An update vis-à-vis contractors under Tier 2 Intra-Company Transfer category - | Hudson McKenzie

An update vis-à-vis contractors under Tier 2 Intra-Company Transfer category

April 26, 2016 | Immigration, Latest Thinking, News

On 19 January 2016, the Migration Advisory Committee was commissioned by the UK Government to advise on a number of potential changes to Tier 2 category of the Points Based System with regard to the increasing number of migrant workers in this route and UK businesses relying on them to fill shortages in the UK labour market.

Changes recommended by the Migration Advisory Committee

As a result of this consultation, the Migration Advisory Committee reviewed and has proposed several changes as below:

  • The minimum salary threshold should rise to £30,000 to reflect the current degree level skill requirement under the Tier 2 category. As typical pay of migrants in some occupations, such as healthcare and teaching, is below the new proposed threshold the MAC recommends this new minimum is phased in.
  • An Immigration Skills Charge (ISC) should be introduced, to act as a skills levy on firms using migrant labour. The revenue accumulated from the charge could be used to help raise skills in the domestic jobs market through training, and decrease the demand for migrant labour.
  • Use of the Tier 2 (Intra-company Transfer) route for third-party contracting be moved into a separate route and a higher salary threshold at £41,500 be applied.
  • There should be no automatic sunsetting of jobs on the Shortage Occupation List (SOL), but employers should provide sufficient evidence when an occupation has been on the list for a number of years.
  • They do not recommend that Tier 2 (General) is restricted only to occupations on an expanded shortage occupation list.
  • They do not recommend restricting automatic work rights for dependents.

For third party contractors, the biggest change is that this comes under a separate route under Tier 2 of the Points Based System. The aim of this is to ensure that this route is used by highly specialist migrants, and they have recommended that the salary threshold be raised to £41,500, as an effective substitution for managers and specialist staff.

The Tier 2 Intra-company transfer route is designed to transfer staff from the overseas companies to the UK temporarily to impart skills and knowledge or gain experience, however this route does not allow the migrant to settle in the UK permanently. The Government found that this route was also being used to bring in third party contractors, mainly within the Information Technology sector and that it is less beneficial to the UK market. By bringing in migrant workers for this it cuts costs for the IT firms but does not contribute to the stock of IT skills within the UK, the UK Government feel tightening up this route will result in a benefit for the UK and companies recruiting locally, rather than from overseas.

MAC advised increasing the work experience from 12 to 24 months, however the Home Office have confirmed that this change will not be implemented for ICT migrants, however we never know it may well change in the future.

In April 2017, many employers will be affected by the closure of Tier 2 Intra-Company Transfer Skills Transfer and Short Term route, all applicants will need to qualify under a single visa category and the salary for these routes which is currently set at £24,800 per annum will be £41,500. This is a massive increase which will lead to impacts on businesses, mainly the IT sector which is dependent on this route for short term assignments and third party contracting.

The change which is probably going to have a huge impact on UK businesses is the Immigration Skills Charge which will come in to play from April 2017. As a result of this change UK employers will be required to fork out an additional £1,000 a year for each Tier 2 migrant employed, this money is to be used to train resident workers and will contribute £250,000,000 to the project. For smaller businesses and charities this will amount will be reduced to £364.

It seems unfair that the Immigration Skills Charge will be yet another cost that UK business are expected to cough up, along with the Certificate of Sponsorship fee, Immigration Health Surcharge, application fees etc., the costs just seem to be piling up.

The introduction of the Immigration Skills Charge is to stop employers from being dependant on recruiting migrant workers and offer more jobs to resident workers as well as invest in training UK workers and it seems that this may just work, as this will act as a huge deterrent.

Changes to be implemented over the next year

 As a reminder, the following changes will be rolled out:

Autumn 2016

  • Increase in the Tier 2 (General) salary threshold to £25,000 for experienced workers, minimum threshold of £20,800 will remain for new entrants.
  • Salary threshold to be increased to £30,000 for the Tier 2 Intra-company transfer Short Term category.
  • Introduction of exemptions from the increased Tier 2 (General) experienced threshold for nurses, medical radiographers, paramedics and secondary school teachers in mathematics, physics, chemistry, computer science and Mandarin. This exemption will end in July 2019.
  • Lower salary requirement for the Tier 2 (Graduate Trainee) category from £24,800 to £23,000 and increase the number of places available to companies from five to 20 per year.
  • Tier 2 (ICT) Skills Transfer category to new applications will be closed.
  • Weighting overseas graduates more heavily in the Tier 2 (General) monthly allocation rounds.
  • Allowing graduates to switch roles once they secure a permanent job.
  • Immigration Skills Surcharge will apply to the Tier 2 Intra-company transfer category.

April 2017

  • Increase in the Tier 2 (General) threshold to £30,000 for experienced workers.
  • Closure of the Tier 2 Intra-company transfer Skills Transfer and Short Term category to new applications.
  • Roll out of the Immigration Skills Charge at £1,000 per year per CoS assigned.
  • High-earners’ salary threshold for Long-Term ICTs will be reduced from £155,300 to £120,000.
  • Remove the 12 months’ experience requirement in the Long-Term category where the applicant is earning over £73,900 per annum.
  • Waiver for the Resident Labour Market Test and prioritisation of Tier 2 (General) places where the visa grant is in support of the relocation of a high-value business to the UK or, potentially, an inward investment project.
  • Implementation of any recommendations as a result of the review of allowances under the Tier 2 (ICT) categories.

If you would like information on any of the above, contact one of our London immigration lawyers on 020 3318 5794 or email at