IMPACT – HIGH

What is the change? A draft regulation has been issued that details how the government will implement the new Immigration Skills Charge paid by companies hiring skilled foreign workers.

What does the change mean? Companies will be charged £1,000 per certificate of sponsorship per year of sponsorship per migrant (smaller companies with up to 50 employees and charitable organizations will be charged £364). The regulation sets out the full schedule for the Immigration Skills Charge and exemptions for certain skilled workers and certain occupational codes.

  • Implementation time frame: April 6.
  • Visas/permits affected: Tier 2 (General) and (ICT), excluding the Tier 2 ICT Graduate Trainee sub-category.
  • Who is affected: All companies employing Tier 2 migrants in the U.K.
  • Business impact: The Immigration Skills Charge will generate funds for projects aimed at upskilling and training U.K. resident workers, but is not limited to specific sectors or roles and will significantly increase costs for all employers who rely on Tier 2 migrant workers.

Background: The Immigration Skills Charge, first announced in March 2016, requires Tier 2 employers to pay additional monies to support a general government fund for skills training initiatives for British workers. Companies will be required to pay the charge each time they assign a Tier 2 certificate of sponsorship to a skilled worker via the Sponsor Management System.

The rate is £1,000 per year per worker for any company with more than 50 employees, payable up front at the certificate of sponsorship stage based on the length of employment entered on the CoS. There is a minimum of 12 months employment required, and calculated in six-month increments thereafter. For example, a six-month CoS would attract no charge, a 2 ½-year CoS will attract a £2,500 charge and a five-year CoS will attract a £5,000 charge. This charge is in addition to the CoS fee, visa application fee and immigration health surcharge linked to any Tier 2 migrants. It is also separate from the “apprenticeship fund” to be launched by the Department for Enterprise in April.  Exemptions from the charge include:

  1. CoS assigned before April 6, even where a visa application is still pending.
  2. Those already in the U.K. extending a Tier 2 visa or changing jobs or employers.
  3. Occupations skilled to Ph.D. level (specified in SOC codes).
  4. Tier 2 (ICT) Graduate Trainees (of which there are maximum 20 per year).
  5. Those switching from Tier 4 student visa to Tier 2 (General) in-country.
  6. Croatian nationals.
  7. EEA nationals at present (although this may change under the post-Brexit immigration regime).

There are no exemptions for employers who already invest in training schemes and resident worker employment initiatives, as the monies will be spent directly by the government, i.e., employers cannot apply to access these funds for their own sectors or initiatives.

Refunds of the skills charge will be given in the following instances where the Tier 2 worker never actually starts work:

  1. The visa application is refused.
  2. The visa application/employment offer is withdrawn.

The Home Office policy team has indicated they will consider allowing refunds in other circumstances – e.g., under current rules, if a five-year employee leaves employment there is no way to recover the charge—but these are not confirmed.

BAL Analysis: Employers should budget for the Immigration Skills Charge, which will take effect April 6 and must be paid up front for the full duration of each certificate of sponsorship.  

BAL will be discussing the Immigraiton Skills Charge, along with other key Tier 2 changes and other immigration changes, in more detail at our webinar on March 23. Registration is available here.

This alert has been provided by the BAL Global Practice group in the United Kingdom. For additional information, please contact uk@bal.com.

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