This GMS Flash Alert reports on the U.K. government’s response to the Migration Advisory Committee’s report “Review of Tier 2: Balancing migrant selectivity, investment in skills and impacts on U.K. productivity and competitiveness,” which was published in January 2016.
Last week the U.K. government announced its response1 to the Migration Advisory Committee’s (“MAC”) report “Review of Tier 2: Balancing migrant selectivity, investment in skills and impacts on U.K. productivity and competitiveness,” which was published in January of this year2. The response addressed a number of issues, such as:
Some of the changes will be brought in from autumn 2016 (usually October), the remaining changes will be brought in from April 2017.
This GMS Flash Alert briefly explains the key elements of the U.K. government’s response.
While there are some useful concessions in the U.K. government’s response (please see below), the changes, generally, appear designed to oblige U.K. businesses to consider taking steps to reduce their reliance on non-European Economic Area (EEA) migrants to fill vacancies in their U.K. operations.
This could make it more expensive, and more onerous from a sponsor compliance perspective, for U.K businesses to recruit non-EEA nationals in the hope that these businesses will look at the local labour market first to fill any vacancies.
While this is a laudable goal, the changes may mean that businesses would have to evaluate their short- and long-term recruitment and assignment policies so that they are still able to get the right employees into the right positions at the right time. Overall, these changes could have a detrimental effect on the ability of U.K. businesses to compete in a global market.
Tier 2 is the main visa route for employers to bring employees into the U.K. to work. Tier 2 immigration applies to non-EEA skilled workers with job offers in the United Kingdom. Last year the U.K. government asked the MAC to overhaul the Tier 2 visa category to achieve a reduction in the demand for skilled migrant labour by restricting the Tier 2 route to genuine skills shortages and highly specialised experts.
It has now evaluated the MAC’s recommendations and has published a list of changes, which will be implemented throughout 2016 and 2017.
Recommendations that will not be implemented as a result of the MAC report are as follows:
Our Take on the Government’s Plans
The U.K. government’s changes to the Tier 2 visa category are aimed at incentivising U.K. businesses to recruit more workers from the resident labour market instead of relying on non-EEA migrant workers. As the U.K. government cannot limit EEA migration, it instead appears to be undertaking efforts to make Tier 2 migration more expensive and more onerous for U.K. businesses.There are some very useful concessions in the new rules, such as the waiver of the requirement for Tier 2 (ICT) migrants to have been employed outside of the U.K. for a year as long as they are paid a relatively high salary, or the waiving of the RLMT if a Tier 2 (General) application is connected to U.K. investment. However, by and large the changes could very well result in significantly increased costs for U.K. businesses wishing to sponsor non-EEA migrants, and have a significant impact on business models that utilise the short-term ICT routes to support client contracts.
Considerations for Business
It may take U.K. businesses some time to digest the changes, and to consider what they will mean for the way they run their U.K. operations. It is likely that some of the changes will have an effect on some business models. The offering of international assignments to the U.K. to attract highly skilled employees may become too expensive, as may be the sending of highly skilled migrants to the U.K. for short-term project work. The fact that the U.K. government is still looking into which allowances will be permitted to meet minimum salary thresholds for Tier 2 (ICT) migrants may be a further concern for U.K. employers.
For additional information or assistance, please contact your usual KPMG GMS or People Services professional* or one of the following professionals with the KPMG International member firm in the United Kingdom:
tel. +44 (0) 20 7694 4950
tel. +44 (0) 20 7311 1475
tel. +44 (0) 20 7694 3481
* Please note the KPMG International member firm in the United States does not provide immigration services.
The information contained in this newsletter was submitted by the KPMG International member firm in the United Kingdom.
© 2019 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.