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Employment Matters

Pay to Stay
Employment Matters

Employment Matters

Author
Natalie Loader
Date
07 October 2015

From 6 April 2016, Tier 2 (General) or Tier 2 (Sportsperson) visa holders will need to meet a new income threshold when applying for indefinite leave to remain ("ILR") in the UK – also known as "permanent residency".


Pay to Stay

Changes from 6 April 2016

From 6 April 2016, Tier 2 (General) or Tier 2 (Sportsperson) visa holders will need to meet a new income threshold when applying for indefinite leave to remain ("ILR") in the UK – also known as "permanent residency".

Applicants will need to earn at least £35,000 per annum or the minimum experienced rate for their occupation as set out in the Standard Occupational Code ("SOC") (whichever is higher) at the time of applying for ILR.  This is a significant increase to the current minimum threshold, which is £20,800 per year.

The ILR pay threshold of £35,000 per annum will not apply to those who entered the Tier 2 visa category under the rules in force on or before 5 April 2011 or to those in shortage occupation roles and PhD roles.   

Future Changes

In April 2018, the threshold will increase year-on-year at the following rate:

  • £35,500 per annum for applications submitted on or after 6 April 2018
  • £35,8000 per annum for applications submitted on or after 6 April 2019
  • £36,200 per annum for applications made on or after 6 April 2020

Tier 2 Time Limits

Tier 2 (General) and Tier 2 (Sportsperson) employees who are in the UK under the Immigration Rules in place on or after 6 April 2011 are limited to six years in the UK as Tier 2 visa holders, although they would meet the qualifying period for ILR after five years in the UK.

Those who are not able to apply for ILR between their fifth and sixth years in the UK because they do not meet the minimum salary requirements will be required to leave the UK or switch into another visa category which would allow them to remain in the UK.  If they leave the UK, they would be subject to a twelve-month “cooling off” period, during which time they would be unable to apply for any new Tier 2 visa.

Salary Considerations

This change means that an employee who obtains his or her first Tier 2 (General) or Tier 2 (Sportsperson) visa today will need to be earning at least £36,200 per annum within the next five or six years in order to qualify for ILR.  The £15,400 of additional salary per annum may represent a pay gap that some employers are not able to bridge.

What this means for employers

The implementation of the ILR minimum salary threshold is expected to reduce the number of Tier 2 migrants settling in the UK from 60,000 per year to 20,000 per year.

While this measure may assist the government’s wider plan to reduce net migration figures, employers who have invested in Tier 2 workers who may not be eligible for settlement from 6 April 2016 due to being unable to meet the minimum salary threshold, must decide whether the higher salary can be offered, or prepare for the loss of their skilled worker.