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New Immigration Skills Charge for Employers - What You Need to Know

on Monday, 12 June 2017.

The Immigration Skills Charge Regulations came into force on 6 April 2017, but what exactly does the charge involve and how will it work in practice?

What Is the Immigration Skills Charge and How Will It Operate?

  • The skills charge applies to Tier 2 workers assigned a Certificate of Sponsorship (CoS) on or after 6 April 2017 in either the 'General' or 'Intra-Company Transfer' categories.

  • The amount that an employer will be required to pay depends on the size of the organisation and how long the worker is due to work for the organisation (as stated on the worker's CoS).

  • The charge is £1,000 per person per year, unless the organisation has charitable status or is subject to the small companies regime under sections 381-384 of the Companies Act 2006, in which case a reduced charge of £364 per person per year is payable.

The Home Office has confirmed that it will calculate whether the lower fee applies. This will be depend on whether the sponsor benefitted from the reduced sponsor licence application fee for small companies and charities, when making their initial licence application. If a sponsor paid the higher fee when making their sponsor licence, but now believes that it should now be treated as a small company, then they can report this as a change of circumstances to have their status updated.

Are You Affected?

You are required to pay the Immigration Skills Charge:

  • if you sponsor a worker from outside the European Economic Area (EEA) and Switzerland
  • if the worker is applying for a visa to work in the UK for 6 months or more
  • if the worker is making their immigration application from within the UK for any length of time including applications for less than 6 months

The following workers are exempt:

  • workers who were sponsored under Tier 2 before 6 April 2017 and are applying to switch employers or extend their stay
  • Tier 2 (Intra-Company Transfer) Graduate Trainees
  • Tier 4 students switching to Tier 2 (General)
  • workers sponsored to do a specified PhD-level job

How Much Will It Cost You?

Employers are permitted to assign a CoS for a maximum of five years. Therefore, if you want to sponsor a migrant worker for this period and cannot rely on the reductions or exemptions outlined above, you will be required to pay £5,000 when assigning the CoS.

As we have already reported, this expense is in addition to the various other costs associated with Tier 2 sponsorship and visa applications, which includes:

  • the fee for assigning a CoS
  • visa application fees
  • the Immigration Health Surcharge (which has now been extended to Intra-company Transfers)
  • additional expenses which may be incurred for tuberculosis screening, English language testing, priority visa processing fees and obtaining overseas criminal record certificates

The charge will be payable at the same time as the employer pays to assign a CoS to a worker.

Could You Get a Refund?

The Home Office has made it clear that the cost of the charge must not be passed on to the worker under any circumstances.

Therefore, while you might include provisions in your contracts of employment with sponsored workers to clawback some of the costs of sponsorship and relocation, these cannot include the cost of the Immigration Skills Charge.

That said, a refund of all or part of the charge may be made where, for example, a worker leaves their job early, is refused a visa, or withdraws their application.

Refunds will not be available where:

  • a worker changes job but continues working for the same employer
  • a worker switches from Tier 2 to another immigration category but continues working in the same job
  • a worker's leave is cut short due to a breach of the conditions of their leave

What Impact Will the Immigration Skills Charge Have on the UK Labour Market?

It is clear that by introducing the Immigration Skills Charge, the government is intentionally seeking to out-price a growing number of employers from the migrant labour market, limiting their recruitment options. Indeed, the Conservative party's manifesto commits to doubling the Skills Charge during the course of the next Parliament.

While nurturing a more competitive, upskilled domestic labour market is critical for the future economic sustainability and success of the UK, the commercial reality remains that employers need to hire workers with the appropriate skills and at a commercially-viable cost level.

Some employers faced with mounting costs of migrant sponsorship are reviewing their recruitment strategies, including exploring alternative immigration options.

To discuss the impact of these new changes on your organisation, please contact Tom Brett Young in our Employment Law team on 0121 227 3759.

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