'Time tight' to implement post-Brexit UK immigration rules

This week, the independent Migration Advisory Committee (MAC) partly rejected the government's plans, describing references to an "Australian-style PBS" in election materials as a "soundbite". Instead, it has recommended what are effectively tweaks to the current rules: a system relying on salary and skills for those coming to the UK with a job offer and a PBS for skilled workers coming without a pre-arranged job.

The MAC's proposals would apply to everybody seeking to live and work in the UK, including migrants from the EU and European Economic Area (EEA). This is a significant change to UK immigration rules, and many employers who had previously been able to avoid the complexity of the regime may be required to get up to speed quickly.

The MAC's report focuses on the UK's two main immigration routes: Tier 2 General, for skilled workers with a job offer; and Tier 1 Exceptional Talent, for those who do not have a job offer but are leaders in their field. It does not deal with other Conservative manifesto commitments around immigration, such as the introduction of post-study visas or special visas for NHS workers.

The MAC has stressed that "no perfect system exists and there are unavoidable, difficult trade-offs". While some of the recommendations are positive for employers several areas of concern remain; and there is significant uncertainty as to what the government will do in the very short space of time remaining for a new system to be decided on and prepared, legislation passed and employers to be given sufficient notice of how the rules will work in practice. The government must now review the MAC's recommendations and finalise its plans.

What has the MAC proposed?

The MAC was asked by the government to consider:

• salary thresholds for Tier 2 visas: how these should be calculated and whether there should be any regional variations or exemptions;
• how an Australian-style PBS could be introduced in the UK, with the aim of strengthening the labour market;
• how flexibility could be added to salary thresholds, for example by awarding points for attributes and whether these points could be 'tradeable'.

Overall, the MAC is fairly critical of the government's track record in collecting relevant data and sharing this across departments. It said that, because of this, it has "little idea whether the current system works well" and how it performs against the government's objectives for the UK. The MAC recommends greater focus on accurate data collection going forward.

The MAC appears sceptical about the government's continued references to an "Australian-style PBS". Instead, it says that the government's focus should be on deciding what it hopes to achieve with the new system, and on continually reviewing the system against those aims based on verifiable data. It confirms that the current UK system is points-based in name only, with successful applicants required to score a certain number of points in order to qualify for various immigration routes but no scope for attributes being tradeable.

The report recommends that the Tier 2 General route for skilled workers with a job offer should be retained, and should remain employer sponsored with a salary threshold. However, it should be expanded to include medium-skilled roles to a greater extent than already agreed by the previous government. In its manifesto, the Conservative party indicated that it would retain the requirement for most migrants to need a job offer in advance of coming to the UK. This will increase competition of talent available for employers, but many employers will not be keen to go to the expense and bureaucracy of sponsorship unless they have to.

According to the MAC, the widening of Tier 2 General to include medium skilled roles will reduce immigration and UK population pressures, along with pressures on the NHS, schools and social housing in comparison to continued EEA free movement. However, it will increase pressure on the social care sector and impact some sectors and areas more than others. The MAC is of the view that the root cause of this will have less to do with reduced immigration than with a failure to offer competitive terms and conditions in these areas.

Should the government wish to introduce some kind of PBS, the MAC recommends modifying the Tier 1 exceptional talent route, which is currently underused due to a high skills bar to entry. The reforms should be focused on admitting individuals with "exceptional promise" as opposed to those with proven talent, and should include some tradeable characteristics.

How would the proposals impact on salaries?

Currently, migrants using the Tier 2 General route must be paid a minimum salary of £30,000 or a higher threshold specific to that role. New entrants to the labour market, typically graduates, can be paid a lower initial salary, but only for a three-year period.

The MAC recommends that a salary cap be retained, to avoid lower-paid migrants undercutting the UK labour market. However, the threshold should be cut to £25,600 – based on the 25th percentile for the role – due to the inclusion of medium-skilled roles in the route, again with higher minimum salaries for particular roles depending on average salary. While a lower minimum salary would undoubtedly be welcomed by employers, the actual impact in practice will depend on the extent to which role-specific minimum salaries are amended.

For new entrants to the labour market, the MAC recommends simplifying the calculation to 30% less than the applicable standard experienced rate. This should apply for up to five years, and be available to a wider group. This proposed change will be welcomed by employers, who may previously have been put off from recruiting international graduates or retaining them beyond the three-year point due to the increase in minimum salary - as well as by applicants.

The MAC has not recommended that salary thresholds be pro-rated for part-time work, but does suggest that there should be options for visa holders to move to part-time work when they become parents. While this is a welcome concession, it is still a very limited one and does not mirror the UK's general right to request flexible working which applies to every employee with 26 weeks' service, regardless of childcare responsibilities.

The MAC does not support regional variations of salary thresholds in its report, as this could reinforce geographic inequalities. Instead, it recommends further work on regional visas to cater to labour shortages in remote areas. Special consideration should also be given to Northern Ireland, particularly if it ends up with a different relationship to the EU than the rest of the UK. This will be particularly disappointing to the Scottish government, which has long called for devolved powers to manage its own migration requirements.

What about the shortage occupation list?

The current shortage occupation list would not have a place in the new system as proposed by the MAC. The main benefit of the list is to make it easier to recruit for these roles. However, if the current annual cap on Tier 2 General migrants and the resident labour market test are abolished – as the government has indicated – the benefit of keeping the list is questionable.

In addition, the MAC does not believe that so-called 'shortage' roles should have lower salary thresholds, as this could exacerbate skills shortages.

What about sectors that rely on lower skilled workers?

Given that the new system will apply to workers of all nationalities, the lack of a route for low-skilled work will remain a concern for those business sectors and geographic areas that typically rely on lower skilled workers who will not qualify under either the current or amended rules. The MAC suggests that the government could address this through another route, such as the temporary short-term worker route proposed by Theresa May's government in its immigration white paper of December 2018.

This will be a real area of concern for many employers. There is as yet no confirmation of what immigration routes will be available to replace low-skilled workers from the EU on which sectors such as social care, hospitality, retail and, potentially, construction heavily rely; as well as the NHS. Even the temporary route previously proposed has serious flaws, as it would force a revolving door of short-term staff and prevent employers from retaining skills and experience, in turn making recruitment more costly and uncertain.

The MAC has recommended the inclusion of some roles which were not previously included within the Tier 2 General route, many of which are trades and will be relevant for employers in the construction sector in particular. However, it has also recommended that some roles be removed, including waiting staff and elementary agricultural roles.

What about those without a job offer?

The MAC believes that the current Tier 1 Exceptional Talent route is not currently working well, as the bar is set too high and the criteria are too risk averse. The route should be modified to focus more on an individual's potential rather than experience, or replaced with some form of PBS.

The UK could take inspiration from overseas immigration systems here. Examples proposed by the MAC include an 'expression of interest' system, through which those hoping to come to the UK could register, with those who score a certain number of points invited to apply on a monthly basis within an annual limit. Points should be tradeable, with high performance in one category offsetting lower points in others, and attributes such as qualifications in STEM subjects or creative fields, younger people without experience but with longer career potential and those who have studied in the UK given as examples which could potentially carry more weight.

English language skills should be an essential requirement under this route.

What about future settlement in the UK?

The MAC is concerned that the current settlement system is inflexible, with high salary thresholds and lengthy five-year residence requirement before a migrant becomes eligible to apply. However, a lack of available data means it has been unable to assess this fully.

In the MAC's view, the salary thresholds and five-year residence requirement make the UK much less competitive on a global scale than other countries. It has recommended that planned annual salary threshold increases be paused to allow review, and that the UK consider accelerated settlement for some workers.

Many employers will echo these comments, with concerns about the salary requirements and period of time they need to be locked into sponsorship before an employee becomes eligible for settlement. However, the flip side of this is that the quicker someone settles the quicker they are released from being tied to the employer who has invested in them and can move on more easily.