Going Rate Changes: The Elephant in the Room

The UK Home Office published a Factsheet on net migration measures on 21 December 2023 which gave further detail to the broad measures announced by the Home Secretary in Parliament earlier that month on 4 December aimed at reducing net migration. The detailed Statement of Changes is now expected to be laid on 14 March.

The 44% increase in the general salary threshold for Skilled Workers from £26,200 to £38,700 attracted headlines. However, those involved in the business of work sponsorship should note that, in the case of higher-skilled work, the increase to the ‘going rate’ will more often be significant.

The factsheet set out further detail in several respects, including (with emphasis):

“Increasing the minimum earnings threshold for Skilled Worker visas from £26,200 to £38,700 and raise the individual occupation ‘going rate’ thresholds in line with the median full-time wage for equivalent jobs in 2023.”

For a role to be eligible for a work permit, it must pay the higher of:

1. the general salary threshold;
2. the going rate; and
3. the national minimum wage.

Understanding Going Rates

It is important to understand that the current going rates are based on the 25th percentile for wages for that occupation (see Guidance on the 2020 PBS launch, paragraph 3), based on data collected in the Annual Survey of Hours and Earnings (ASHE) produced by the Office of National Statistics (ONS). The underlined statement above confirms that the going rate will increase to the median full-time wage (the 50th percentile).

This provides a better indication of the likely increases in minimum salaries for sponsored workers coming down the line next week. The following table shows what the changes would look like for a sprinkling of highly skilled (RQF6+) roles. (Taken from the ASHE 2023 provisional dataset Table 14.7a. Some occupations have been re-coded since the change of rules, so SOC codes do not always map.)

The SOC codes have a hierarchical structure with xy a subheading of x and so on. The ONS ASHE dataset helpfully gives averages across all headings. Therefore, we can more generally look at the average, taken as far as codes 1-3.

Analysis

In the case of many private sector roles, the 50th percentile for wages is more than the new general salary threshold. What conclusions can be drawn from this?

First, to the extent that discussion of the changes has focused on the general salary threshold increase, this will underestimate the impact on key occupation codes.

Second, this makes more significant the confirmation that those already in the route before the rule changes will be exempted from the increases (subject to continuing to meet the 25th percentile threshold):

“Those already in the Skilled Worker route before the Immigration Rules changes should be exempt from the new median salary levels when they change sponsor, extend, or settle.”

The impact of remaining available discounts, for example, New Entrant, will also increase.

Finally, the going rate for eligible health and education occupation codes, i.e., NHS workers, care workers and education professionals are based on national pay scales. An increase in the going rate to the 50th percentile for pay will have no effect. This creates a discrepancy in the ease of work permit sponsorship for the public compared to the private sector.

Need to know more?

For more information on salary threshold changes please contact Senior Manager Alexander Finch at [email protected].

This blog was published on 6 March 2024, and due to the circumstances, there are frequent changes. To keep up to date with all the latest updates on global immigration, please subscribe to our alerts and follow us on LinkedIn, X, Facebook and Instagram.