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Tier 2 and Sponsorship Licence Update

The Migration Advisory Committee (MAC) – an independent body commissioned to advise the government on proposals for potential reform of the UK’s immigration system - has today published its recommendations for changes to the Tier 2 Sponsored Skilled Migrant route of the Points Based System.

The proposals will now be considered by the Home Office and, if followed, will have a significant impact on the Tier 2 route for employers holding sponsorship licences and Tier 2 migrants. It will lead to increased costs, greater administrative responsibility and a likely reduction in skilled migrant numbers. It will almost certainly make it more difficult for employers to recruit skilled migrant workers.

 The proposals are as follows:

• Increase the minimum salary threshold for both Tier 2 General and Tier 2 Intra Company Transfer (ICT) categories to £30,000 per year. Increase the minimum salary level for ‘new entrants’ in Tier 2 General and Tier 2 ICT Graduate routes to £23,000 per year.

• Apply the Immigration Health Surcharge (NHS levy) to Tier 2 ICT.

• Apply the Resident Labour Market Test to all ‘in-country’ switches.

• Increase the requirement for prior employment threshold for Tier 2 ICT’s from 6 months to 2 years. The increased will not apply to the Tier 2 ICT Graduate route where the current 6 month minimum will remain.

• Certificates of Sponsorship (CoS) to include detailed information about why the employee is required and the specific skills they can bring to the job.

• Allowances and National Insurance contributions payments will be reviewed by both the Home Office and HMRC to prevent ‘undercutting’ of the resident labour market.

• A new ‘third party contractor’ route to be introduced into Tier 2.

• A review of the skill shortages within the IT sector.

• A new Immigration Skills Charge (ISC), commonly referred to as the “apprenticeship levy” for licensed sponsors. The levy of £1000 p/a will be paid on issuing a CoS for more highly paid jobs under Tier 2 General and Tier 2 ICT routes (with the exception of Tier 2 ICT Graduate Trainee and Skills Transfer routes). The funds raised are to be used to raise ‘human capital’ and not limited to introducing apprenticeships as was previously posited.

Raising the minimum salary thresholds by approximately 25 per cent, together with the Immigration Health Surcharge and Immigration Skills Charge, are likely to make any employer think twice about recruiting a migrant worker. Whilst it is laudable to safeguard the resident labour market, the skill shortages will not disappear overnight.  It will take time for educated and trained resident workers to enter the labour market. Until that happens, employers will be heavily penalised by the increased costs.

The proposal to apply the IHS surcharge to Tier 2 ICT’s comes as no surprise given that it applies to almost every other immigration category.

The proposal to require more information on a CoS for a Tier 2 ICT will provide a decision maker with more information to consider when assessing an application. It reduces Tier 2 ICT sponsorship licence holders’ autonomy and will ensure that there is a genuine need for an ICT worker, i.e. because a resident worker could not readily fill the role.

We can only await what the outcome of a review on skill shortages for the IT sector and the new ‘third party contractor’ route will lead to.

The apprenticeship levy, first mooted by David Cameron last year, is likely to have a major cumulative impact on the recruitment and retention of overseas workers. It will test the resources of small to medium sized companies who have identified a need to recruit a migrant worker to fill a skills gap in their business. We shall have to wait and see how the funds raised will be utilised in raising the resident labour market’s human capital.

The Home Office has a remarkable propensity to follow the MAC’s proposals. What has been outlined in the current proposals will very likely come into practice in the next few months.

We are a firm of accredited solicitors specialising in UK immigration law and located in central London. Please contact us for legal assistance in connection with sponsorship licences, Tier 2 visas and other immigration visas to the UK. We can be contacted on 020 7038 3980, by completing the online form or via email at

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