The UK government has instituted nearly a 50% increase in the minimum salary threshold for those arriving into the country under the Skilled Worker visa route.
The threshold recently increased from £26,200 per annum to the new minimum general salary threshold of £38,700 impacting over 200 occupation codes currently eligible for a Skilled Worker visa, including a number of roles within the energy sector.
The increase in the general salary threshold to £38,700 per annum is based on median UK earnings in eligible occupations, whereas the previous threshold was based on the 25th percentile of UK earnings.
Similarly, the going rates, relevant to each specific classification of occupations, have increased from the 25th percentile to the median percentile.
Although the announcement of the transitional arrangements will ensure going rates remain at the 25th percentile (for those already within the Skilled Worker route), employers will still notice a significant rise in the going rates due to these being increased in line with the latest Office for National Statistics (ONS) pay data.
How do these changes impact the energy sector?
The government’s move comes as part of a five-point plan to reduce net migration figures in the UK.
However, the government’s commitment to bring all greenhouse gas emissions to net zero by 2050 will require a complete revamp of the UK energy infrastructure and a large number of domestic and foreign workers to fill all the necessary roles for this undertaking.
Additionally, while the UK continues to develop renewable energy resources, access to reliable oil and gas resources remains critical to the country’s energy security.
To reduce the reliance on imported fossil fuels, the UK needs to continue to replenish its own resources through exploration for oil and gas.
In order to achieve this, the UK’s energy sector needs to fill 400,000 roles in the Net Zero Energy Workforce, of which 260,000 will be in new roles, while 140,000 will be replacing those who have left the workforce, according to data presented by National Grid.
The new salary threshold changes have the potential to seriously undermine the country’s ability to fill all these critical roles.
Prior to the introduction of the new threshold on April 4, the role of electrical engineers, which can include jobs such as installations engineers, wind turbine and solar maintenance staff, was subject to a going rate of £39,300 per annum, based on a 37.5 hour working week
- Employers were able to benefit from paying a 20% discount on the going rate due to this role previously being on the Shortage Occupation List (SOL), which amounts to £31,440.
- With the abolition of the SOL, and in the absence of this role being included on the new Immigration Salary List (ISL), should UK businesses wish to continue to recruit from abroad for such roles, they will now be required to pay their workers at least the revised going rate of £53,500 in order to do so — an additional £22,060 per annum.
Those applicants already in the Skilled Worker route, and due to extend their status within the transitional period i.e., by April 2030, will still see a rise in the going rate for this specific role, to £43,900 per annum (based on current ONS data).
Of note, particularly for engineering roles, is that Skilled Workers whose role is on the SOL but not included on the ISL, will be able to continue to rely on ISL discount only if they are sponsored for a role which was eligible under the applicable rules at time of sponsorship, and they continue working in the same job for the same sponsor.
However, if the individual in question is switching roles, and that role does not appear on the ISL, their application will be refused, even if they already had permission as a Skilled Worker.
The SOL contains a list of occupations in the UK which are experiencing a shortage of skilled labour.
The Migration Advisory Committee (MAC) provides recommendations on which jobs should be placed on the SOL.
Prior to the implementation of the new salary thresholds, if a particular job was on the SOL, the full salary threshold did not need to be met and a 20% discount was applied to the going rate for that specific role. Since April 4, the SOL has been replaced with a new ISL.
Under the new rules, the 20% going rate discount for occupations on the SOL has been removed.
Additionally, the ISL only lists 23 occupations compared to over 50 occupations on the SOL, 20 of the occupations on the ISL are UK-wide while three are Scotland-specific.
This list of roles represents roughly 8% of the roles currently eligible for the Skilled Worker pathway, whereas the ISL’s predecessor included 30% of the jobs eligible under the Skilled Worker route.
Fewer occupations will therefore benefit from preferential treatment under the Skilled Worker routes; many occupations may now be unable to access the route.
This change will no doubt affect the energy sector as many roles that fall within this sector were found in the SOL.
As the new ISL is smaller in scope than its predecessor, employers who have relied on the benefits related to shortage roles may need to review their talent management strategies if they have previously relied on the SOL to recruit foreign workers.
Whilst the rule changes, in light of the December 2023 proposals to abolish the SOL and increase the minimum salary threshold for Skilled Workers, weren’t a huge surprise, the going rates being raised to the median level of UK earnings means that ultimately, salary thresholds have increased for every role within the sector.
Companies should work with knowledgeable legal counsel to help them navigate the changes, including analysing the impact of the changes on the existing workforce, developing a strategic plan to ensure compliance with the legal changes and assisting with implementing both practicable and actionable solutions to help steer the complexities of these changes and minimise disruptions to ongoing and future projects.
Legal counsel can also assist in preparing tailored communications for the impacted employee population to address their most common questions.
Employers should consider, if they have not done so already, undertaking a review of data for 2023 to include job titles for which the salary falls below the new minimum threshold of £38,700 and ensure they have familiarised themselves with the new going rates applicable to their most common sponsored skilled occupations.
As the full impact of these newly implemented changes becomes clearer over the coming months, it is important that businesses collate relevant data surrounding any difficulties they experience in recruiting for roles, in order to actively engage with the MAC’s extensive stakeholder engagement as part of a fuller review of the ISL, alongside a renewed assessment of labour market conditions.
Feedback will be key to determining future policy, but in the meantime, businesses should ensure that recruiters, mobility, and talent teams alike are all aware of and trained on these legal changes and update their hiring policies and strategies accordingly.
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