What are the key immigration changes facing the pharma industry?

It’s no secret that the UK life sciences sector is facing skills shortages – in a 2020 report, the Science Industry Partnership’s Life Sciences 2030 Skills Strategy predicted that 133,000 extra life sciences roles would need to be filled by 2030. Sponsorship of overseas nationals is part of the solution to these skills shortages for many businesses.

Pharma businesses that sponsor individuals or may wish to do so in the future should be aware of significant changes that came into effect on 4th April 2024. Importantly, these new Immigration Rules only apply if the Certificate of Sponsorship (CoS) used to support the immigration application was assigned to the individual on or after 4th April 2024. If the CoS was assigned before then, the previous Rules apply.

Increased minimum general salary levels

The new rules have increased the general minimum annual salary threshold for Skilled Workers from £26,200 to £38,700. Furthermore, the general minimum annual salary threshold for the Global Mobility: Senior/Specialist Worker route also increased from £45,800 to £48,500.

In some cases, the annual salary threshold of £38,700 will not apply for Skilled Workers – most pertinent to the pharma industry is where the individual being sponsored holds a PhD that is relevant to the role they are being sponsored for. This means a discounted general salary threshold applies of £30,960 (for a STEM PhD) or £34,830 per annum (non-STEM PhD).

It is also possible to rely on a discounted minimum threshold of £30,960 where the individual is a ‘new entrant’ to the labour market and meets the specific criteria for this. The new entrant criteria can only be relied on for a maximum of 4 years, including any time already spent in the UK under the Graduate visa route or new entrant route.

Increased ‘going rate’ salaries

There have also been significant hikes in many of the ‘going rate’ salaries that must be paid. As part of the sponsorship process, sponsors must identify the most appropriate Standard Occupational Classification (SOC code) for the role. As part of the recent changes, many SOC Codes have changed, so employers should ensure they have selected the correct SOC Code.

Each SOC Code has a particular ‘going rate’ salary for that type of role – i.e., the minimum salary that must be paid. The sponsor must pay a salary that meets both the general salary threshold for that sponsorship route and the going rate salary for the relevant SOC Code.

Going rate salaries are discounted by between 10% to 30% for individuals with a PhD relevant to their role and for new entrants.

For many SOC Codes, there have been hefty increases in going rates, as these rates are now based on more recent salary data. Also, the going rates were previously based on the 25th percentile of salaries for roles in the relevant SOC Code, but are now generally based on the 50th percentile.

The going rate salaries are usually based on a 37.5 hour working week. Where the sponsored individual will be working, say, 39 hours, the salary must be increased accordingly and the sponsor will need to pay more than the annual going rate given on the SOC Code.

Replacement of the Shortage Occupation list with the new Immigration Salary List

The Immigration Salary List has replaced the Shortage Occupation List with a significant reduction of SOC Codes on the list. Happily for the pharma industry, pharmaceutical technicians, experienced laboratory technicians and biological scientists are on this list.

These roles benefit from a reduced general salary threshold of £30,960, although there is no longer any reduction on the going rate salary. For example, for an individual sponsored as a biological scientist (SOC Code 2112) the going rate annual salary would still be £41,900 (on the basis of 37.5 hours per week).

Transitional arrangements

There are a number of detailed and complex transitional arrangements in place for applications submitted on or before 30th April 2030. Generally, these will apply to individuals where their last sponsorship application was decided in line with the Immigration Rules that were in force prior to 4th April 2024. Where businesses are recruiting individuals who are already sponsored in the UK for a different sponsor, it’s worth checking if the individual benefits from these transitional arrangements to take advantage of the reduced salary requirements that would then apply.

What can businesses do to minimise costs?

Immigration application fees have also increased recently – the Immigration Health Surcharge fee rose from £624 to £1,035 per year and application fees increased in April 2024. This means that immigration fees can run into many thousands of pounds to sponsor just one individual, particularly if the sponsor is covering the fees for dependants.

Businesses could consider a number of steps to minimise costs. For example, they could request the individual pays some of the fees themselves – this can only be the immigration application fee, Immigration Health Surcharge payment, and any optional priority service fees. Sponsors may not ask individuals to incur or reimburse them for the CoS assignment fee or the Immigration Skills Charge.

Another means is through the use of claw-back provisions in contracts requiring the sponsored worker to reimburse the employer some of the immigration fees if they leave employment before their immigration permission expires. Again, this must not include the CoS assignment fee or the Immigration Skills Charge.

Where appropriate, employers could also consider supporting individuals to switch from their Student visa into the Skilled Worker category directly (rather than the individual applying for Graduate leave first, before switching into Skilled Worker). The employer is then exempt from paying the Immigration Skills Charge for the whole length of that individual’s sponsorship (including any extension), which could amount to savings of £5,000 over a 5-year visa for a medium sized sponsor.

Immigration is costly and can be time-consuming, so it’s crucial to get things right first time to minimise any disruption and unexpected costs. Getting advice early on is key and the fact that a two-tier system will be in place for a while (new rules versus transitional arrangements) makes this is even more important.

About the authors

Kerry Garcia is a partner and head of the Employment, Immigration and Pensions practice at Stevens & Bolton. She advises on the full range of contentious and non-contentious employment matters, as well as business immigration.

Jackie Penlington is a managing associate at Stevens & Bolton. She deals with a wide range of UK immigration and nationality matters, from advising multinational corporates on their sponsor compliance duties to assisting individuals with their British nationality applications.