Publication - Consultation paper

Intra-company transfer immigration route - call for evidence: Scottish Government response

Published: 30 Aug 2021
Directorate:
External Affairs Directorate
Part of:
Economy, International, Work and skills
ISBN:
9781802011777

This paper sets out the Scottish Government’s response to the call for evidence by the Migration Advisory Committee's (MAC) call on Intra-Company Transfers. It provides evidence on the use by businesses with a base in Scotland as well as outlining how the route could be made more responsive to the needs of the Scottish economy.

Intra-company transfer immigration route - call for evidence: Scottish Government response
ICT Criteria

ICT Criteria

Salary Threshold

27. One of the policy purposes of a salary threshold is to prevent downward pressure on salary levels through employers recruiting foreign workers at lower wages than the resident workforce would accept[5]. However, this is a fundamental misconception of the way migration interacts with the labour market. The MAC found in their comprehensive analysis of the impact of EEA migration on the UK labour market that there is "overall no evidence that EEA migration has reduced wages for UK-born workers on average"[6]. At the time, there was no selection mechanism in migration from the EU, and no salary threshold those workers had to meet – but nevertheless, EU migration has had, on average, no impact on wages for resident workers. That calls into question the purpose of a salary threshold intended to prevent wage undercutting through migration when the available evidence suggests that does not happen.

28. However, as outlined in our 2020 policy paper, a salary threshold can be an appropriate control measure in an employer-sponsored route for higher-earning skilled workers, if it is set at a point that reflects earnings at the skill level the route is open to and the situation in the wider labour market, and if additional options with different controls are available. It can serve as a lever to ensure migration policies support fair work, protecting workers' rights, pay and access to employment and preventing exploitation and abuse.

29. When Skilled Worker replaced Tier 2 (General), the basic salary threshold was reduced from £30,000 to £25,600 (or the going rate for the role). For ICTs there was not a reduction and so the basic minimum salary threshold still remains high at £41,500 (or the going rate for the role). A salary threshold of £41,500 is too high for this route, well above the minimum of £25,600 and the going rates for most occupation codes for Skilled Workers.

30. Our response to the MAC commission on the salary threshold and a new 'Australian-style' points-based Immigration System in December 2019 expressed concern about the impact of a salary threshold at all, and in particular, that the proposed £30,000 threshold would be actively damaging for Scotland's economic, social and demographic prosperity[7]. It would disadvantage women, young people and part-time workers, and our rural and remote communities[8].

31. The independent Expert Advisory Group on Migration and Population (EAG), in their February 2019 report, analysed differences in income across Scotland[9].Their analysis shows that 63% of employees in Scotland (both UK and non-UK nationals) earn less than the previous Tier 2 £30,000 requirement and so the £41,500 threshold dramatically constrains Scottish employers' access to skills and the workers they need to deliver and grow.

32. The EAG have since produced an update which considers the lower salary threshold of £25,600 for the Skilled Worker route[10]. Taking into account the expansion of the skilled worker route (Tier 2) with the lowered salary threshold and the consideration of inclusion of some Regulated Qualifications Framework (RQF) 3 roles on the Shortage Occupation List (SOL); together with the contrasting steady decline of EEA migration since 2015; the EAG retained their estimates of a reduction in migration of 30-50%.

33. Additionally, the Group note, however, that a key issue is how the changes will affect the occupational, geographic and gender distribution of migration to Scotland. Their analysis of differences in income across Scotland showed that in 2019, 52.5% of employees in Scotland (both UK and non-UK nationals) earn less than £25,600. In contrast, 60.9% of jobs pay less than the original threshold of £30,000: only an additional 8.4% of jobs would therefore be available to migrants. Thus even a salary threshold at the new level of £25,600 would dramatically constrain Scottish employers' access to skills and the workers they need to thrive. There was also a striking divergence in the distribution of salary levels across areas of Scotland. Implementing an excessively high salary threshold would restrict the ability of employers to attract the international talent they need in all sectors of the economy, including new growth industries in creative, digital and fin-tech. Therefore while we welcome the MAC's previous recommendation to reduce the threshold to £25,600, without consideration of differentiated regional thresholds, this will still exclude key roles in Scotland.

34. Table 2 highlights the varying median incomes across the UK. At median full-time gross annual pay, Scotland is the fourth highest region in the UK (after London, the South East and the East), with a median of £30,000. However, this masks a degree of variation in salary levels across Scotland and is skewed by increased salaries in Glasgow, Edinburgh and Aberdeen.

35. Table 3 provides detail of non-UK nationals employment in Scotland during 2019. This highlights that non-UK nationals are concentrated within high and low skill jobs within the Scottish economy[11]. Therefore, the impact of the salary threshold would be to restrict the required numbers of migrants working in Scotland, resulting in Scottish economic growth being hindered. This demonstrates that regional variation should be explored within this route. The impact upon Scotland's economic performance will undermine living standards and the prosperity of the Scottish people.

Table 2: Median full time gross annual pay by region (2019)
Description Number of jobsb (thousand) Median Annual percentage change Mean Annual percentage change Percentiles
10 20 25 30 40 60 70 75 80 90
United Kingdom 16,216 30,353 2.7 37,428 2.3 17,189 20,327 21,870 23,483 26,698 34,583 39,591 42,642 46,485 60,890
North East 615 27,187 3.2 31,852 2.4 16,627 19,137 20,356 21,608 24,308 30,682 34,972 37,380 40,231 49,967
North West 1,771 28,137 2.8 33,479 2.4 16,573 19,273 20,609 21,895 24,895 32,019 36,844 39,693 43,041 53,513
Yorkshire and The Humber 1,277 27,835 3.5 32,653 2.9 16,521 19,294 20,541 21,949 24,634 31,322 35,823 38,125 41,613 51,615
East Midlands 1,113 28,000 4.8 32,639 3.4 16,477 19,210 20,508 21,848 24,760 31,560 35,962 38,833 41,884 52,507
West Midlands 1,340 28,536 3.1 34,247 3.6 16,597 19,517 20,955 22,503 25,459 32,477 37,345 40,043 43,481 54,339
East 1,399 30,345 4.1 36,143 3.4 17,212 20,475 22,072 23,705 27,000 34,348 39,198 42,127 45,940 59,929
London 2,595 38,992 2.2 53,100 0.9 20,000 25,000 27,299 29,544 34,145 44,624 52,526 58,082 65,478 93,870
South East 2,207 32,120 4.1 38,715 4.6 17,669 21,168 23,049 24,820 28,220 36,438 41,888 45,123 49,477 64,515
South West 1,289 28,654 2.5 33,543 2.1 16,869 19,791 21,099 22,513 25,436 32,148 36,540 39,607 42,451 53,659
Wales 702 27,500 4.4 31,251 3.0 16,638 19,205 20,447 21,762 24,353 31,418 35,871 38,163 40,411 48,426
Scotland 1,394 30,000 2.4 34,916 0.9 17,374 20,431 21,808 23,290 26,479 33,726 37,964 40,452 43,591 54,886
Northern Ireland 515 27,434 1.2 32,083 3.0 16,600 19,208 20,504 21,788 24,677 31,221 35,886 38,202 40,740 49,992

a Employees on adult rates who have been in the same job for more than a year.

b Figures for Number of Jobs are for indicative purposes only and should not be considered an accurate estimate of employee job counts.

Estimates in bold are considered reasonably precise, all other estimates are considered precise

Source: ASHE, 2019 Office for National Statistics

Table 3: Major Occupation Group - Annual pay - Gross (£) - For full-time employee jobs and employment of non- UK Nationals, 2019
Major Occupation Group Code Number of jobsb (thousand) Median Annual percentage change Mean Annual percentage change Percentiles Number of non-UK nationals in employment (16 years and above)
25 75
Scotland
Managers, directors and senior officials 1 167 42,381 4.7 51,122 1.5 29,462 61,742 13000
Professional occupations 2 366 37,663 3.8 42,769 -0.1 30,819 47,817 39000
Associate professional and technical occupations 3 230 32,076 1.9 36,962 -0.3 25,571 41,175 17000
Administrative and secretarial occupations 4 132 22,899 1.0 25,683 -0.6 19,218 29,120 13000
Skilled trades occupations 5 143 28,530 3.2 30,437 3.8 22,050 36,298 21000
Caring, leisure and other service occupations 6 98 20,725 -0.1 21,822 -0.2 17,259 24,888 19000
Sales and customer service occupations 7 72 20,240 3.7 22,242 1.2 17,169 25,272 13000
Process, plant and machine operatives 8 94 25,052 -3.5 27,225 -0.4 20,059 32,723 19000
Elementary occupations 9 94 20,060 1.6 21,247 1.7 16,655 25,591 44000
United Kingdom
Managers, directors and senior officials 1 2,182 44,597 2.1 61,610 1.6 30,097 69,869  
Professional occupations 2 4,010 39,384 2.3 44,367 0.7 30,928 50,584  
Associate professional and technical occupations 3 2,826 33,051 0.9 39,171 -0.6 25,581 43,722  
Administrative and secretarial occupations 4 1,608 23,487 2.2 26,852 3.9 19,180 30,224  
Skilled trades occupations 5 1,503 28,273 3.4 30,133 2.9 21,782 35,965  
Caring, leisure and other service occupations 6 1,041 19,385 4.4 20,489 4.7 16,041 23,805  
Sales and customer service occupations 7 792 20,402 2.4 22,828 3.9 16,900 25,887  
Process, plant and machine operatives 8 1,118 25,751 2.2 27,805 3.1 20,448 33,068  
Elementary occupations 9 1,138 20,579 3.7 21,976 3.9 17,110 25,985  

a Employees on adult rates who have been in the same job for more than a year.

b Figures for Number of Jobs are for indicative purposes only and should not be considered an accurate estimate of employee job counts.

Estimates in bold are considered reasonably precise, all other estimates are considered precise

Source: ASHE, 2019 Office for National Statistics

36. Previously, the main threshold in Tier 2 was set at the 25th percentile of the range of earnings in roles at the minimum skill level required for the route, currently graduate roles at RQF 6. The qualification threshold for the Skilled Worker route has been reduced from RQF 6 to RQF 3 level roles (equivalent to A-levels or Highers). The MAC previously found that the 25th percentile of the range of earnings in roles at RQF 3 was £20,100.

37. Some stakeholders have previously suggested a salary threshold set at a level that is a multiplier of National Minimum Wage. For example, a full-time salary that is 50% above National Minimum Wage is approximately £23,000. If the goal of a salary threshold is to provide reassurance to resident workers that migration is not undercutting wages, linking the minimum threshold to the Real Living Wage could be an option to explore. This would automatically uprate as changes to minimum wage levels come into place.

38. Many organisations and stakeholders who have made a public statement of their views on the salary threshold to date, with or without an expressed methodology, have clustered in the range of £20,000 to £24,000, approximately. The Russell Group and Universities Scotland suggest £21,000, and the Welsh Centre for Public Policy (commissioned and endorsed by the Welsh Government) proposes £20,000.

39. The Scottish Government has previously highlighted that a points-based approach to selecting migrants can be an effective way to broaden the range of criteria for eligibility, allowing migrants to score points across multiple characteristics[12]. It is typically not tied to a migrant having a job offer, although that could be one of the criteria for which points are awarded. A points-based system should therefore not require a salary threshold. Points could be awarded for earnings or for skills or experience in a particular sector. An approach focusing on skills or experience in key sectors could also help to address gaps in sectors of high social value but where the qualifications and salary levels would not meet the thresholds set by the previous Tier 2 or current Skilled Worker visa routes. However the Scottish Government is concerned that the UK Government's approach which focuses solely on the economic value of migrants ignores the wider issue of social value and the contribution that people who have moved to Scotland, and the UK as a whole, make to our cultural life and our communities.

40. The MAC previously suggested that a higher threshold for London, with a single lower threshold for other parts of the UK, would be a possible approach to regional salary levels for the Skilled Worker route[13]. The Australian system does include regional flexibilities within its points-based system. The Australian Government works with state and territory governments to offer a range of State Specific and Regional Migration initiatives which include varying criteria that recognise the specific needs of rural and regional areas and are designed inter alia to address regional skill shortages. Previous evidence submitted to the MAC in response to the review of the Skilled Worker salary threshold could be used as a baseline for setting regional levels for ICTs.

41. Given it's temporary nature, ineligibility for Indefinite Leave to Remain, and low numbers of applications compared to the Skilled Worker visa, there is a low-risk opportunity to pilot regional salary thresholds within the ICT route to better understand how variations of this lever could help support all regions of the UK, particularly as the UK starts to recover from the economic impact of the pandemic.

42. Our view is that regional variation should be explored within this route. Since the UK Government previously ignored stakeholder concerns and decided to retain a salary threshold for the Skilled Worker route, at the very least the ICT threshold should be lowered to £25,600 for intra-company transfers and £20,480 for intra-company graduate trainees in line with Skilled Worker applications for established workers and new entrants. The cost of an international entity doing business in the UK already includes the maintenance of a sponsor licence and effectively paying a £1,000 per year of the visa tax in the form of the Immigration Skills Charge. Even where sponsors would like to use the ICT category, they may find this minimum salary level prohibitive, compared to the lower Skilled Worker salary threshold.

Allowances

43. Unlike the Skilled Worker category, ICT applicants are allowed to include certain allowances towards the required salary threshold – a benefit of using ICTs. However, the allowances must be guaranteed to be paid for the duration of the UK employment (such as a London weighting) or be paid as a mobility premium to cover the additional cost of living in the UK. Where allowances are solely for the purpose of accommodation, they will only be taken into account up to a value of either:

  • 30% of the total salary package, where the applicant is applying on the Intra-Company Transfer route; or
  • 40% of the total salary package, where the applicant is applying on the Intra-Company Graduate Trainee route

44. Other pay and benefits, such as those outlined below, are not considered when calculating allowances[14]:

  • flexible working where the nature of the job means that hours fluctuate and pay
  • payments or allowances that cannot be guaranteed
  • additional pay such as shift, overtime or bonus pay, whether or not it is guaranteed
  • employer pension and national insurance contributions
  • in-kind benefits, such as equity shares, health insurance, school or university fees
  • company cars or food
  • one-off payments, such as 'golden hellos'
  • any payments relating to immigration costs, such as the fee or Immigration Health Charge
  • payments to cover business expenses, including (but not limited to) travel to and from the applicant's country of residence, equipment, clothing, travel or subsistence

45. Feedback from stakeholders in the IT & Financial Services sector who rely on talent from India and Eastern Europe is that the ability to use allowances allows them to meet the minimum salary threshold as these countries typically have lower base salaries. This also means for any time when they hold the ICT visa and are not in the UK, the sponsor is not obliged to pay them the minimum rates required for the visa. Stakeholders also indicated that they preferred to use allowances because many workers in the UK undertaking similar roles will not earn £41,500. Employers want to avoid inflating ICT worker base salaries purely to meet the threshold as this will result in wage discrepancies between workers on the ICT route and staff based permanently in the UK.

46. Stakeholders also highlighted that some of the above benefits should be capable of contributing to the salary threshold, particularly if those payments are guaranteed and budgeted for by the employer. We recommend that guaranteed payments such as shift and overtime allowances, bonus pay, employer pension and national insurance contributions and in-kind benefits, such as equity shares, health insurance, school or university fees are made eligible for inclusion in the salary threshold calculation.

Skill Level

47. The UK Government has placed a strong focus on 'skilled migration' and uses qualifications and salary as measures to assess skill levels. Many respondents raised concerns that this definition of "skilled work" excluded important skilled professions, vital to Scotland's economy.

48. In keeping with the salary thresholds, the Tier 2 (General) RQF level 6 threshold was reduced to level 3 for Skilled Worker applications. That has not been the case for ICTs for which the sponsored role must still be at level 6. This is unhelpful for ICTs given many roles considered to be of so called 'lower skill level' will not qualify. For example, across all industry sectors there are important roles which the UK Government would define as lower-mid skill level roles that would not currently qualify for an ICT visa.

49. The distribution of RQF levels in Scotland by country of birth is shown in Figure 1 below. Those born outside the UK are more concentrated at the extremes of the qualification distribution: for example, the proportion of those born in the EU who hold a PhD is more than three times the equivalent UK share. Migrants at this skill level are eligible within the new immigration system.

50. The proportion of labour from the EU-10 countries that falls below the RQF 6 skill level is more than double the UK proportion. This implies that there are likely to be fewer migrants in the middle of the income distribution than there are UK-born. It is this so called 'low-skilled' labour as the UK Government defines it from the EU-10 countries which has been impacted the most by the ending of free movement. It demeans these people to class them as 'low' or 'unskilled'. Going forward the UK Government must show a greater appreciation of all contributions and this should be articulated in an inclusive and respectful way. The current global pandemic has powerfully demonstrated that what the UK Government may have previously described as "lower-skilled" jobs are in fact a whole range of absolutely vital roles, filled by dedicated people with valuable skills[15].

Figure 1: Regulated Qualifications Framework ( RQF) and Country of Birth
The distribution of RQF levels in Scotland by country of birth is shown in a graph, noted as Figure 1. Those born outside the UK are more concentrated at the extremes of the qualification distribution: for example, the proportion of those born in the EU who hold a PhD is more than three times the equivalent UK-born share.

Source: ONS Labour Force Survey 2013-2017

51. Table 4 shows estimated annual earnings in Scotland by country of birth and level of qualification based on the LFS 2013-2017 dataset. Consistent with the argument above, the range of earnings is wider for those born outside the UK. For example, median earnings for those born in the EU-15 with PhD level qualifications exceed £54,200 while their so called "low-skilled" counterparts earn only £14,100. These compare with £35,200 and £18,100 for equivalent levels of skill among the UK-born workforce. This demonstrates the need for regional income thresholds in order to support Scotland's distinct economic needs to ensure that we have the workforce and skills to deliver our ambitions for Scotland's post-covid economic recovery.

Table 4: Median Annual Salary by Level of Qualification and Country of Birth
  PhD RQF6 RQF4 RQF3 Lower-skilled All
UK £35,200 £34,400 £25,600 £23,100 £18,100 £14,500
EU-15 £54,200 £30,100 £22,900 £24,100 £14,100 £16,900
EU-10 £40,200 £31,700 N/A £18,300 £13,300 £14,600
Non-EU £35,100 £32,700 £23,100 £22,600 £15,700 £14,100
All £35,200 £34,200 £25,300 £23,100 £17,600 £14,500

Source: ONS Labour Force Survey 2013-2017

52. In the hospitality sector, hotel and accommodation managers and restaurant and catering managers would not qualify. In the scientific sector laboratory technicians do not qualify and in engineering/tech electrical technicians and engineering technicians would not qualify. In IT, operations and user support technicians fall short and in the legal sector it's the same for legal associate professionals (including paralegals). In finance, financial and accounting technicians, buyers and procurement officers, business sales executives, marketing associate professionals, insurance underwriters and human resources and industrial relations officers all do not qualify

53. Our view is that there is a strong case for lowering the skills threshold to RQF level 3 for ICT applications, bringing it in line with the Skilled Worker route.

English Language Requirement

54. A key advantage of the ICT category is that there is no English language requirement. It is understood that the requirement exists to ensure that individuals eligible for indefinite leave to remain have suitable knowledge of the English language and about life in the United Kingdom in order to settle and fully integrate into communities in the UK[16].

55. Applicants to the Skilled Worker route must evidence that they can read, write, speak and understand English to at least level B1 on the Common European Framework of Reference for Languages (CEFR) scale. Proof of English language capabilities can be achieved by[17]:

  • passing a Secure English Language Test (SELT) from an approved provider
  • having a GCSE, A level, Scottish National Qualification level 4 or 5, Scottish Higher or Advanced Higher in English, gained through study at a UK school that you began when you were under 18
  • having a degree-level academic qualification that was taught in English - if you studied abroad, you'll need to apply through Ecctis (formerly UK NARIC) for confirmation that your qualification is equivalent to a UK bachelor's degree, master's degree or PhD
  • be a citizen of a designated English majority country.
  • already passed an English Language assessment that is accepted by the relevant regulated professional body (doctors, dentists, nurses, midwife or vet).

56. Having to undertake an approved English language test increases overall application costs and delays the visa application process. Individuals may have to wait up to 28 days after booking to take a test. The test must generally be taken in person but may not always be at the nearest location. If there is not an approved test location in the applicant's country, they will have to travel to another country to take the test.

57. Stakeholders have noted that post- Brexit, EEA nationals who now require sponsorship will struggle to meet English language requirements as a large number of European universities are not recognized by NARIC/ENIC as having courses taught in English.

58. In addition, stakeholders have highlighted that 'speed to ground' is crucial for roles where specialist knowledge is required and there is a need to mobilise staff quickly to resolve an issue at their UK entity. The ICT route is preferable because of the English language requirement exemption and therefore suitably agile for seconding specialist IT or engineering staff, particularly from non-majority English speaking countries such as India and South Africa. Employees will generally be coming to the UK for a short period to address a time sensitive issue and are deemed by the employer to have sufficient English language knowledge to carry out the necessary work successfully. Therefore meeting the English language requirement is less important in these circumstances. If workers are required in the UK longer term stakeholders have indicated that they will often use the ICT route to get workers into the UK quickly with plans to then attain the English qualification in-country, allowing them to switch onto the Skilled Worker route.

59. ICTs are crucial for many industries such as IT, Oil and Gas and renewables sectors and the route has arguably become more important in a post-Brexit context. Therefore the route should be retained to continue to provide the responsiveness often required by business but lacking across the other visa categories of the UK points-based immigration system.

Length of service with overseas group company

60. Unless the salary for the UK ICT sponsored role is £73,900 or above, the employee must have worked for the overseas group company for at least 12 months. The 12 months work can have been accumulated over any period that the applicant was continuously working for the sponsor group, in or out of the UK. The reasoning behind the 12 month minimum is unclear although it may be based on an assumption that it takes at least one year of 'acclimation' before an overseas group employee can be considered sufficiently useful for the UK sponsor.

61. Stakeholders have expressed the view that it does not take as long as 12 months for the employee to have developed specialist skills and experience about the products and services and that the length of service requirement could be considerably lower. Employers generally use a probationary period at the commencement of employment during which they can assess the employee's ability and suitability for the role. Whilst there is no legal definition of or requirement for a probationary period, a 3-6 month range is not uncommon. Based on this feedback, our recommendation is that the time in employment should be halved to 6 months.

Ability To Apply For Indefinite Leave To Remain (ILR)

62. Unlike Skilled Workers, ICTs do not lead to ILR. Additionally, the current ICT rules only allow the employee to stay for 5 years in a 6-year period, or 9 years in a 10-year period if the UK salary is £73,900 or above. As a result, normally sponsored ICT workers will need to leave the UK after a maximum of 5 years.

63. Stakeholders have expressed a preference for the temporary nature of the ICT route. By bringing an employee into the UK on this route, it allows the employer to clearly demonstrate that the nature of employment in the UK is time-limited and the employee will be expected to return to their country of origin at the end of their secondment.

64. The Scottish Government view is that the ICT route should not lead to settlement as the primary function of the route is to allow multinational organisations to mobilise their workforce quickly to meet their short-term needs. If both parties agree that there is a need for the role to be permanently filled in their UK entity the main changes to the ICT category mean that ICT migrants should switch to the Skilled Worker category from within the UK. Whilst the time spent under the ICT category does not count towards the 5 years required to apply for indefinite leave to remain, the ability to switch to the Skilled Worker category does provide ICT migrants with a path to settlement. However the Scottish Government is clear that the switching process should be quick and flexible to facilitate settlement in the UK.


Contact

Email: Olivia.Pires@gov.scot