How will the visa rule changes impact employment?

There is no hiding from the fact that the recent rise in the salary threshold for skilled worker visas, among other changes, has made it that much more expensive for companies to sponsor workers in the UK. This is one of many changes that have been brought in to “reduce net migration” in recent months.

In this article, our employment partner Sungjin Park, immigration partner Christine Chiew and paralegal Chelsea Qu look at what the changes mean for employers and what the employers can do to alleviate the effects of such changes.

What are the changes?

• Increase in the minimum salary threshold from £26,200 to £38,700 for Skilled Worker visa.
• Increase in the minimum salary threshold from £45,800 to £48,500 for Global Business Mobility visa.
• A lower threshold of £30,960 may apply for ‘new entrants’ who are under 26 years of age, studying or a recent graduate or in professional training.
• This lower threshold also applies for candidates with a PhD that is relevant to their job.

What are the cost implications?

This is a substantial increase for employers reliant on recruiting a young, educated workforce early in their careers. Often the salary for these workers is at a low end, not because they are not skilled enough, but because of where they are in their careers. Few employers are willing to break their wage structure to sponsor new employees at the new wage level.

The new entrant route is a possible way out for employers if the requirements can be met, although the age limit of 26 may still be a major barrier for many employers.

The recent increase of immigration health surcharge from 6 February 2024 by 66% hasn’t helped matters from a cost perspective.

Will employees have to cover the cost?

There is a danger of inadvertently encouraging employers to resort to short-termism by having a revolving door of graduate employees at the expense of recruiting to develop and retain talent for the long term.

There have been increasing signs of passing on some of the costs of sponsoring a worker on to the workers themselves. This could be done by:

• Asking the candidates to pay some of the costs associated with sponsoring, such as visa application fee and immigration health surcharge.
• Entering into a clawback agreement with the candidate concerned, requiring the candidate to pay back certain costs in the event that the candidate leaves the employer within a certain period of obtaining a visa.

One note of caution is that employers must not ask employees to pay for a Certificate of Sponsorship (CoS) allocation fee or the immigration skills charge or indeed claw these back under a clawback agreement. This would be a breach of immigration law.

Accidental discrimination

Indirect discrimination can creep in at any stage in relation to sponsoring (or not) a worker. For example, stating in a job post that it will not consider those who require sponsorship is likely to be indirect discrimination.

Further, if continued employment can only be sustained by sponsoring an existing employee but the employer is deterred from doing so because of costs, this may also constitute indirect discrimination. Whether a costs reason can form an objective justification defence is up for debate and as yet untested in this particular arena.

Offering guarantees of a visa at the recruitment stage is also fraught with problems for obvious reasons.

Employers are advised to remain vigilant of these issues.

Could there be change under a Labour government?

Even if the Labour Party is successful in the next general election, we don’t yet know whether it will reverse the recent changes to allow businesses a more leeway in sponsoring workers. It’s certainly a possibility but there has been little indication either way on this. A ‘sit tight and wait’ strategy may bear little fruit if the changes continue to be in place going into 2025 so it’s best to adapt to these changes now and think strategically about sponsoring new workers in light of the recent changes.

If you do have questions about how the visa changes will impact employment, please contact Sungjin Park, Christine Chiew and Chelsea Qu.