The cost of recruiting foreign staff is about to get much higher

The cost of recruiting foreign staff is about to get much higher

T S Eliot said that April is the cruellest month. And that is certainly true this year if employers need to recruit foreign nationals on skilled worker visas. From 4 April, it is going to cost significantly more.

We knew tougher immigration rules were coming, but as is often the case, the devil is in the detail.

Presently, employers with a Home Office sponsor licence can recruit foreign nationals on a Skilled Worker visa provided they are paid the higher of £26,200 or the ‘going rate’ for their occupation, fixed at the 25th percentile of earnings based on 2021 data from the Office of National Statistics (ONS).

The UK Government has confirmed a 48 per cent increase to the minimum annual salary from £26,200 to £38,700 from 4 April. Additionally, going rates will be linked to ONS 2023 earnings data based on the 50th percentile instead of the 25th percentile, as they are presently. This means a sharp increase in minimum salaries; for example, the minimum salary to recruit an accountant will increase from £31,300 to £46,800.

For roles previously considered as ‘shortage occupations’, the increases are even more severe. Architect and civil engineer roles were previously in this category and benefited from a 20 per cent discount to the minimum salary thresholds, but come 4 April will no longer be included. The minimum salary to recruit an architect and civil engineer will increase from £26,320 to £45,900 and from £27,760 to £45,500 respectively.

Hospitality and food producers who have previously recruited chefs, butchers and bakers will likely be unable to meet the new minimum salary of £38,700.

There is better news for employers who already employ Skilled Worker visa holders, including individuals who can apply for the visa before 4 April or who at least can secure a Certificate of Sponsorship from an employer before that date to apply for the visa. These visa holders will be subject to the present rates. Moreover, when they apply to extend or settle in the future they will face a less steep increase; they must be paid the higher of £29,000 per year or the ‘going rate’ for their occupation, fixed to the 25th percentile of earnings based on ONS 2023 data.

Higher salaries in London mean the capital is likely to be least affected by the changes. However, in the rest of the UK, including Scotland, where wages are lower, the impact is likely to be onerous for smaller employers in particular.

Another factor for employers to contend with is the looming wage disparity, contrasting pay rates for equally qualified skilled workers recruited before and after the increases.

The increases are significant and employers are advised to consider whether their future recruitment budgets can be flexed to meet the new thresholds.

What to do now? Applying for a visa or at least obtaining a certificate to be used in a visa application before 4 April is crucial. After that date, the new higher rates will apply.

Calculating the new rates that will apply to each Skilled Worker depending on their status will be complex and legal advice is advisable.

If you’d benefit from advice on dealing with this, contact Mark Templeton.

This article is featured in The Scotsman.

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