Businesses must act now: minimum salary for sponsorship of foreign workers rising to £38,700

In this article John Vassiliou, Director in our Immigration team, discusses the recently announced changes to the minimum salary threshold for sponsorship of a foreign workers from £26,200 to £38,700.

8 December 2023

Lawyer explaining new visa changes

The big change

On 4 December 2023, Home Secretary James Cleverly announced a jump of nearly 50% to the minimum salary threshold for sponsorship of a foreign worker from the current £26,200 to £38,700. The change will take effect in Spring 2024, underlining the urgency with which businesses must now act. 

Currently, any business with a sponsor licence can sponsor foreign workers to fill permanent vacancies under the Skilled Worker visa route. Most sponsored workers must be paid the higher of either £26,200 or the “going rate” for that job. Going rates are specified in a long list of occupations on the UK Government website. From Spring, it will be the higher of either £38,700 or the going rate.  

While this announcement did not come with a precise implementation date, Spring typically means the new tax year, so 6 April 2024 would be a reasonable target date to prepare for. The announcement did not confirm whether any transitional provisions will be introduced to shield existing sponsored workers from the salary threshold change.  

The health and social care sector will, for now, be exempt from this change, but other sectors including academia, science, and hospitality will be hit hard. 

Policy justifications 

The changes arrive on the back of a UK Government drive to reduce the number of people lawfully migrating to the UK under the Government’s immigration rules. The Home Office’s press release issued on 4 December 2023 implies that current rules are being “abused” and anticipates the changes “…encouraging businesses to look to British talent first and invest in their workforce, helping us to deter employers from over-relying on migration, whilst bringing salaries in line with the average full-time salary for these types of jobs.” 

Visa fees have already been increased to pay for vital services 

Visa costs are typically made up of two components: the visa application fee, and a mandatory immigration health surcharge which is raised to fund the NHS. The UK Government increased visa application fees by around 15% on 4 October 2023 with the extra fee being earmarked to fund “vital services and allow more funding to be prioritised for public sector pay rises”. The UK Government is also increasing the immigration health surcharge from 16 January 2024 by 66% from £624 per year to £1,035 per year. 

While it is unclear from the most recent announcement how the plan to slash legal migration numbers squares with the underlying policy justification for the 4 October 2023 fee increases, it is likely that the increased costs will have a deterrent effect on would-be sponsors. 

This 66% immigration health surcharge increase in particular will have a big impact on the overall cost of Skilled Worker sponsorship for those employers that cover staff visa costs.  

Currently, a Skilled Worker applying for a three-year visa would pay an application fee of £827, and an immigration health surcharge of £1,872. After 16 January, the immigration health surcharge element for the same three-year period will increase to a significant £3,105, bringing the total cost for the applicant to £3,932.  

Where possible, sponsors should encourage any future Skilled Worker visa applicants to make their applications before the 16 January 2024 increase. 

What can you do if you are affected? 

Act now. If your future recruitment plans encompassed foreign workers filling roles with a salary bracket between £26,200 and £38,700, you have a shrinking window of opportunity between now and Spring 2024 to hire and sponsor. Once the changes take effect, unless you will be hiking salaries, you will be priced out. 

You can currently sponsor a Skilled Worker for up to five years, so assuming you can source suitable candidates now, you can potentially secure positions for the next five years to provide some stability to your workforce. 

As a medium to long-term strategy, if you feel that your business is likely to be damaged by these changes, you can consider writing to your local Member of Parliament with details about your business, the roles you are unable to fill locally, and the challenges/problems that the new threshold will create. 

First published in: The Herald (