New business immigration rules: effects on the healthcare industry

While the uncertainty surrounding Brexit continued, April 2017 saw the implementation of significant changes to business immigration rules. It is now more expensive and administratively onerous for businesses to employ non-European Economic Area migrant workers, which will be particularly hard hitting for the healthcare industry as a sector already strained by a skills shortage.

The new rules impose an additional charge on businesses for each non-EEA worker sponsored, payable upfront.

The UK healthcare industry is heavily reliant on foreign workers from both inside and outside the EEA. It is estimated that 12 per cent of NHS staff come from abroad, with 6.8 per cent coming from outside the EU (House of Commons Library). 

Healthcare employers, including the NHS, make particular use of obtaining sponsor licences to employ non-EEA migrants to work in the UK. Tier 2 licences are used for skilled workers with long term job offers. 

Major changes

Broadly, the recent changes are five fold:

Immigration skills charge

The new rules impose an additional charge on businesses for each non-EEA worker sponsored, payable upfront.

The new rules increase the minimum salary threshold for experienced workers from £25,000 to either £30,000 or the appropriate rate for the job offered, whichever is higher.

Generally, for workers who apply for a Tier 2 visa lasting six months or more, small employers must pay £364 per worker for each year it is intended that they will work in the UK.

For employers with an annual turnover of over £10.2 million or over 50 employees, the charge is significantly higher at £1,000 per year.

Minimum salary threshold

Non-EEA workers must be eligible for sponsorship in terms of both rate of pay and skill. The new rules increase the minimum salary threshold for experienced workers from £25,000 to either £30,000 or the appropriate rate for the job offered, whichever is higher. There are of course exceptions, for example, the threshold for new entrants and employees under 26 years of age is still £20,800. 

Intra company transfers

April 2017 saw the closure of the Tier 2 (Intra Company Transfer: Short Term Staff) scheme to new applications and extensions. This scheme was used by non-EEA migrants who were transferred to the UK from the overseas offices of the same employer (or a company within the same group) to a role which could not be filled by a UK national, for a period of up to and including 12 months.

Following the changes, the vast majority of Intra Company Transfer workers must use the Tier 2 (Intra Company Transfer: Long Term Staff) scheme which, when compared to the short term route, has a significantly higher minimum salary threshold of £41,500. This will affect international employers who make regular use of UK assignees.

Immigration health surcharge

The healthcare surcharge was introduced in 2015 to cover the health costs of migrants coming to the UK, enabling them to access the NHS. While certain groups of non-EEA nationals have been subject to the surcharge since 2015, the recent changes have widened its applicability so that it now captures previously exempt Intra Company Transfer workers.

The recent changes also affect the resident labour market test whereby employers must advertise any job they offer to particular categories of non-EEA workers, such as Tier 2 (general) workers.  

Generally, as part of an immigration application, a non-EEA worker must pay £200 per year upfront for themselves and for each of their dependants.

Her Majesty’s Revenue and Customs has advised that if the employer pays or reimburses the worker, the payment will be deemed a taxable “benefit in kind” (ie, a “perk” or “fringe benefit” of employment) which will affect how much money the worker takes home.

Resident labour market test

The recent changes also affect the resident labour market test whereby employers must advertise any job they offer to particular categories of non-EEA workers, such as Tier 2 (general) workers.  

The changes highlight the government’s aim to encourage employers to reduce reliance on non-EEA workers and to invest in UK resident workers.

There are strict requirements in this respect, for example, two adverts must be placed and each must last 28 days.

The purpose of this is to ensure that there are no suitable workers already living permanently in the UK who could fill the role.

Under the new rules, the minimum salary threshold for “high earners”, the employment of whom exempts the employer from the obligation to undertake a resident labour market test, has increased to £159,600.

Going forward

The above changes highlight the government’s aim to encourage employers to reduce reliance on non-EEA workers and to invest in UK resident workers. This may be easier said than done for the healthcare industry which, despite growing concern for patient safety, is increasingly unable to fill vacancies with UK nationals.

This is recognised to some extent in the new rules as a notable number of medical and healthcare jobs are included on the Shortage Occupation List, providing some relief from the new requirements. However, with an ageing workforce and growing demand, the healthcare industry continues to take the blows of the curtailment of the free movement of workers.

Going forward, employers who sponsor non-EEA workers must ensure that they are fully informed of the new immigration rules and that they review their practices in accordance with them. Further, with Brexit on the horizon, businesses should follow future developments in terms of both EEA and non-EEA workers to ensure full compliance.

Sybille Steiner is a partner and Laura Ludlam a trainee in Irwin Mitchell’s Employment Group.