• International Workplace
  • 17 January 2017

New rules for Tier 2 foreign workers: are you ready?

The Immigration Act 2017 will come into force in April and brings with it significant changes to the recruitment of non-EEA nationals under the Tier 2 category of the points-based system. Possibly the most widely used category within the points-based system, Tier 2 applicants range from general skilled workers and graduates to intra-company transferees.

Home Office statistics indicate there were 91,833 Tier 2 visas granted in the year ending March 2016, with the information and communication, financial services and insurance, health and social work sectors the biggest recruiters.

With such far-reaching reliance on overseas workers, the changes are likely to have a significant impact on UK businesses, though it remains to be seen whether the Act will meet its objective of encouraging recruitment and training of UK nationals.

New salary thresholds

Of particular significance to companies across the UK will be the increase in the minimum salary threshold for experienced workers from £25,000 to £30,000. The rule is likely to be a strict one following the Court of Appeal’s May 2016 decision in KG (India), where a Tier 2 applicant whose annual salary was found to be £22.15 per year short of the requirement was refused on the basis that “it was not so small it should be disregarded”.

The minimum threshold for new UK-based graduates will remain at £20,800. There will be no requirement for employers to show they could not recruit locally for a post when employing university students switching to a Tier 2 visa, or for companies relocating high-value businesses to the UK, as the Resident Labour Market Test (RLMT) has been relaxed for these groups.

Resident Labour Market Test

The RLMT must be met for non-exempt categories. It requires all jobs to be advertised to settled workers for 28 days within the six months before sponsorship is issued to a non-EEA worker.

Following the Home Office guidelines, the vacancy can be advertised for one period with a closing date of 28 calendar days, or for two stages totalling 28 days. A Tier 2 worker can only be appointed if no suitable settled worker has applied in either of the two stages.

Employers must also:

  • place a minimum of two advertisements in English;
  • advertise through the Jobcentre Plus Universal Jobmatch service on unless exempt via graduate recruitment, creative sector or annual salary of £72,500;
  • state the criteria for the position and closing date for recruitment; and
  • keep a copy of the advertisement, which can be in electronic format, detailing where the role has been advertised.

Skills charge for employers

The 2017 Act will also introduce a ‘skills charge’ of £1,000 for each certificate of sponsorship, with a reduced rate of £364 for SMEs (defined as those with fewer than 250 employees). The revenue raised will be used by the government to fund apprenticeship schemes. Though the rationale of this is to encourage employers to invest in training young UK workers, the ‘charge’ will not apply to graduate trainees or students switching to Tier 2 visas.

In recognition of a skills shortage, the Act does give some temporary relief in the recruitment of healthcare and education professionals, though fees are set to be introduced in these sectors from July 2019.

Another area where the Act appears to be particularly considerate is intra-company transfers (ICTs), which enable multinational companies to transfer workers from overseas to a UK branch. Transferring employees likely to be in the UK for more than one year must have worked for the employer abroad for at least one year. In addition, the following amendments to this category will take effect:

  • the skills charge will not apply;
  • the minimum salary for non-EEA graduate trainees will reduce from £24,800 to £23,000 per annum;
  • Tier 2 graduate trainee positions for sponsors will increase from five to 25;
  • Tier 2 ICT hires and their dependent family will have to pay the immigration health surcharge of £200; and
  • the salary threshold for ICTs working in the UK for between five and nine years will reduce by £35,000.

On the face of it, the Act provides some benefit to multinationals and those engaging in graduate recruitment. However, it remains open to debate whether the rationale driving these changes can be met given the cost benefit to employing multi-lingual, non-EEA graduates without payment of a skills charge within a global market.

The additional freedom of intra-company transfer might also prove an attractive way of maintaining a multinational workforce in light of Brexit, rendering the Act somewhat ineffective.


This article first appeared on and is reproduced with kind permission.