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In our previous article we outlined the increases to the salary requirements for visas which came into effect on 4 April; in this article we consider how these changes will affect the Manufacturing Sector.
Firstly, the general minimum salary will increase from £26,200 to £38,700. This is an increase of nearly 50% which is well above the rate of inflation. It also applies regardless of where in the UK the employee is working or how many hours they work. Therefore, this will affect regions like Northern Ireland more than it will, for example, London, where average salaries are higher.
Secondly, the going rate will no longer be calculated on the 25th percentile of the relevant code in SOC 2010; it will now be calculated on the 50th percentile (median) of the relevant code in SOC 2020. This is makes a big difference to the level of the going rate that must be paid.
There has also been a shake-up of the codes particularly affecting roles in the manufacturing sector. For example, an industrial engineer would currently be classified under SOC code 2127, which has a going rate of £32,000 based on a 37.5 hour working week. However, the equivalent code under SOC 2020 has a going rate of £43,700 when this is calculated on the median salary. If the individual worked more than 37.5 hours a week, then the requirement would rise.
Finally, the shortage occupation list is being abolished and employers in the manufacturing sector will no longer be able to avail of the 20% deduction to the going rate that is currently available for certain roles. For example, mechanical engineers (SOC code 2122) are currently on the shortage occupation list, which means that the going rate is reduced from £33,000 to £26,400. This will no longer be the case and, as is outlined above, the going rate is greatly increasing for all roles. The new going rate for mechanical engineers will be £42,500. This is nearly a 61% increase to the salary which must be paid.
On a more positive note, there are transitional arrangements for those who were already on Skilled Worker Visas by the deadline or had been assigned a certificate of sponsorship by this date. For these individuals, the general minimum is £29,000 and the going rate, while still being calculated on the SOC 2020 list, will be based on the 25th percentile. Therefore, for an industrial engineer extending his or her visa the going rate will be increasing from £32,000 to £35,700 instead of £43,700. These increases are closer to what one would expect in terms of a normal inflationary increase. This will make it easier for these individuals to switch to a new employer, extend with their current employer or apply for indefinite leave to remain.
Another positive point is that the salary reductions for new entrants (those under 26 or switching from student visas) will be maintained. Therefore, the going rate for a mechanical engineer who is a new entrant will be £30,960 rather than £42,500. This will benefit employees that are at the start of their careers and employers may wish to consider expediting applications where necessary in order to avail of this lower rate.
Nevertheless, these changes are still causing understandable concern to both employers and migrant workers. Employees that are at a more junior level are more likely to struggle with the salary requirements. Employees that are dependent on their partner’s visa status may find themselves in a difficult position if their partner’s visa is curtailed as it will be harder for them to meet the new salary requirements to be sponsored themselves.
As well as increasing the salary requirements, these changes also increase the level of complexity for employers. The relevant statement of changes in the rules runs to 289 pages and it is difficult even for immigration practitioners to keep track of the volume and pace of the changes in immigration law and policy. We would recommend that employers seek legal advice on how these changes will affect them. This is particularly relevant for employees that are on other types of visas like Graduate Visas that would require sponsorship in the future. Overall, these changes will not be welcome news to the manufacturing sector and will likely exacerbate the skills shortages that are already affecting many employers. It remains to be seen what modifications may be made to these policies in the future or what approach a future government may take on this issue with a general election due to take place within the next year.
This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Business Immigration team at Cleaver Fulton Rankin for further advice or information.
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