UK Migration Advisory Committee to advise on new Immigration Salary List

In the commissioning letter, the Home Secretary has asked the Migration Advisory Committee (MAC) to deliver its report by 23 February 2024. This will give the Home Office a short period to consider the recommendations and incorporate them into the Immigration Rule changes due to be implemented in April.

A separate commissioning letter for the full ISL review will be provided shortly, as well as one detailing the parameters and timings for the graduate route review.

The Home Office has, however, missed an opportunity to ask the MAC to advise on how the Skilled Worker salary thresholds for new entrants and roles requiring a PhD. This is concerning, because a lack of advice and consultation in these areas could lead to unintended consequences when the Rules are updated.

Scope of the rapid review of the Immigration Salary List

The rapid review will only consider roles included in the current Shortage Occupation List and the list of occupations recommended by the MAC for inclusion in the SOL in their October 2023 review.

All roles recommended must be skilled and in shortage. The MAC must also conclude it is sensible for immigration to be used as part of the solution to the shortage in the short-term.

The MAC has not directly been asked to advise on the discounted general salary threshold figure for the ISL. However, in its response to the commission, the MAC has confirmed it will:

• Outline the details of the new salary thresholds (which presumably will include the general and going rate thresholds); and
• Identify the potential benefits of the ISL that the Home Office will need to clarify before the MAC carries out a full review.

As an aside, the commissioning letter confirms that SOC 2020 occupation coding will be adopted in the April 2024 Rules changes. Implementation of the ISL and new Skilled Worker Rules more broadly will therefore require some re-mapping of SOC codes from the SOC 2010 classifications currently in use. It will also entail significant updates to the ONS coding tool as this also uses SOC 2010 data.

Timing and scope of the full review of the Immigration Salary List

The Home Secretary has indicated the full review will be commissioned ‘shortly’.

The MAC anticipates work on the full review will happen during 2024. It has confirmed extensive stakeholder engagement is envisaged, including a Call for Evidence and an updated analysis of labour market conditions and available data. This may take some months to complete, and will also need to be prioritised in coordination with the planned review of the Graduate route.

The commission for the full review will include a date for the MAC to submit its report, so inclusion of a revised list will likely happen in the next Immigration Rules update after that. Normally there is an Immigration Rules update in the Autumn, but if there is extensive stakeholder engagement and analysis, it is possible a revised ISL may not be ready in time for this.

Once details of the full review are announced, employers experiencing skills shortages should consider submitting evidence for any skilled roles they are experiencing shortages for, particularly where the new general salary threshold will price them out for sponsorship.

Employers will be required to demonstrate they will meaningfully benefit from the discount to the general threshold and that this will not put downwards pressure on pay. They will also have to be able to demonstrate what realistic and sustainable strategy will be in place to reduce shortages ahead of being removed from the ISL in the future.

Transitional arrangements for Skilled Workers in shortage occupations

In April 2024 the going rates for individuals who already have Skilled Worker permission will be amended from the 25th percentile under the Annual Survey of Hours and Earnings (ASHE) 2021 to the 25th percentile under ASHE 2023. The commissioning letter confirms that even if covered by transitional arrangements, existing Skilled Workers will have to meet the new going rates at the time they extend or settle, ‘in line with normal practice’. For most occupations, the new rates will be higher due to inflationary pressures.

It is not clear whether any transitional arrangements will continue to include a 20% discount on the going rate for occupations currently on the SOL, or if employers will be required to lift the salary to the full going rate at the time of an extension or settlement application. The general salary threshold applicable at the time of extension or settlement will also need to be confirmed by the Home Office.

It is clear that there will be at least two sets of going rates at play for Skilled Workers from April 2024 as follows:

• Going rates for people to whom the transitional arrangements apply, based on the 25th percentile under ASHE 2023; and
• Going rates for people sponsored under the Skilled Worker route for the first time after the new Rules take effect, based on the 50th percentile under ASHE 2023.

Employers of those in occupations currently on the SOL should be prepared to pay higher salaries at extension/settlement stage, even where transitional arrangements apply. They should also anticipate additional complexity in identifying the correct threshold levels depending on whether the transitional arrangements apply to the applicant’s circumstances.

How will the Home Office review the policies on new entrants and roles requiring a PhD?

To-date no detailed information has been released by the Home Office on how its net migration reduction policy will impact Skilled Workers who are new entrants or whose role requires a PhD.

The MAC has not been asked to advise on options for updating the salary arrangements for these groups. This appears to be a missed opportunity since the Home Office could benefit from the MAC’s expertise to determine the following questions:

• Whether and how these groups of worker should continue to benefit from a discounted general salary threshold; and
• Whether and how these groups of workers should continue to benefit from a discount to going salary rates.

Some specific issues for each group are outlined below.

New entrants

To score points as a new entrant under the Skilled Worker route (as defined under Tradeable points option E of the Skilled Worker Rules), an eligible individual must be paid a salary that exceeds all of the following:

• £20,960;
• £10.75 per hour; and
• 70% of the going rate for their role.

Four years is the maximum combined time a person may spend with permission in the Skilled Worker or previous Tier 2 route (relying on the new entrant criteria), or as a Graduate. What this means is that an individual cannot currently rely on the new entrant Rules for the full five years it takes to qualify for settlement under the Skilled Worker route. They must have their salary increased to at least the 25th percentile for their occupation for one or more Skilled Worker extension applications and must be paid at or above the prevailing 25th percentile at the time they settle.

From April 2024, the going rates will increase to the 50th percentile. Unless eligibility criteria are adjusted for new entrants, the required jump in salary may be too big for employers to be able to afford to continue to sponsor them from the point their eligibility as a new entrant falls away.

Assuming specific arrangements for new entrants remain in place, some of the policy questions the Home Office must consider in this area are:

• What should the general salary threshold be for new entrants?
• Is 70% still an appropriate discount for this group, or should it be increased?
• Should the maximum permission length for new entrants be removed or made longer?

It may be most appropriate for the MAC to advise on these questions. For example, it may be beneficial to have a robust economic analysis of how long it takes for an individual to expect be earning the median salary for their occupation. If this is five years or more, then there may be an argument for the maximum permission length to be extended or removed entirely.

Roles requiring a PhD

In its October 2023 review of the SOL, the MAC recommended removing the 20% going rate discount for shortage occupations to prevent undercutting of resident workers and prevent exploitation of migrants.

Going rate and general salary threshold discounting applies to roles requiring a PhD as follows:

The MAC has never been asked to evaluate the tradeable points policies relating to roles requiring a PhD. On the face of it, they suffer from the same problems as discounting the salaries for shortage occupations, so a detailed analysis seems appropriate.

We will provide further details on commissions to the MAC and on changes to the Skilled Worker route as they become available. If you have queries about this topic, please contact a member of our Immigration Team.