Helpful information
As the new Labour government sets its sights on reshaping the UK's immigration landscape, businesses should be poised to navigate legislative changes aimed at reducing net migration levels, addressing domestic skills shortages, and guaranteeing fair pay for fair work. With the proposed reforms signalling a strategic shift towards a more managed immigration framework with potential additional compliance burdens for businesses, understanding these changes is crucial to ensuring compliance and planning effectively for future workforce needs.
1) Reducing net migration levels and addressing skills shortages
At the heart of Labour's immigration policy is a plan to reduce the high net migration levels we have seen in recent years. Although no official targets have been set (unlike the Conservative Government who proposed a cap on net migration), Labour's strategy aims to reduce UK businesses' long-term reliance on overseas workers by upskilling the local labour force, particularly in critical sectors such as construction, IT, health, social care and engineering. The difficulty of course is the potential time lag between the introduction of such steps and the development of the required skills.
Employers can expect to see the introduction of a Growth and Skills Levy, to reform the current Apprenticeships Levy, with businesses allowed to use up to 50% of their levy contributions to fund training through routes other than apprenticeships.
Whilst currently unconfirmed, there may also be a reintroduction of the ‘resident labour market test’ (which was removed in January 2021), which will require employers to show they have first tried to recruit a UK citizen / settled worker in the UK before hiring migrant workers who require sponsorship.
If it were to happen, the reintroduction of the resident labour market test would lengthen recruitment processes and could cause some interim operational difficulties for employers who will have workforce gaps whilst the recruitment process is completed.
We expect that such a step would be particularly challenging for employers in industries where the ability to sponsor migrant workers, and quickly, is critical – for instance, restaurants who require skilled and highly-trained chefs from overseas.
2) Reforming the points-based immigration system
Another cornerstone of Labour's immigration policy is what Labour has described in their manifesto as the "reform of the points-based system so that it is fair and properly managed" by introducing "appropriate restrictions on visas" and linking immigration directly with the UK's skills policy. Although radical changes to the current system are not expected, with an increased focus on upskilling the local labour force, it may become more difficult for employers to sponsor migrant workers. Businesses may need to adjust their recruitment strategies, focusing more on the specific skills and qualifications that will be prioritised under the new system.
3) Strengthening the Migration Advisory Committee
To ensure that UK immigration policy is better aligned with the nation's skills needs and economic goals, the new Labour Government is expected to strengthen the role of the Migration Advisory Committee (MAC) by linking it more closely with the Industrial Strategy Council, the Department for Work and Pensions and skill bodies across the UK. It is anticipated that the MAC will conduct a review of the recently increased minimum salary requirement for a Skilled Worker visa (currently £38,700), including an investigation into the effects of the increase on net migration figures. However, the recent ban on sponsored care workers bringing their families to the UK is expected to remain.
4) Mandatory workforce plans and fair pay agreements
Labour has also said that it will require different parts of government to put in place a 'skills improvement plan' in sectors with high numbers of migrant workers. It is expected that those sponsoring workers in sectors with skills shortages, e.g., adult social care, will be required to comply with government workforce plans and fair pay agreements.
For the Skilled Worker visa route, it is anticipated that the workforce plans will be linked to the Immigration Salary List, the latter of which may be adjusted depending on engagement and results shown in line with the workforce plans. For instance, it is anticipated that occupations may be removed from the list if a sector fails to demonstrate commitment to training and development.
5) Increased penalties for employers who do not comply
The new Government plans to introduce more stringent penalties for employers who fail to comply with minimum wage and other employment laws. Lengthening ineligibility periods for obtaining a sponsor licence and increasing visa penalties are among the measures proposed to ensure adherence to fair employment practices. Non-compliance with workforce plans and fair pay agreements could also lead to sponsor licence revocation for individual employers.
Next steps
Further information on the business immigration reforms is expected – however, as Labour has many proposals to implement in areas other than immigration, it may be 2025 before we have more clarity. In the meantime, employers should start to:
1) Review existing recruitment strategies to understand where potential delays in the process could be reduced, in case the resident labour market test is reintroduced;
2) Identify any training needs and skills gaps in the workforce and consider formulating a proposed plan focused on investing in training / talent development programmes and, once further information is released by the Government, consider how the Growth and Skills Levy might help to fund any workforce training;
3) Be vigilant in complying with minimum wage and other key employment laws (including working time and rest breaks) to avoid increased penalties and potential sponsor licence revocation; and
4) Ensure all employment practices related to hiring overseas workers are fully compliant.
Contributors to this article were Olivia Bell and Sneha Chacko
