EEF Policy Briefing: Migration Advisory Committee (MAC) Review of Tier 2
The Migration Advisory Committee (MAC) recently published its report that reviewed Tier 2 of the UK’s migration system. Within the report, the MAC makes a number of recommendations to government, which could impact on EEF members. The review itself was commissioned by the government – i.e. the government requests that the MAC specifically explores key areas and proposals. The MAC report has now been published and the government will be considering the recommendations put forward to them. It is likely that if the government implements some, or all of the recommendations – or indeed goes even further than the recommendations in the report – such changes will be implemented at the April 2016 rule changes.
Increasing the minimum salary thresholds when recruiting Tier 2 non-EEA workers
The government commissioned the MAC to explore the case for increasing the current minimum salary thresholds that employers must pay if they recruit a non-EEA worker. Under the current system the threshold is around £20,000 or the 25th percentile of that occupation – whichever is higher. The government asked that the MAC look at the impacts of increasing it to the 50th or even 75th percentile.
The MAC has recommended that instead of increasing the salary threshold to the 50th or 75th percentile, to increase the £20,000 current rate to £30,000. For many EEF members who recruit engineering professionals, they will find this makes little, or no, difference, as the current codes of practice state that engineering roles are paid above this rate. The MAC’s reason for increasing the rate from £20,000 to £30,000 is that it better reflects the skill level that non-EEA employees are now required to be at to come and work in the UK. The skill level is now set at NQF6+ (equivalent to a graduate role or higher), whereas previously occupations at NQF4+ were allowed.
In addition, the MAC has recommended that the salary threshold for a new entrant (i.e. a graduate) is set at £23,000. The MAC recommended that the government did not increase the graduate threshold up from the current 10th percentile.
The new salary thresholds will also apply to Intra-Company Transfers. It will essentially impact short-term ICTs as the salary threshold will increase to £30,000. For long-term ICTs the salary threshold will remain at the higher rate of £41,500.
Immigration Skills Charge
Shortly after the May 2015 General Election and the formation of the new Conservative Government, the Prime Minister announced a new levy on firms that recruit workers from outside of Europe. At this time, the UK-wide apprenticeship levy had not been announced, and the Prime Minister stated that the money would be used to fund UK apprenticeships. However, since then we have had the announcement on the wider apprenticeship levy.
The MAC has recommended that the government pursues its proposals to implement an additional skills levy – which they now refer to as an immigration skills charge. The MAC has recommended that the charge is set at £1,000 per non-EEA employee, per year. This would be paid upfront at the time of the application of the Certificate of Sponsorship. This charge would apply to all Tier 2 General and all Tier 2 Intra-Company Transfers.
The MAC envisages that the charge would be used as a levy and grant system, therefore those employers that train, would be able to get back the money that they pay into the immigration skills charge pot
The MAC has recommended against any form of capping of Intra-Company Transfers, which will be welcome news for EEF members. However, in discussions with the MAC they have emphasised that the route is specifically for senior managers and specialists, and this is not always the case.
The MAC has however recommended that to qualify for the ICT route, an employee must have worked for the company for a minimum of 2 years, up from the current 12 months. In addition, employers would need to explain why the ICT employee was required, and not just state the skill level, as is the current requirement. In addition, the MAC has recommended that ICTs also pay the Immigration Health Charge, which is set at £200 per year.
Increasingly the minimum salary thresholds will have little impact on EEF members as the current codes of practice are such that many engineering posts already require employers to pay £30,000 or over for engineering positions. Of course, there will be difficulties for certain sub-sectors and regions, as the salary thresholds do not account for regional variation.
EEF thinks the immigration skills charge is completely unnecessary. With employers now having to pay 0.5% of their paybill into the apprenticeship levy, this additional charge just adds the ever-increasing costs to business. If the government does pursue this skills charge, EEF will be calling for flexibility for employers on how it is used. For example if employers want to use it for wider training, and not just apprenticeships, they should be able to do so, and the process for getting the money back should be simple. However, in the first instance we do not agree that the charge should be implemented at all.
We also do not think that the ICT qualifying period should be increased. This reduces flexibility for international employers, who have a certain expectation that they are able to move talent around globally. While there remains a system in place for graduates, an increasing number of junior and senior managers will be required to move across global sites. Far from reducing the flexibility for ICTs, EEF will be campaigning to increase this flexibility, including increasing the long-term ICT route for STEM workers to over five years; five years is often too short for employees to work in projects in the UK.
The MAC has estimated that if the government implements their recommendations, it will reduce numbers by 28,000. We would expect that the government at the very least accepts these recommendations and looks to implement the changes this year. However, EEF will campaign on the above points which are of most importance to EEF members.
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