Will increases in visa costs be a deterrent to the recruitment of overseas employees?

New Home Office guidance was published on Friday, 10 February 2017 providing information on the new Immigration Skills Charge. We explore the details.

From 6 April 2017, it is proposed that employers who wish to sponsor a migrant worker on a Tier 2 Visa will be required to pay a charge which is set at £1,000 per migrant, per year.

A reduced rate of £364 will apply to small businesses and charities. The charge will not apply to roles requiring a PHD or to students switching from a student visa to their first permanent work visa and/or to graduate trainees applying to work in the UK using the Intra Company Transfer arrangements. Crucially, the charge will also not apply to those who came to the UK as Tier 2 migrants before 6 April 2017 and who are applying to extend their stay with either the same or a different sponsor.

The charge will be payable in full at the time when a sponsor assigns a Certificate of Sponsorship to a migrant worker. So, for example, an employer wanting to employ an IT Engineer from India for a five year period, will now be required to pay an additional £5,000 on top of existing fees and charges before they are able to employ the migrant worker.

The rationale behind the charge is to encourage UK businesses to train UK staff to fill vacant positions and to deter employers from recruiting from overseas.

In addition to the above, April 2017 will also see increased minimum salary levels being introduced which must be paid to migrant workers before employing them under Tier 2. Whilst this change will benefit migrant workers, given that employers will have the extra cost of the increased wages plus the charge, it may be that employers will have to reconsider their recruitment budgets.

If you are planning to employ Tier 2 migrant workers, it may be worthwhile acting quickly now to assign the Certificates of Sponsorship before the new charge becomes mandatory.