The Rising Cost of Immigration
Increases in Home Office fees coupled with higher minimum salary requirements are driving up the cost of hiring Skilled Workers.
Back in September 2023, the Home Office announced that they would be increasing visa application fees across the board. This increase took effect on 4 October 2023 – the new fees can be found here.
Of relevance to employers who sponsor Skilled Workers were the increases to the Skilled Worker visa application fees (by about 15%) and the certificate of sponsorship assignment fee (from £199 to £239). You can read more about these changes here.
Also announced was a whopping 66% increase to the Immigration Health Surcharge (IHS), up from £624 to £1,035 per year of visa for most applicants. This increase is now expected to apply to all applications made from the 6 February 2024. Visa applications submitted before then will avoid paying the higher IHS, but applications submitted on or after the increase is implemented risk incurring a significant additional cost (around £2,000 extra for a five-year visa!).
More recently, the Home Office confirmed a substantial increase to the minimum salary requirements for Skilled Workers. Employers will need to pay Skilled Worker applicants at least £38,700 per year – nearly a 50% jump from the current minimum salary of £26,200. By contrast, in Spring 2023 this minimum salary increased by just £600, from £25,600 per annum to the current £26,200 figure.
The new minimum salary is expected to be introduced on 4 April 2024. It is currently understood that the increase will apply to new Skilled Worker visa applications only, exempting those currently on the Skilled Worker route – so we expect that employers will not need to pay Skilled Worker migrants the higher annual salary of £38,700 where they are only applying to extend their visa or change employer on or after 4 April 2024. However, we will not have absolutely certainty on this point until the Home Office publish their Statement of Changes on 14 March 2024.”
In practice, however, it is unlikely to be positive for employee relations if migrants acquired their Skilled Worker visa before 4 April 2024 are paid one salary, while migrants who acquire their Skilled Worker visa from 4 April 2024 are paid a far higher salary for the same or similar roles
This all paints quite a bleak picture for employers looking to sponsor migrant workers, but there are some steps you can take to combat the increase in fees.
Apply Now
If you were planning to sponsor Skilled Workers some time in 2024, you may want to consider fast-tracking those plans, if possible, to ensure visa applications are submitted before the IHS and minimum salary increases are implemented.
As the increased minimum salary will only apply to applications made on or after 4 April 2024 you can avoid having to pay this salary if the visa application is submitted before then.
For most of you reading this, it may be more difficult (if not possible!) to submit the visa application before the IHS increase in February. However, if you are already part way through the process of preparing the applications, then it is worth having that February deadline in mind, as avoiding the increased IHS will represent a significant saving for either you or the employee, depending on who is covering the cost.
Five-Year Visas over Three-Year Visas
Coupled with the above recommendation, it may also be worth considering whether the employee could apply for a five-year visa, rather than a three-year visa. This has the advantage of allowing you/the employee to pay the current, lower IHS for the whole of the five-year period. By contrast, if you wanted to continue employing a Skilled Worker after their three-year visa expired, then they would need to apply to extend their Skilled Worker visa and the higher IHS would then be payable for the period post-extension.
Another advantage of this option is that, after five years on a Skilled Worker visa, migrants can apply for settlement in the UK (provided they meet the residency and other requirements). Once they are settled, the migrant will no longer need to pay IHS. This means that if the migrant submits a five-year visa application before the IHS increase in February 2024, and then apply to settle at the end of their visa term, they will completely circumvent the higher IHS – although, of course, you cannot force a migrant to apply for settlement.
While we expect and hope that transitional provisions will be introduced, allowing Skilled Workers who apply for their initial visa before 4 April 2024 to remain on the current minimum salary even when extending on or after 4 April 2024, we cannot yet be sure on this point without further clarification from the Home Office.
The above points regarding IHS may therefore be equally applicable to avoiding the increase in minimum salary – if a migrant applies for their five-year Skilled Worker visa before 4 April 2024, you could pay them the current minimum salary for their occupation code for the entire five-year period, before they transition to settlement (at which point, you would no longer sponsor them, meaning that the minimum salary requirements would no longer apply).
Of course, it is always possible that the minimum salary will be entirely different in three years’ time, or that there will be no minimum salary at all, as a Labour government may take a different approach to skilled immigration.
Clawback Clauses
Finally, you can introduce clawback or repayment clauses into the employment contracts of your Skilled Workers, to ensure that you can recover some of the costs associated with their visa applications. Certain costs, such as the Immigration Skills Charge and certificate of sponsorship assignment fee cannot be recovered in this way. However, other costs that you have incurred, such as the IHS, visa application fee, ancillary fees (such as priority services and biometric appointment fees) and even legal fees can be recovered in this way, although you will of course need the migrant to agree to this arrangement.
Care should be taken in drafting these clauses, as there is a risk that they may be found to be penalty clauses, and therefore unenforceable. We regularly draft clawback and repayment clauses for our immigration clients and can tailor these to your specific needs and preferences.
It should be borne in mind that the Home Office might U-turn on the increase in minimum salary, as they did, at least in part, with the increase in minimum salary for partner visas. The Government had initially announced an increase from £18,600 to £38,700 for those looking to meet the financial requirements for a family visa, which was also to come into effect in Spring 2024, but they have since reduced this to £29,000 for the time being, following significant public backlash – you can read more about this here.
Will they follow suit with the Skilled Worker visa? It remains to be seen, although the increase in the minimum salary for Skilled Workers is yet to whip up the same level of publicity and anger as the change for family visas did.
If you would like legal advice and support with hiring Skilled Workers, or with drafting clawback and repayment clauses for your migrant workers’ employment contracts, please get in touch at [email protected]
