New charge to sponsor skilled migrant workers will hit small businesses hard, says expert

A new 'immigration skills charge' of £1,000 per worker per year, designed to "reduce Britain's reliance on migrant workers", came into force on 6 April. The policy has been introduced to "reduce demand for migrant labour", and encourage businesses to train up UK workers for skilled roles instead.

A reduced rate of £364 per worker per year will apply to smaller and charitable organisations and to universities. However, immigration law expert Joanne Hennessy of Pinsent Masons, the law firm behind Out-Law.com, said that small businesses could be "priced out of the market" for migrant labour, even where this reduced charge applies.

"This will be of particular concern for businesses that rely heavily on migrant workers, including construction and engineering as well as the medical profession," she said. "These additional costs may well dissuade some multinational businesses from shorter-term transfers into the UK of group employees at a time when the costs associated with employing migrants are already increasing."

"Set against the backdrop of Brexit, this new charge could become a key aspect of the government's immigration policy as the objective to encourage a shift towards employing UK-settled workers gathers pace. Given the UK's entrenched reliance on skilled migrant workers, its success is debateable," she said.

"On the whole, employers sponsor migrants because they have particular skills or experience that they need in their business. So while smaller businesses could feel the pinch, it is probable that lucrative businesses will simply accept this as an additional cost to be absorbed in the recruitment process," she said.

The new charge has been introduced in line with the recommendations of the Migration Advisory Committee, which provides the government with independent advice on immigration policy. It will be levied on sponsoring employers using the 'Tier 2' visa route to recruit migrants from outside the European Economic Area (EEA) for skilled roles, through either the 'general' or 'intra-company transfer' routes.

There are exemptions to the charge for PhD-level jobs and for international students switching from Tier 4 'student' visas to Tier 2 'working' visas. Intra-company transfer graduate trainees will also be exempt from the charge. These exemptions will "help the UK continue to attract talented students and the most qualified migrants, as well as protecting the UK's world-class reputation for education and research", according to the government.