Migration Advisory Committee report recommends ways to restrict Tier 2 migration

In light of its well-publicised objective to reduce net migration and its concern that employers have become over-reliant on migrant workers to fill shortages in the UK, the Government commissioned the Migration Advisory Committee (MAC) to carry out a review of the Tier 2 category in June 2015.

In particular the Government tasked the MAC to review five key areas:

Although we had previously anticipated a complete overhaul of Tier 2, the changes recommended in the MAC report published this week are by no means insignificant and, if implemented, shall cause the overall cost of sponsoring migrant workers to be prohibitive for many companies.

Nevertheless it is encouraging that the MAC has warned the Government that a reduction in Tier 2 migration would only 'make a marginal contribution' towards reducing net migration. We can only hope that the Government grasps that implementing the MAC's suggested changes to Tier 2 will not achieve its aim to reduce net migration to tens of thousands and may instead seriously hamstring UK businesses' productivity, innovation and competitiveness.

A summary of the main recommendations is below, however the full MAC report is available online if you wish to review the recommendations in detail.

Tier 2 minimum salary thresholds The MAC has recommended the Government increase some of the minimum earning thresholds under Tier 2 as an effective means of decreasing the number of migrants eligible under Tier 2:

The implementation of the higher minimum salary thresholds for those sectors (eg public sector) where there are lower paid roles has been suggested to be increased gradually over time, but the MAC did not recommend a permanent exemption from the increased thresholds.

In relation to the occupation-specific salary rates (detailed in the Standard Occupation Classification codes), the MAC mercifully heeded our and many others' feedback and has recommended that the rates remain unchanged at the tenth percentile for 'new entrants' and 25th percentile 'experienced workers'.

Immigration Skills Charge
The introduction of an Immigration Skills Charge (ISC) set at £1,000 per year for each Tier 2 migrant has been proposed. This would mean an exorbitant £3,000 for a migrant coming to the UK for three years, and £5,000 for five years in addition to the higher minimum salary thresholds and other relevant application fees.

The MAC believes that this scheme will incentivise employers to reduce reliance on migrants workers and instead train domestic workers. The only exemption suggested by the MAC is for Tier 2 (ICT-Skills Transfer) and Tier 2 (ICT-Graduate Trainee) migrants.

Intra Company Transfers
The MAC has recommended that all Tier 2 (ICT) migrants should be subject to both the Immigration Health Surcharge (IHS) and the ISC (apart from those applying under the Skills Transfer and Graduate Trainee routes).

For many employers it will also be of great concern that the MAC has suggested that the qualifying period of prior employment with the linked overseas entity be extended from 12 months to two years for Tier 2 (ICT-Short and Long Term Staff) migrants. It was also suggested that sponsors should be required to enter a more detailed description of the UK role on the Certificate of Sponsorship for Tier 2 (ICT) migrants to evidence that therole is sufficiently specialist.

The MAC report highlighted significant use of the Tier 2 (ICT) route to service third party contracts (particularly in the IT sector), which is permitted under the Immigration Rules but was not originally an intended use of the route. In light of this, the MAC has proposed that the Government creates a new category under Tier 2 specifically designed for third party contracting. The new route would require migrants to be paid a minimum salary of £41,500, which will no doubt act as a severe deterrent to using this new route, not least as the MAC has also recommended that consideration should be given as to whether the new route should be subject to the Resident Labour Market Test (RLMT) and even a cap to the number sponsored under this route in each sponsoring organisation.

Furthermore the MAC proposed the Government to commission a separate in-depth review of skills shortages within the IT sector and has strongly recommended that any changes implemented to the Tier 2 (ICT) category should be kept under active review.

Tier 2 (General)
We advised in our response to the MAC that Tier 2 (General) should not be restricted to an expanded Shortage Occupation List (only containing jobs which are deemed to be 'genuine skills shortages' and 'highly specialist experts') and that jobs on the Shortage Occupation List should continue to be reviewed by the MAC rather than being removed automatically after a certain period of time. We are therefore pleased to see that the MAC has recommended the Government not to change the Shortage Occupation List and that automatic removal of jobs from the List should not be implemented, given that their own reviews provide the best mechanism for identifying which jobs should be added or removed from the List.

The MAC has suggested that the RLMT is a crucial element of the Tier 2 (General) process and should be retained, however it needs to be improved to increase effectiveness and efficiency. Additionally, the current Restricted Certificate of Sponsorship (RCoS) allocation system which ranks roles by salary, has been deemed by the MAC as being 'the most objective way of prioritising applications'. However as low paid roles, such as those in the public sector and graduates roles, are being disadvantaged in the allocation process the MAC proposes that public sector roles should be given temporary priority in the short term and graduate roles should receive a £7,000 uplift.

Although on the one hand these suggested changes are welcomed, the MAC has also regrettably recommended the Government to consider requiring Tier 2 (General) in-country switching applications to be subject to the RLMT and included under an extended Tier 2 annual cap.

Automatic right to work for dependants
The MAC has recommended the Government to continue to allow Tier 2 dependants automatic access to the UK labour market, in line with our and many others' feedback to the MAC's recent consultation. As with restrictions on Tier 2 main applicants, the MAC conceded that restricting Tier 2 dependants' right to work in the UK would not have any significant impact on overall Tier 2 net migration numbers and would unlikely affect employers demand for overseas workers.

The MAC report has been sent to the Government for consideration, and although there is no obligation for the Government to implement any of the recommendations past experience indicates that most of the changes will be applied.

Please note that until the Immigration Rules have been changed (which is most likely to be in April 2016), the current requirements under Tier 2 apply to the sponsorship of migrant workers. We shall update you as soon as the Government has announced any changes to the Rules and advise you on how the changes may affect you and your business.

If you have any queries, please contact your Client Care Manager or if you are not a client, email our Enquiries Team at enquiries@lauradevine.com.