Big changes announced to the Skilled Worker minimum salary threshold

The Home Secretary announced on Monday 4th December 2023 that the Government is planning to raise the minimum salary threshold for Skilled Worker migrants from its current level of £26,200 to £38,700 next year. The changes are announced in response to net migration figures which indicate record breaking numbers of foreign nationals have moved to the UK in the last year.

How did we get here?

Following the UK's departure from the EU in 2020, the government carried out an overhaul of the UK immigration system, anticipating that many sectors would experience skills shortages following the end of free movement. The Points Based Immigration System was launched in late 2020 which introduced the Skilled Worker route (formally known as Tier 2 (General)) as the main work-based visa option for employers. Businesses were actively encouraged to obtain a Skilled Worker Sponsor Licences to ensure they would be able to employ workers from the EU and beyond. The new route removed some of the administratively burdensome processes for employers, including the Resident Labour Market Test and the monthly cap on Certificates of Sponsorship, which had made the Tier 2 (General) more cumbersome.

In addition, the minimum salary for a Skilled Worker visa was lowered from £30,000 to £25,600 (this rose slightly in April 2023 to £26,200) to allow a broader range of jobs to be eligible for sponsorship. The Skilled Worker route also saw the emergence of "tradeable points", which allowed even lower salary thresholds to be met for certain categories of employees, including those whose roles are on the Shortage Occupation list, or those who are "new entrants" to the labour market. The concessionary Health and Care visa was also introduced to help fill the gaps created in the NHS and the wider healthcare sector.

These changes had the desired effect as more and more employers have become licence holders and greater numbers of workers have been arriving in the UK on Skilled Worker visas. The last year has seen a 54% increase in work-based visas. This is mainly due to the popularity of the Health and Care where successful grants have increased by 135%. However, the government considers these numbers to be unsustainable and has acted decisively.

What does the new salary threshold now mean for UK employers?

By deciding to raise the salary threshold for the entire Skilled Worker route, these changes will have a wide ranging impact. Once the new changes come into force next Spring, many employers will not be able to hire employees who are on an annual salary of less than £38,700 per annum. This will include roles in industries such as banking, finance and law who are regular users of the immigration system.

The immigration rules have not yet been released so we do not know the tradable points criteria will work to know if there will be concessions for different types of workers as there are now. We can be sure that the threshold of £38,700 will create difficulty for employers who rely heavily on non-UK workers for lower and medium skilled roles. We have previously seen that certain industries have struggled more than others with recruitment following Brexit, in particular the construction industry, and these sectors may be hit more significantly if they can no longer hire workers who fall below this higher salary.

What does this mean for those already in the UK on Skilled Worker visas?

At the present time it has not been confirmed whether the new salary cap will apply to those who are already in the UK on Skilled Worker visas and need to extend their visas. In terms of visa extensions, historically, changes to the salary thresholds have not always applied to visa extensions for those already in the UK and on the route. However, this has not been confirmed by the government as of yet, and they have indicated that they are currently keeping their position on extensions under review.

What about the other changes outlined by the government?

As a brief summary, the following additional changes have been announced:

• Changes to the Shortage Occupation list. This includes both changes to the occupation codes included on the list and the removal of the 20% reduction currently applied to the minimum salary in each occupation code. It is expected there will still be a reduction of the general threshold available for shortage occupations, however this is expected to be increased from its current rate at £20,960.
• The minimum income for family visas will also be increased. Settled individuals and British nationals who wish to bring family members from overseas to the UK currently have to prove a minimum income of £18,600 (a rule that was controversial and fiercely debated when it was originally introduced). This is now expected to rise to a minimum income of £38,700 per annum in line with the minimum salary threshold.
• New rules will be introduced to prevent care workers and senior care workers from bringing dependant partners and children to the UK with them. It remains to be seen what impact this will have on recruitment of workers in the care sector.
• The government has mentioned that it plans to review the graduate visa, which allows graduates to stay in the UK for a maximum of three years after completing a degree or PhD at a UK university. From January 2024, students (unless they are on post-graduate research courses) will no longer be able to bring dependant family members with them to the UK.

These changes have been announced in addition to the increase to the Immigration Health Surcharge, which is expected to rise to £1,035 per year from £624 per year by early 2024.

When will these changes come into force, and what can employers do now?

While the government has not outlined a "plan of action" as of yet, we understand that they are aiming to find a Parliamentary slot early next year. On this basis, we would expect further information to come in a statement of changes released at the end of January 2024.

Employers who have Sponsor Licences and employ non-British nationals should review the visa expiry dates of their current employees and consider the advantages of extending their leave early if they are expiring next year, particularly to benefit from the lower immigration health surcharge. Employers should also plan ahead with their recruitment strategies over the next 12 months, which is set to be yet another period of change for the immigration system.

Please feel free to reach out to our immigration team if you have concerns about these changes or would like to discuss.