29 May 2024
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UK Immigration Update: Salary threshold changes for Skilled Workers

To The Point
(4 min read)

The Home Office has introduced a range of measures from 4 April 2024 aimed at reducing net migration to the UK including increasing the salary thresholds necessary to sponsor Skilled Workers. The new entrant provisions will continue to work in the same way although there has been an increase to the baseline minimum salary. These changes are likely to be more acutely felt by employers looking to recruit junior employees, graduates, and those in certain sectors.

Increase to skilled worker minimum salary threshold

The salary thresholds for all Certificates of Sponsorship (COS) have increased by around 50% to the higher of £38,700 or the 'going rate' for the occupation per year (based on a 37.5 hour working week) from 4 April 2024. We have noted that in practice the salary increase has presented a barrier to businesses sponsoring more junior employees, graduates and those in the hospitality or retail sectors.

Overcoming the challenge posed by the new salary threshold

For context, the UK operates a points-based immigration system whereby applicants must gain 70 points to be given sponsorship. 50 of the points are mandatory and comprise the following:

  1. obtaining a valid COS;
  2. being sponsored for a job at the appropriate skill level; and
  3. demonstrating English language proficiency at level B1 or higher.

The remaining 20 points are known as 'tradeable points' meaning that they may be earned as follows:

  • Option A: candidates will be able to rely on this option where the salary is £38,700 per year (based on a 37.5 hour working week) or, if higher, the 'going rate' for that role. The going rates are calculated by reference to the current 'median' salary based on the 50th (previously 25th) percentile of ONS data from 2020 (previously 2010).
  • Option B: if candidates have a PhD in a subject relevant to the role for which they are applying to be sponsored, they may use this option provided that their salary will exceed £34,830 or, if higher, 90% of the current 'going rate' for the Standard Occupational Classification (SOC) code.
  • Option C: if candidates have a PhD in a Science, Technology, Engineering or Mathematics (STEM) subject relevant to the role for which they are applying to be sponsored, they may rely on this option provided that their salary is £30,960 or, if higher, 80% of the current 'going rate' for the SOC code.
  • Option D: if candidates are being sponsored for a job on the Immigration Salary List (previously the Shortage Occupation List), they can score tradeable points by demonstrating their salary equals or exceeds £30,960 or, if higher, 80% of the current 'going rate' for the SOC code.
  • Option E: this option may be available to some individuals who are entering into the UK labour market as 'new entrants', for example, recent graduates or young people at the start of their careers. Amongst other conditions, they must show that their salary equals £30,960 or, if higher, 70% of the current 'going rate' for the SOC code.

It may also be possible for those who do not meet the requirements to apply for a Skilled Worker visa to apply under a different route such as the graduate visa, Youth Mobility Scheme visa, a family or a dependant visa.

Practical implications

These changes are likely to impact businesses as the salary increase poses a commercial barrier to recruitment for certain roles or sectors.

For graduate schemes where the proposed role does not meet the salary requirement (even with the 'new entrant' discount) this means that the role may no longer qualify for sponsorship. Businesses must not artificially inflate the salary so that it meets the required threshold; salaries must be genuine for the recruited role.

At the same time, if a business rejects a candidate based on their immigration status, this could be seen as indirect discrimination. This means that businesses will need to assess the graduate (and other) roles available for sponsorship and have conversations with applicants where the role does not qualify for sponsorship. Businesses may need to discuss with applicants whether other options are available to them.

Next steps

Businesses trying to navigate recruitment decisions may need practical advice to establish if the roles for which they are hiring qualify for sponsorship under the changes to the immigration rules. Employers may also need to balance employment and immigration considerations.

For more advice on navigating the new immigration rules and their practical considerations, please get in touch.

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