‘New entrants’ salary discounts for the skilled worker route: who can benefit and how well does it work

In April this year, the government introduced significant increases to the qualifying salary rates for the skilled worker and global business mobility routes.  While employers and potential employees grapple with how the new salary thresholds and ‘going rate’ percentiles affect new hires as compared to extensions in the same role, many aren’t aware of how some of the discounts operate.

It’s been particularly galling talking to international graduates and students reaching the end of their degrees in the UK this year. While last year, they looked forward to paying off the eye-watering costs of their degree with the wealth of opportunities the UK job market has to offer, this year potential employers have been scared off by April’s hike in minimum salaries. Some have said to us they wouldn’t have come to the UK to study if they had known how difficult the Government was about to make it to employ international graduates. Yet many applicants remain unaware of how some of the salary discounts operate.

The new Home Secretary Yvette Cooper has told MPs that she does not intend to reverse any of the salary hikes purporting to reduce immigration. So, salary discounts are more important than ever for employers seeking to hire international talent at the start of their careers.

New entrants salary discounts

The new entrants category is set out in Appendix Skilled Worker of the immigration rules and provides discounted qualifying salary rates to people at the start of their careers. The general salary threshold has a 20% discount to £30,960 and a going rate discount of 30% against the new median (50^th percentile) rate keeps these salary rates at much the same level as the previous 25^th percentile rate.

Who benefits?

The category is mainly used by young applicants under the age of 26 on the date of application and those switching from student or graduate routes to the skilled worker route. But there are other beneficiaries and more details which can help applicants. 

The salary discounts also benefit applicants who are sponsored for certain postdoctoral scientific positions and higher education teaching professionals. The new entrant category also includes applicants working towards a recognised professional qualification in a UK-regulated profession as well as applicants working towards full registration or chartered status with the relevant professional body.  These groups are not necessarily that young and can include people switching careers at any stage in their lives.

Students with a bachelor’s degree or above (including Postgraduate Certificate of Education and Professional Graduate Diplomate of Education) and those on the graduate route are included, but what many on these routes do not always appreciate is that their permission must either:

• be current; or
• have expired less than two years before the date of application and their most recent permission, other than as a visitor, was under one of these routes.

In other words, where their student leave expires or when their two-year graduate permission comes to an end, and they have not yet found a sponsor, although they may have to leave the UK they still have two years in which they can find a sponsor under the lower salary thresholds so long as they only return to the UK as a visitor in the meantime.

Does it work?

One of the effects of the increased qualifying salary rates, especially the raising of the going rate to the 50^th percentile, is that sponsors are more likely to restrict new hires to senior people as their salaries are more likely to be in the top half of their profession, so the new entrant category offers some respite to those at the beginning of their careers and sponsors seeking to fill entry level gaps where there is a skills shortage in the UK.

The problem for sponsors is that it only last four years at which point, if they keep the migrants on, they have to be paid more than half of the rest of the people in their profession, which may be more than their peers, leading to possible claims of discrimination or unfair dismissal or wage inflation.

The problem for applicants is that sponsors are wise to this and so may just avoid hiring those who qualify as new entrants to avoid these problems further down the line.  Where they are hired, they have precious little time to progress to the point where their salary is more than half of the people in that profession, to stand a chance of continuing to be sponsored as a skilled worker long enough to reach settlement.

Having inflicted a seniority bias by increasing the qualifying salary rates, what new entrants may really need is a longer lead-in period. The Home Secretary appears to be retaining the graduate visa as it is following the Migration Advisory Committee’s recommendations. But if prospects of finding a graduate position are thin, our university sector may continue to face a costly drop in overseas students. More flexible new entrant rules could make a big difference for the UK higher education sector, international graduates and employers.