September 2015 – The Migration Advisory Committee (“MAC”) has been asked to carry out a review of the Tier 2 sponsorship route by the Government. As part of this review the MAC has been asked to advise on potential changes to the Tier 2 scheme to address concerns about the rising number of migrants using the Tier 2 route and UK employers’ reliance on them to fill shortages.
This is the most extensive and concerning review of Tier 2 since the scheme was introduced in 2008. Left unopposed, the proposal would change the Tier 2 scheme beyond recognition. Employers could find their ability to recruit under Tier 2 General (excluding Tier 2 sportsperson and religious workers) considerably diminished.
With the consultation closing on the 25th September, the clock is now ticking. Affected UK employers, who have yet to respond to the MAC’s Call for Evidence, would be well advised to submit their evidence at the earliest.
The main questions raised by the Government the MAC is to advise on are:
1) How to restrict Tier 2 (General) recruitment to genuine skill shortages and highly specialist experts only?
2) How to limit the length of time occupations can remain regarded as having shortages?
3) How to apply a skills levy to businesses recruiting from outside of the EEA?
4) How to restrict the automatic right of Tier 2 dependants to work in the UK?
5) How to limit the number of migrants using the Tier 2 Intra Company Transfer (ICT) route?
RESTRICT TIER 2 (GENERAL) TO GENUINE SKILLS SHORTAGES AND HIGH SPECIALIST EXPERTS
The MAC has been asked to consider how Tier 2 (General) and the shortage occupation list should be reformed to restrict the use of the scheme to genuine skill shortages and highly specialist experts. Getting rid of the Resident Labour Market Test and replacing it with a new and expanded shortage occupation list has been put forward at a possible means of achieving this goal.
The Government expects the proposed reforms to be sufficiently flexible to include high value roles, key public service workers and those, which require specialist skills.
The MAC is to advise on selection criteria such as, salaries, points for attributes, economic need and skills level, and whether such an approach should also operate in respect of intra-company transfer and Tier 4 graduate migrants hoping to switch into Tier 2 General.
Under the current system the number of Tier 2 (General)applications is restricted to a maximum of 20,700 certificates per year with a monthly allocation, which varies slightly depending on the level of subscription. This year 2,550 certificates were released in April, and the remaining certificates will be released equally on a monthly basis until March 2016. Any certificates not allocated in any given month are carried over and added to the next month allocation.
All applications are ranked against each other in a monthly pool using a point-based system. Points are allocated depending on:
- the role: – if on the shortage occupation list (75 points) or; – if at PhD level and a resident labour market has been carried out, if applicable (50 points) or; – if the resident labour market has been tested (30 points); and
- the salary offered: Points for salary are awarded according to the relevant salary bracket, starting at £20,880 – £20,999.99 (2 points) up to £100,000 – £155,299.99 (30 points).
To qualify for consideration, applications must attract the minimum of 32 points. Until recently the quota had always been under-subscribed. So providing the application met the minimum points it was pretty much guaranteed that a certificate would be allocated.
However with the monthly quota being oversubscribed in both June and July, the salary offered became a deciding factor for applications that were not at PhD level or not on the shortage occupation list. Indeed, in June, due to the unusually high number of requests filed, the Home Office had to reject all requests scoring fewer than 50 points and therefore offering salaries lower than £46,000. The situation improved slightly in July with a minimum score of 45 points and offered minimum salaries of £32,000. In August we were almost back to normal with a minimum score of 36 points and offered salaries of £24,000.
This ‘highest salary’ led system has a negative impact, in particular, on graduate recruits across the board and sectors with high value jobs such as NHS, engineering, research, pharmaceutical..etc.
Relying on salary to gauge the level of expertise required for a particular role is a highly fallible system, especially when no distinctions are made from one industry to the other. For instance software engineers’ salaries vary greatly depending on their sector of employment, be it banking, electronics, telecommunication..etc.
Should the Home Office have to rely mainly on a ‘salary led’ system in the future when considering applications, we are likely to see salaries raise considerably for those jobs which are not on the shortage occupation list but for which the necessary skills and expertise are in short supply in the UK.
In their response to the MAC’s Call for Evidence, employers should request that the roles, which they are struggling to fill be added to the shortage occupation list. Their request should be backed up by substantiating evidence to demonstrate the shortage. This could include the length and cost of the recruitment process compare to other roles, the necessary salary increases which may result in having to offer inflated rates..etc.
SUNSET CLAUSE FOR JOBS ON THE SHORTAGE OCCUPATION LIST
As part of this review, the Government is re-visiting the possibility of introducing a limit on how long a job should remain on the shortage occupation list. This proposition was explored previously under the Coalition Government. The MAC then investigated whether a sunset clause of two years should be applied and after full consideration recommended against it.
As this proposition has been brought back to the table, there is a possibility that going forward, a job could be placed on the list only for a pre-determined period of time. On reaching the end of this period, employers would be required to provide further evidence of the continuing shortage to maintain the job on the list.
SKILLS LEVY ON EMPLOYERS WHO RECRUIT FROM OVERSEAS
As part of their plans to reduce employers’ reliance on workers from outside of the EEA, the Government is also considering introducing a skills levy to fund UK apprenticeships for settled workers. It is not clear yet how the levy would be collated and whether it would be a fixed or variable fee.
Bearing in mind the heavy visa fees, the recent increase in salary thresholds and the introduction of the Immigration Health Surcharge (IHS), this levy would come as an additional and unaffordable burden on small businesses, which rely on overseas workers for skills currently lacking in the UK.
For the large organisations that already provide training, the imposition of the levy could be counterproductive. Indeed, there is a risk that the cost of the levy could be included in existing training budgets, reducing the funds that would normally be available to train workers across the board.
TIER 2 DEPENDANTS RIGHT TO WORK
When last consulted on whether the dependants should be included towards the cap as a means to reduce net migration, most employers objected. Then the main argument was that any reductions in the number of dependants would have a significant impact on the UK businesses’ ability to attract the ‘brightest and the best’. The general consensus was that the vast majority of migrants would be reluctant to come if their dependants were not able to join them and / or to work in the UK.
The collective opinion has not changed and any restriction on the right to work of Tier 2 dependants is likely to affect many businesses.
It has been argued that permitting dependants to work has resulted in the displacement of resident workers for low skills jobs. However research carried out by the Permits Foundation analyzing the international assignee population of more than 200 employers demonstrate that most dependants are highly educated and the jobs they take in the UK economy, compliment rather than replace / displace the UK workforce.
CHANGES TO THE TIER 2 INTRA COMPANY TRANSFER (ICT) ROUTE
The number of overseas workers entering the UK as ICTs has increased alarmingly over the last few years. This increase has made the ICT route an ideal target in the hunt for means to reduce net migration.
The ICT route is mainly used by the IT Industry. Off shore companies with an established presence in the UK can use this route to bring IT workers from overseas to work on temporary contracts.
IT resident workers and campaigners have expressed concerns that this puts them at a disadvantage as staff from overseas are often paid considerably less. In response to these concerns the Government has put in place a minimum pay threshold to ensure that UK workers are able to compete in the national and international market place. Allegations, however, have been made that suppliers of contract workers are still finding ways to avoid paying the minimum rate by manipulating salaries and inflating the value of allowances.
The Call for Evidence is looking at whether allowances should continue to be included in the salary threshold. Imposing tighter intra-company transfer restrictions, specifically on the IT sector, is a possibility. The introduction of a fixed cap or a cap based on the percentage of UK workforce is also being considered. Another of the proposed changes would be to apply the Immigration Health Surcharge to ICT workers.
In its determination to reduce net migration the Government is expected to impose drastic changes to the ICT route, which will have a considerable impact on the IT sector and the way IT overseas suppliers operate in the UK.
UK employers in the IT sectors, who are likely to be affected by the proposal, would be well advised to provide evidence of the negative effects the changes would have on their businesses.