Immigration Newsflash: MAC Report on Reducing Number of Tier 2 Migrants

Please note that this article was published on 19 January 2016 and since then the government has published its Ministerial Statement on how the MAC Report is to be implemented.  

The Migration Advisory Committee has just released its long anticipated report recommending methods of tightening the skilled worker visa routes with the goal of reducing immigration from outside the EU.

Whilst there are some very significant proposals for change within Tier 2, we are pleased that they are not as detrimental for business as some of the suggestions originally put forward. 

The MAC’s recommendations can be summarised as follows: 

• The introduction of an ‘Immigration Skills Charge’ to encourage employers to invest in training UK employees. This works out at an upfront fee of £1,000 per year for each Tier 2 migrant employed by a UK company. This is effectively an ‘apprentice’ fee.
• Raising the overall Tier 2 salary threshold from £20,800 to £30,000. Of course the SOC code salary rates must also be taken into account when considering the salaries to be offered to migrant workers and the higher of the two selected.
• Recommending that Graduates should be paid a minimum of £23,000. This would clearly impact any ‘new entrant’ rates currently in place.
• For sponsors who have migrant workers on ‘third party client sites’ the MAC proposes that use of the Tier 2 (Intra-company Transfer) route for third-party contracting be moved into a separate route and that a higher salary threshold of £41,500 be applied to these workers. This is of concern to us as no suggestion is made as to what the ‘separate route’ will be. This will significantly affect I.T. companies with migrants working on client sites.
• It has also been recommended that the government carries out an ‘in-depth review’ of the I.T. sector and third party contracting. There is a suggestion of limiting the number of Tier 2 migrants in each company.
• It is proposed that in order to qualify for a Tier 2 ICT Short Term or Long Term visa an employee must demonstrate 2 years' prior employment overseas as opposed to only 12 months' employment.
• Tier 2 ICTs should also pay the Immigration Health Surcharge (IHS).
• They have recommended that there is no rationale behind continuing to allow ‘in country switchers’ being exempt from the resident market labour test (RLMT). This would mean that Tier 4 and Tier 1 Post Study Workers (PSW) would need to meet RLMT requirements and Sponsors would need to advertise these roles. UK Universities will no doubt be very concerned by this proposal.
• They have recommended that the Tier 2 list of occupations remain as they are and that they are not restricted only to occupations on an ‘expanded shortage occupation’ list. It was originally suggested that only those on an ‘expanded shortage occupation’ list would qualify for a Tier 2 visa, the suggestion being that a Sponsor can only hire roles deemed as in shortage in the UK. Thankfully the proposals are to keep the current list in place.
• They have advised against an ‘automatic sunsetting’ of occupations on the shortage occupation list. This means that certain roles on the shortage occupation list will not have a maximum time limit upon which they will be automatically be removed from the shortage occupation list.
• They have advised that there should be no restrictions on automatic work rights for dependants. The original proposal was that dependants would not be able to work, hence this will enable dependants to continue to work in the UK without any restrictions.

The MAC’s news release can be viewed here and the Report can be viewed here.

Our View

It is clear that these proposals will have a significant cost impact on Sponsors who may now need to pay both the IHS fee for any ICT migrant workers in addition to the new Immigration Skills Charge. Furthermore, there will be an increase to the minimum salaries required to hire someone under Tier 2. These cost factors may dissuade some companies from hiring non-EEA workers.

‘Graduate’ hires will be negatively affected by the minimum salary requirement of £23,000 and the proposal to scrap the resident labour market test exemption for Tier 4 and Tier 1 PSW new hires. The proposals to the ICT sector in general are also concerning - particularly the recommendation that these employees must now show 2 years’ previous employment to qualify for a Tier 2 ICT Long Term or Short Term visa and that those on 3rd party client sites will be considered under a ‘separate route’.

We look forward to seeing how the government responds to the MAC report and applies these recommendations. Any clients who have any concerns relating to any of the proposed changes should contact the Business Immigration Team at Doyle Clayton.