What do the new student visa rules mean for employers and students?

Feb 16, 2024 | Home Featured, Sector & policy, Webinars

ISE’s Stephen Isherwood considers the new visa rules for international students and what they could mean for employers, students and careers teams.

In December the Home Secretary, James Cleverly, announced a set of changes to the UK’s visa regime. These are due to come into force in the coming months. But although the proposed changes were announced to parliament, much of the detail wasn’t and is still being worked on.

For employers of graduates, the most significant change will stem from plans to increase the headline minimum salary for the skilled worker visa to £38,700.

The Migration Advisory Committee (MAC) has also been instructed to review the graduate visa which enables international graduates to work in the UK for two years (three years for those with a Phd).

Impact of increased salary threshold on graduates and employers

Many employers use the skilled worker visa for international student hires instead of relying on the graduate visa.

The skilled worker visa provides certainty of employment from day one for the student and employer. Graduates hired through the graduate visa route may also need to transfer to the skilled worker visa when the two-year period expires.

It is unlikely that employers will need to pay recent graduates the full new skilled worker rate as a lower salary threshold is currently applied to new entrants to the labour market. The government currently set this at 70% of the full rate, but have not confirmed if this will apply after April.

The impact of the proposed changes on employers is two-fold.

New graduate hires sponsored through the skilled worker route will likely need to meet a much higher salary threshold. Even if the 70% rate continues to apply, the minimum salary for most graduates on the skilled worker route would increase to £27,090 – a significant increase on the current average rate of £20,480.

Employers converting graduates previously hired on the graduate route to the skilled worker visa will also need to meet the new salary threshold. This doesn’t only apply to new hires, but could also apply to existing employees who currently possess a graduate visa.

For employers who use the apprentice levy mechanism to train graduate hires, the graduate visa also creates complications as international hires are expected to hold a visa that covers the entirety of the training period.

Discrimination against international students is unlawful

It is illegal in most cases for employers to discriminate against international students and graduates.

Employers must only employ individuals with a right to work in the UK, but it is unlawful not to accept applications from, or employ someone, on the basis of their nationality (there are some exceptions to this rule, e.g. defence roles).

Employers now face the challenge of how to progress international student applications in the middle of a recruitment season when the rules surrounding salary thresholds are unknown.

Anecdotally, some tell us they are progressing applications as usual but deferring hiring decisions until later in the year, others have put international student applications on hold, others are trying to work out the best course of action. Until the government clarifies the new visa rules, there can be little clarity for employers or students.

Unintended consequences will flow from the proposed changes. For example, visa salary thresholds are national so could reduce regional opportunities for international students – salaries in London and the South East are often higher, regional salaries may not be high enough.

Why review the graduate visa route?

The graduate visa route helps UK higher education remain internationally competitive. International students add a richness of experience to campus life and increase the UK’s global reputation – but they also pay much higher fees than home students.

International students cross-subsidise UK home students. Because the level of tuition fees for UK students has barely increased over the last twelve years, inflation has significantly eroded their value.

Universities have increased levels of international student recruitment, particularly at masters level, to help fill funding gaps.

The government’s latest Reducing Net Migration Factsheet states, ‘We will be asking the MAC to review the graduate route to ensure it works in the best interests of the UK, to prevent abuse and protect the integrity and quality of UK higher education’. They haven’t said when the review will be completed by, but it is expected to be delivered at some point in 2024.

The government doesn’t have to include internationals students in net migration figures of course, as many return home after their studies. The All Party Parliamentary Group on International Students has in the past called for them to be excluded, only included when they take up a work visa.

What happens next?

The government also intends to reduce the number of jobs listed on the Shortage Occupation List and replace it with an Immigration Salary List – the list makes it possible for employers to sponsor visas in shortage areas, e.g. social care, below the minimum salary threshold. This list is expected to be published in April.

The government will formally revise the visa regulations through a statement to parliament. They’ve said they intend to do this in two phases on 19 February 2024 and on 14 March 2024. This might be when we hear about the new entrant salary level. The skilled worker minimum salary increase takes effect on 4 April.

We have only looked at two visa routes in this article, but the rules that cover international students and workers are complex.

There are a number of visa routes, a range of fees for employers and visa applicants to pay, and many rules that cover other factors such as dependents. Different salary thresholds also apply to different roles on the shortage occupation list.

To help employers, careers teams and students, ISE has collaborated with the International Student Employability Group (ISEG) to create the guide to recruiting international graduates.

We also highly recommend that employers obtain specialist advice on the employment law that applies to hiring international workers.

We also recommend that employers and universities stay close to students, candidates and existing employees who will all be naturally very worried about the uncertain situation.

As 2024 is a general election year and as immigration is a hot political topic, I expect we’ll be returning to this subject more than once in the months to come.

Watch the webinar on visas and international students.