Salary thresholds to increase in April

11 Mar 15

UNITED KINGDOM

IMPACT – HIGH

What is the change? As of April 6, the Home Office will increase base minimum salary thresholds across all Tier 2 categories, as well as the minimum salary for each individual Standard Occupation Classification (SOC) code against which Tier 2 roles must be plotted.

What does the change mean? Costs will increase for U.K. employers sponsoring migrants on Tier 2.

  • Implementation timeframe: April 6.
  • Visas/permits affected: Several job categories under Tier 2 (General) and Tier 2 (Intra-Company Transfer).
  • Who is affected: Companies recruiting foreign nationals across all categories.
  • Business impact: The increases in minimum salaries impact budgets for foreign employees and assignees working in the U.K. and may complicate applications that are in the pipeline but have not yet been submitted by April 6.

Background: Minimum salaries for the Tier 2 (General) and Tier 2 (Intra-Company Transfer – Short-Term) categories will increase by £300, while Tier 2 (General) jobs that are exempt from certain advertising or other rules will increase by £900 and £1800.

The old and new Tier 2 salary thresholds are displayed here:

Category Job Criteria Current Threshold Threshold as of April 6
Tier 2 (General) Jobs that qualify for Tier 2 (General) £20,500 £20,800
Tier 2 (General) Jobs exempt from Jobcentre Plus advertising (Jobcentre Online for Northern Ireland) £71,600 £72,500
Tier 2 (General) Jobs exempt from annual limit, 12-month cooling-off period, and Resident Labour Market Test £153,500 £155,300
Tier 2 (ICT) Jobs in the categories of Short-Term Staff, Skills Transfer or Graduate Trainee (maximum stay six months or one year) £24,500 £24,800

SOC codes, which set out minimum wages for each role in the U.K., are based on data from the National Office of Statistics, and are used to ensure that migrants are paid in line with resident workers for equivalent roles. There have been changes for all sectors. Some have been increased – for example, a software developer will now need to be paid an additional £1,500, taking the minimum annual salary from £29,600 to £31,100. Marketing and sales directors must be paid an additional £7,200, from £40,700 to £47,900. In other categories where there is a perceived shortage, the minimum wages have gone down.

Overall costs for Tier 2 migrants are also poised to be raised as a result of the introduction of an annual health surcharge to mitigate the cost impact of migrants on the National Health Service – this has not yet been published formally, however. On a more positive note, the 12-month “cooling-off period” will no longer apply to previous grants of Tier 2 stays of three months or less. This change is intended to give businesses flexibility to transfer key staff for very short periods, and should be read in line with the new visitor rules that make clear that this is not a means to work in the U.K. even for a very short period.

BAL Analysis: The Home Office reconsiders salary thresholds annually and these latest salary increases correspond to a 1.2 percent increase in average weekly earnings for resident workers in the previous year and are not of immediate concern. However, the revision to salary thresholds set within each SOC code may have a more significant impact on what employers need to pay migrant workers to come to the U.K. or to support them in making settlement applications there. U.K. companies are reminded to adjust their minimum salaries and may wish to contact their BAL representative for the full list of new salary levels.

Further analysis will be available at our client webinar to which you will be invited shortly.

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

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