Government Raises Skilled Worker Salary: What Employers Need to Know

New Minimum Salary Thresholds for Skilled Workers

The government has announced significant changes to the minimum salary thresholds for Skilled Workers, effective from April 4, 2024. Employers sponsoring new Skilled Workers must now meet a general minimum salary threshold of £38,700 per year, up from the previous £26,200. Additionally, the hourly rate has increased from £10.75 to £15.88 per hour. These changes are part of the Home Secretary’s measures to reduce UK immigration.

General Threshold Increase

The general minimum salary threshold has been raised to £38,700 per year. However, this will be implemented in stages: initially rising to £29,000 from April 11, 2024, then to £34,500 in the Autumn, and finally reaching £38,700 in Spring 2025.

Occupation-Specific Rates

Minimum going rates for specific occupations have also seen a significant rise. These rates are now pegged to the 50th percentile of jobs in their occupation code according to the Annual Survey of Hours and Earnings (ASHE). This means that for many occupations, the required salary will be much higher than the general threshold.

Impact on Employers

Employers will need to adjust their budgets to accommodate these new salary requirements. This could impact their ability to hire and retain skilled workers, especially in sectors where the going rates have increased substantially. Employers should also be aware of the transitional provisions for employees who were issued a Skilled Worker visa under the old rules, as they will not be subject to the new £38,700 threshold but will still need to meet the new occupation-specific rates.

Changes to Right to Work Checks

Compliance Requirements

Employers must ensure that their right to work checks are compliant with the latest regulations to avoid increased civil penalties for illegal workers. Failure to comply can result in significant fines and legal consequences. It is crucial for employers to stay updated with the changes and implement them promptly.

Penalties for Non-Compliance

The penalties for non-compliance have been increased, making it more important than ever for employers to adhere to the rules. The fines can be substantial, and repeated offenses may lead to even harsher consequences, including potential criminal charges.

Best Practices for Employers

To ensure compliance, employers should:

• Regularly review and update their right to work check procedures.
• Train HR staff on the latest requirements and best practices.
• Use the Home Office's online checking service for accurate verification.
• Keep detailed records of all checks conducted.

Staying compliant with right to work checks is not just a legal obligation but also a critical aspect of maintaining a trustworthy and lawful workplace.

Impact on Sponsoring Skilled Workers

Financial Implications

Employers will need to reassess their budgets to accommodate the new salary thresholds for sponsoring skilled workers. This may include additional allowances that were previously not considered. The increased financial burden could affect the overall hiring strategy and operational costs.

Recruitment Strategies

With the new salary thresholds, employers may need to adjust their recruitment strategies. This could involve prioritizing high-skill roles that justify the higher salaries or exploring alternative visa routes. Employers should also consider the importance of permits and other legal requirements when planning their recruitment.

Retention of Current Employees

Retaining current employees on Skilled Worker visas will be crucial. Those already on this route are exempt from the new salary hikes when extending their visa or changing employers. Employers should assess the immigration status and salaries of current employees to ensure compliance and avoid disruptions.

Transitional Provisions for Existing Skilled Workers

Renewal and Extension Rules

Those already on the Skilled Worker route are exempt from these salary hikes when it comes to extending their visa, changing sponsoring employer, or applying for settlement. Planning ahead for those switching into the Skilled Worker route is crucial. If a new Skilled Worker was assigned a Certificate of Sponsorship (CoS) before April 4, 2024, and it has not expired when they submit a visa application, the application will also be decided in line with the rules in force before April 4, 2024.

Salary Thresholds for Existing Visas

Skilled Workers currently sponsored in a role that is on either the Shortage Occupation List (SOL) or the Immigration Skills Charge (ISC) list but no longer on the list when they make their next application, may still be sponsored on the lower general threshold. However, this is only if they extend their visa to continue working in the same role for the same sponsor. Otherwise, their pay must meet the new general thresholds and the updated 25th percentile going rate.

Special Provisions for PhD Holders

PhD holders have special provisions under the new rules. They may benefit from lower salary thresholds compared to other Skilled Workers, provided their role is directly related to their field of expertise. This aims to retain highly qualified talent within the country.

It's important for employers to stay updated with these transitional provisions to ensure compliance and smooth processing of visa renewals and extensions.

Sector-Specific Salary Increases

Healthcare Sector

The healthcare sector is seeing a significant rise in salary thresholds. Minimum salary changes announced for healthcare professionals reflect the updated 25th percentiles using the latest pay data. This ensures that their pay progresses at the same rate as resident workers.

STEM Occupations

For STEM occupations, the salary thresholds have also been updated. Those with relevant PhDs or STEM PhDs will benefit from respective discounts to the going rate. The new entrant reduced salary rate will continue to apply to those who are 26 years of age or under and those carrying out a post-doctoral position in certain specific occupations.

Shortage Occupations

Shortage occupations are not exempt from these changes. The specific salary rates for all occupations have increased, relying on an updated mechanism. As such, we expect the minimum salary required for many roles to be higher than GBP38,700.

Employers should be aware of these sector-specific increases to ensure compliance and to remain competitive in attracting skilled workers.

Conclusion

The recent changes to the Skilled Worker salary thresholds represent a significant shift in the UK's immigration policy, aimed at reducing the number of incoming workers. Employers must now navigate higher salary requirements, which could impact their hiring strategies and budget allocations. It is crucial for businesses to stay informed and compliant with these new regulations to avoid penalties and ensure a smooth sponsorship process. By understanding and adapting to these changes, employers can continue to attract and retain top talent while adhering to the updated legal framework.

Frequently Asked Questions

What is the new general minimum salary threshold for Skilled Workers?

As of April 4, 2024, the new general minimum salary threshold for Skilled Workers is £38,700 gross per year.

How has the hourly rate changed for Skilled Workers?

The hourly rate for Skilled Workers has increased from £10.75 to £15.88 per hour as of April 4, 2024.

Are there different salary thresholds for specific occupations?

Yes, the minimum going rates for specific occupations have risen significantly and are now pegged to the 50th percentile of jobs in their occupation code.

What are the penalties for non-compliance with the new Right to Work checks?

Employers who fail to comply with the new Right to Work checks may face increased civil penalties for employing illegal workers.

Do the new salary thresholds apply to existing Skilled Workers?

No, transitional provisions confirm that employees who were issued a Skilled Worker visa under the rules in place before April 4, 2024, will not be subject to the new £38,700 threshold. However, they must meet the minimum occupation-specific salary thresholds.

What are the salary thresholds for Skilled Workers with a relevant PhD or those on the Shortage Occupation List?

For Skilled Workers with a relevant PhD, the threshold is £34,830, and for those with a relevant STEM PhD, New Entrants, or those on the Shortage Occupation List, the threshold is £30,960.