HR managers and directors will need to be paid a minimum of £49,400 under the new legislation, up from the now £36,500 minimum.
The general salary threshold is due to rise from £26,200 to £38,000, bringing salary requirements for individual occupations in line with median pay for resident workers in those occupations.
The government originally announced the changes in January 2024, but issued the full memorandum last week.
New entrants to the skilled worker market will be entitled to a discount of 30% to the threshold.
The changes have replaced the Shortage Occupation List, which previously allowed certain sectors to pay employees 20% less than the threshold figure, with the new Immigration Salary List.
The explanatory memorandum stated that this move is part of government efforts to “encourage businesses to invest in the resident workforce, rather than over-relying on migration”.
The changes are set to apply to the whole of the United Kingdom and are due to be enforced from 4 April 2024.
Read more: New migration rules will worsen labour shortages
Chetal Patel, head of immigration at the law firm Bates Wells, told HR magazine that some sectors, including HR, will be impacted significantly more than others by the increased pay threshold.
She said: “The steep increase in pay thresholds will be a nightmare for a number of sectors.
“HR managers and directors will need to be paid a minimum of £49,400 (based on a 37.5 hour week, unless any trading points apply) compared to the current amount of £36,500. This is a huge extra cost.”
Patel continued that the government's changes will mean that some employers will have to make significant changes to their hiring strategy.
She said: “This is the biggest reform of UK work routes since Brexit. The radical changes to the skilled worker route are a clear signal from the government that they want to slash net migration.
“Many SMEs will have to close the door on foreign graduates if they can’t meet the new salary thresholds.
“Hiking up salaries simply won’t be an option for some employers. Instead they’ll need to look at the resident workforce to fill gaps.”
Vanessa Ganguin, managing partner at Vanessa Ganguin Immigration Law told HR magazine that the changes would impact sectors facing skills shortages.
She said: “For start-ups, sectors facing skills shortages, and for many organisations outside the capital that don’t pay London wages, these hikes in the minimum salary may be crippling at a time when they face many challenges.
“Organisations, especially those paying lower salaries outside the capital, that face skills gaps that they have relied on filling from abroad will be hit the hardest.
“Sectors such as engineering, construction, agriculture and hospitality are looking at big hikes in the salary they will have to pay sponsored workers.”
Read more: Immigration price hike hits employers
Ganguin noted that employers can pay a discounted salary when sponsoring new entrants as skilled workers.
She said: “For more junior staff, there are discounts for sponsoring new entrants as skilled workers (generally people under 26 years old or people who have graduated recently in the UK). Those on a graduate visa do not require the salary thresholds of sponsored skilled workers.”
Jonathan Beech, managing director of immigration law firm, Migrate UK, advised that employers who are already sponsoring skilled workers will need to ensure they plan ahead for changes to their immigration status.
Speaking to HR magazine, he said: “Employers will need to figure out what rules will need to be met at the time employees get their immigration expiry date come up.
“Employers will need to make an application and they will need to be meeting the rules, so they must be aware of what the salary difference will be at the time they need to extend their stay. It’s a very good idea to identify that early, and to prepare in advance.”
He noted that the pay increase could lead to further employment law issues if employees are being paid different salaries for the same work.
Beech continued: “With increase in salaries for skilled workers, it might cause a disparity in salary with other workers – you might have one group being paid higher, and another doing exactly the same job but being paid less. That could bring up employment law issues.”
He added that the changes are likely to cause businesses to suffer for up to 12 months.
“The changes, unfortunately, don’t seem to be particularly well thought out.
“The Migration Advisory Committee that researched to make the recommendations to the government clearly stated that it didn’t have enough time, so the information being provided by the government isn’t as accurate as it could be.
“It does need to be looked at in more detail, but we know that’s not going to happen until later this year. or certainly with a change of government. For now, I can see a good 10 to 12 months of businesses suffering as a result.”
