Migration Advisory Committee (MAC) publishes recommendations on a points-based visa route and salary thresholds for sponsored workers
This article first appeared as a Thomson Reuters Practical Law Legal Update on 30 January 2020.
The Migration Advisory Committee (MAC) has published its report on how the UK might incorporate a points-based system into its post-Brexit immigration framework. The report also makes recommendations on salary thresholds for Tier 2 (General) sponsored worker visas, taking into account the proposal to expand Tier 2 (General) to include medium-skilled roles.
Speedread
On 28 January 2020, the Migration Advisory Committee (MAC) published its report on a points-based visa route and the use, and level, of salary thresholds for sponsored workers. The report follows separate commissions by the current and previous Home Secretaries, Sajid Javid and Priti Patel, to provide an evidence base for the design of a new work immigration system for the UK from 1 January 2021, after the end of the transition period post-Brexit. The report sets out MAC’s findings and, more importantly, its recommendations for the UK government to consider when designing a future migration system. This update focuses on MAC’s recommendations and the impact of adopting these.
The recommendations include:
- Modifying the existing Tier 1 (Exceptional Talent) route, rather than the Tier 2 (General) route if the government would like to implement a genuine points-based visa route.
- Reducing the minimum salary thresholds for jobs to qualify for sponsorship under Tier 2 from £30,000 to around £25,600 with allowances, equity and employer pension contributions not included.
- Maintaining the current requirement to meet the higher of the general salary threshold and the occupation-specific salary threshold.
- Minimum salary thresholds applying universally across the UK, though lower salary thresholds for applicants willing to live in remote areas should be piloted.
- National pay scales, rather than the general or occupation-specific thresholds, being used for 24 public sector roles, including teaching and healthcare.
- Not pro-rating salary thresholds for part-time work, though the government should consider whether pro-rating should be allowed for visa-holders switching to part-time work after becoming a parent.
- Reviewing the requirements for settlement in the UK and pausing the increases to the minimum salary threshold for settlement.
While the government frequently adopts recommendations by MAC in formulating and implementing immigration policy on work routes into the UK, ministers have been quick to note that the MAC’s role is only advisory.
This update by Samar Shams of Spencer West LLP focusses on the implications of the recommendations on business immigration.
Background
In June 2019, the previous Home Secretary commissioned the MAC to consider salary thresholds in the future immigration system. That scope of that commission included salary threshold calculation mechanisms and levels, as well as whether a regional aspect should be considered or any exceptions made.
In September 2019, the Home Secretary commissioned the MAC to report on how awarding points for attributes could be used to select visa applicants, where points for one attribute could make up for a lack of points in other areas. The government wanted the MAC to consider how these attributes could be used along with salary thresholds in a sponsored skilled worker visa category. The government cited educational qualifications, language proficiency and experience as attributes for which applicants could gain points, but asked the MAC to consider which attributes to prioritise. The MAC was instructed to consider best practice in other countries employing points-based immigration systems.
The Home Secretary instructed the MAC to roll the salary thresholds commission into the points-based system commission to support the government in achieving its stated goals for the future UK immigration system; fairness, control and ensuring that migrants contribute to the UK. This note summarises the MAC’s key recommendations in relation to both a points-based immigration system and the use, and recommended level, of salary thresholds.
MAC’s recommendations
The key recommendations of the report are:
- If the government would like to implement a points-based visa route, it should modify the existing Tier 1 (Exceptional Talent) route, rather than the Tier 2 (General) route.
- modifications should include an expression of interest system, where applicants who have indicated their interest are invited to submit applications on a monthly basis;
- points should be awarded for qualifications, age, having studied in the UK and skills that would contribute to priority areas, such as STEM and creative sectors; and
- English language should be a strict requirement.
- The current requirement to meet the higher of the general salary threshold and the occupation-specific salary threshold should be maintained.
- Salary thresholds should apply across the UK, though lower salary thresholds for applicants willing to live in remote areas should be piloted.
- National pay scales, rather than the general or occupation-specific thresholds, should be used for 24 public sector roles, including teaching and healthcare.
- Salary thresholds should not be pro-rated for part-time work, though the government should consider whether pro-rating should be allowed for visa-holders switching to part-time work after becoming a parent.
- Salary threshold recommendations relating to “new entrants” include:
- the definition of new entrant should be widened to include those working towards professional qualifications or moving directly into postdoctoral roles;
- the new entrant rate should apply for five years, rather than three; and
- salary thresholds for new entrants should be 30% lower than the general experienced rate threshold and the occupation-specific experienced rates.
- The requirements for settlement in the UK should be reviewed.
- Salary thresholds for settlement in the UK should be paused.
- Improvements should be made in relation to data on UK migration including monitoring migrant outcomes, methods of collecting and maintaining data and linking government datasets.
A points-based visa route for non-sponsored workers
The MAC suggests that if the government wants to offer a points-based visa for entry to the UK, it could modify the Tier 1 (Exceptional Talent) category, which would benefit more from incorporating points than Tier 2 (General).
Changes to Tier 1 (Exceptional Talent)
Tier 1 (Exceptional Talent) is a route that does not require a job offer. Applicants seek endorsement from an approved body for their field, such as Arts Council England or Tech Nation. If endorsement is granted, they use the endorsement in making their visa application. The MAC finds that this immigration route is not working well, based on the low numbers of visas granted each year. They feel that the eligibility bar is set too high. Other criticisms include that criteria are subjective so applicants are uncertain of success, and that the endorsement process is slow. The MAC finds that there is scope to add tradeable points to this route. It suggests a shift in focus to attract those with exceptional promise rather than an established track record.
The MAC draws on best practice from other countries to recommend introducing an expression of interest system, in which applicants do not submit a full application but a profile to register their interest. The MAC proposes that the government invites candidates, on a monthly basis, to submit full applications. They suggest there should be a monthly quota of invitations to those with the highest point scores and an annual cap on the number of invitations made. Applicants will stay in the pool of potential invitees for a certain amount of time.
It recommends that points should be awarded for age, qualifications (building on the current use of NARIC evaluations to assess quality), having studied in the UK and high-value skills to work in priority areas (such as STEM and creative, health workers, researchers, scientists). They say that English language proficiency should be an essential requirement and that the points should be awarded based on characteristics to skilled migrant workers who would find it difficult to enter through other work or investment routes. The MAC does not recommend awarding points for candidates on the basis of their willingness to apply outside the main hubs and cities, because migrants tend to leave those areas.
The government announced the introduction of a Global Talent visa to replace the Tier 1 (Exceptional Talent) category with effect from 20 February 2020 the day before the MAC report was published. The Immigration Rules to bring these changes into effect were made on 30 January 2020.
Changes to Tier 2 (General)
The MAC recommends that the current framework for Tier 2 (General) as a work visa requiring a job offer without tradeable points should continue. The MAC’s reasoning is that Tier 2 (General) seems to work well to select qualified migrant workers. The conclusion is also based on stakeholder feedback that they want the certainty of knowing that they will be able to hire workers into eligible jobs. The small number of eligibility criteria, compared to points-based systems employed elsewhere, is an advantage. The MAC does warn that this recommendation should be taken in conjunction with previous recommendations to lower the skill level and to abolish the cap and the resident labour market test.
Minimum salary thresholds should continue to be used
The MAC recommends continuing to employ salary thresholds as an eligibility criterion for sponsorship. Its view is that determining skill level based on job classifications is not a sufficiently refined method, on its own, for selecting migrants. The MAC argues that salary thresholds are a necessary guard against undercutting wages. Its research suggests that migrants’ salaries cluster around existing salary thresholds, and the MAC interprets this to mean that employers would pay less if they could. The MAC also notes that higher incomes are associated with higher net fiscal contribution. Therefore, the recommendation is to maintain the use of thresholds despite very strong disagreement among stakeholders who responded to the call for evidence that there should not be a minimum salary threshold.
The MAC also endorses retaining the current structure for salary thresholds, where the relevant salary threshold for an experienced worker is the higher of an occupation specific threshold and a general threshold. However, the general threshold should be revised to reflect the wider range of occupations that will be eligible for sponsorship in future, when the required skill level is proposed to drop to include medium-skilled roles and not just highly skilled roles.
The MAC recommend that the general threshold should be set at the 25th percentile of the full-time annual earnings distribution for all Tier 2 eligible roles (excluding those based on national pay scales). The general threshold would fall from the current £30,000 to around £25,600 (based on 2019 figures). The MAC recommends that occupational salary thresholds also continue to be set at the 25th percentile. A threshold at the 25th percentile means that 25% of the roles falling under that occupational code will meet that salary level.
The MAC seeks to address the concern that salary thresholds will adversely impact sectors that employ low-wage or low-skilled workers. It recommends making a number of skilled trades such as construction and building trades supervisors, plasterers, floorers and tilers, carpenters and joiners, and painters and decorators eligible for Tier 2. These roles would not otherwise fall within the proposed expansion of Tier 2.
The MAC report explains that if the government is concerned about the impact on medium-skilled lower wage occupations, it could use an occupational cap. The proposed occupational cap would mean that when the 75th percentile of the pay distribution in an occupation is above the general threshold, the 75th percentile is used as the salary threshold instead of the general threshold. This means that where 75% of the jobs falling under that occupational code will have a salary level higher than the general threshold, then the salary level that 75% of the jobs meet can be used. This will be lower than the salary level that only 25% of jobs in that occupation would meet. However, the MAC does not recommend using an occupational cap given its recommendation for a lower general threshold.
The MAC also states that if the government is concerned about expected impacts on sectors that primarily employ lower-skilled workers, it should address them through the temporary worker route proposed in the Immigration White Paper published in December 2018 or sector-based schemes such as the Seasonal Agricultural Workers’ Scheme (SAWS). The government is unlikely to implement the occupational cap idea. As noted by the MAC, the occupational cap would dilute the effects of the new system. It is also difficult to understand and would likely be difficult to implement. At the same time, the government has seemingly abandoned the White Paper proposal for a general, 12-month visa for workers of all skill levels. However, the government has followed the recommendation to implement temporary, capped visa schemes for low-skilled labour to support particular sectors, such as the SAWS, the cap for which will increase from 2,500 workers per year under the ongoing pilot to 10,000 workers per year. It will rely on the MAC for advice on relevant sectors to roll this out to.
Salary thresholds should not vary by region
The MAC holds fast to its position that there should be a single salary threshold across the UK. It has considered this question before and does not believe that any system of regional salary thresholds is optimal. It is of the view that regional salary thresholds might only serve to entrench salary variances.
The MAC recommends a separate pilot visa for “remote” areas of the UK, part of which could be lower salary thresholds. It states there is also a possible case for varying thresholds in Northern Ireland, due to the potential effects of Brexit on that region.
National pay scales to apply to public sector roles
Some public sector occupations, with bargained pay scales, should be excepted from the general salary thresholds. National pay scales should be used for them instead. The MAC suggests that 24 roles be exempted, including doctors, dentists, nurses, midwives, teachers and social workers.
The Government is likely to adopt this change as it has already committed to bespoke processes for NHS workers and other sectors with labour shortages in a press release published during the General Election campaign.
Salary thresholds should not be pro-rated for part-time workers
The MAC does not recommend pro-rating salary thresholds for part-time work. The MAC cited lower net fiscal benefits of part-time workers and the difficulties of ensuring that part-time sponsored migrants did not end up working more hours whilst only being paid for part-time work.
It is unclear whether MAC is recommending a change here, as most occupational salary thresholds can be pro-rated down based on the number of working hours per week. It is the general salary thresholds which cannot be pro-rated down.
The MAC does suggest introducing more options for existing visa holders to switch to part-time work after becoming parents. This seems to be a consolation prize for those stakeholders who argued that disallowing pro-rating discriminates against women.
Despite citing data and stakeholder reports that most part-time workers are women, and acknowledging feedback that women are generally less able to meet salary thresholds because they earn less than men, the MAC concluded that there was no evidence of discrimination against women. The MAC reasoned that the percentage of capped work authorisations used by women were in line with the gender split in the UK labour market.
The MAC’s reasoning in relation to discrimination seems facile. The suggestion that new parents’ part-time work might be accommodated, whilst it will be welcomed by migrants who otherwise do not have the part-time options that their settled peers do, could also be interpreted as a narrow exception to the rule that will only serve to perpetuate women’s disproportionate childcare burden.
New entrants: definition, duration and rates
The MAC recommends that the definition of “new entrant” should be expanded to include those working towards recognised professional qualifications and those who are moving directly into postdoctoral positions.
Including those working toward professional qualifications is in line with the lowering of the minimum required skill level to encompass more occupations. The inclusion of those moving to postdoctoral roles is in line with the Government’s stated policy of attracting researchers to the UK. Both of these recommendations are likely to be adopted. The MAC also suggests that the new entrant rate should be applicable for five years instead of three. Sponsors and migrants alike will be keen to know whether the extension of the new entrant salary rate eligibility to five years will be retroactive, but the MAC is silent on this point.
This would relieve the pressure on sponsors to aggressively raise pay to meet the experienced rate and also relieve sponsors of the compliance duty to raise new entrants’ salaries to the experienced rate when extending workers’ visas. However, the recommendation that time spent under the post-study work route being introduced in 2021 should count towards the five-year limit on the new entrant rate would be very difficult for sponsors to deal with. They would have to verify the remuneration and duration of previous employment and diarise accordingly.
The MAC suggests that the general new entrant threshold be set at 30% of the general experienced threshold, so the new entrant rate would fall from £20,800 to £17,920 (based on 2019 figures). It also suggests that the job-specific new entrant rates should be set at 30% less than the general rates. This would have a significant effect on eligible applicants and the organisations that source new entrants. The full effect will depend on whether the duration of eligibility is extended and also on what settlement thresholds are implemented.
The shortage occupation list (SOL)
The MAC responds to the government’s request for advice on whether roles on the SOL should have lower salary thresholds in the negative. It opines that lower salaries for shortage occupations would exacerbate shortages as a shortage is generally an indication that wages are below market-clearing levels.
The MAC also recommends that, once the new immigration system is in place, there should be a review of whether the SOL should be maintained and, if so, what the advantage of being on the SOL should be. The current advantages of not being subject to the cap or the resident labour market test would not be relevant in the new system.
A review of settlement
The MAC recommends that the criteria for settlement be reviewed. Tier 2 (General) workers may be eligible to apply for settlement after five years in the UK. The MAC suggests that there is scope for a points-based system to form part of a revised settlement framework, particularly if there are a large number of characteristics relevant to settlement. The MAC notes that some successful applicants in other PBS countries are given immediate settlement, others are awarded settlement after a period of residence during which they gain characteristics and the related points, and others never get enough points to settle.
The MAC suggests that the review consider accelerated settlement for Tier 2 (General) migrants. Accelerated settlement after two or three years is currently available under some other work and investment visa routes.
Pause settlement salary thresholds
The MAC suggests pausing the proposed increases to the salary threshold for settlement eligibility. The threshold for Tier 2 (General) migrants applying for settlement now is £35,800 but it is proposed to be £40,100 in little more than five years’ time. The MAC notes that the settlement threshold represents a significant pay progression particularly for some public sector occupations, researchers, technicians and orchestral musicians. These migrants may need to leave the UK and their employment after five years if the requirements are not paused.
Though it recommends a pause, the MAC points out that the settlement threshold might still be higher than the entry threshold after review. In terms of possible exemptions, the SOL is not necessarily the best exemption from the settlement threshold; exemptions for NHS or science and innovation jobs might be better.
Comment
The recommended reductions in the salary thresholds should be widely supported by employers. However, they may feel that the challenge of recruiting roles paid lower salaries, particularly in regions outside the South East, and for roles classified as requiring skill below RQF Level 3 have not been adequately addressed in the report. Employers are also likely to be disappointed that changes to reflect the wider adoption of more flexible working is not considered in more detail.
The government frequently adopts recommendations by the MAC in formulating and implementing immigration policy on work routes into the UK. However, ministers have been keen to point out that the MAC’s role is purely advisory and it remains to be seen which, if any, of these recommendations will be adopted.