Kelly Hardman

Hospitality businesses in Scotland looking to hire overseas talent to support their operations – at a time when domestic recruitment can be difficult – now face a new hurdle following the UK government’s implementation of new salary thresholds in early April.

Under the new rules, hospitality businesses who look to the Skilled Worker visa route to bring overseas talent to fill key roles will need to pay those workers at least £38,700; an increase of almost 50% over the previous salary threshold of £26,200 and far more than the average salary across large parts of the country.

In addition to the increases, the going rate of pay for specific occupations will increase to the median rate based on equivalent roles.

For example, the going rate for a chef, as well as for a manager of a bar, restaurant, or café, has been raised to nearly £31,000. But businesses will be required to pay the higher £38,700 base level to hire into these roles via the Skilled Worker sponsorship route unless the worker qualifies for a discount as a ‘new entrant’ (i.e under 26).

The new thresholds have the potential to negatively impact the UK economy and deliver another blow to an industry that is already suffering and seeing their bottom lines erode. In many instances, and particularly outside of London, the £38,700 threshold exceeds the average annual salary and is simply unaffordable for many hotels, pubs, bars and restaurants.

In the past year, the costs of both making a visa application, as well as the associated mandatory payment to use the NHS (the Immigration Health Surcharge) have increased exponentially. Coupled with these new heightened salary levels, one would question whether the system has now become too prohibitively expensive for this hospitality sector to access altogether. This is particularly ill-timed given the well-reported rising overheads and hiring struggles faced by many businesses.

The UK government’s five-point plan to lower net migration is a clear driver to these recent changes and calls into question whether these motivations are superseding the needs of struggling businesses that are underpinning this sector of the UK economy.

Sectors and industry within Scotland, as well as across the UK more broadly, have repeatedly highlighted the struggles with recruitment challenges and labour shortages. The pervasive issue engages with many sectors, but those attracting a lot of attention recently in Scotland are hospitality, food and drink, tourism, farming and fishing. As reported by the media recently, and following a letter signed by industry leaders, the deep concern following the recent changes is yet to see a response from the government. This should be at the heart of the government’s ambitions in supporting this industry, but those perhaps also need to be seen against the backdrop of the debate around regional immigration policies – very much a live issue in Scotland.

The Scottish Government has already set out its vision for a migration policy – one which it says addresses very specific issues north of the border. The report, Building a New Scotland, published in November 2023, found that sectors such as food and drink are experiencing worker shortages and are struggling to fill vacancies, at a time when the working age population is projected to decline.

Companies in Scotland which have often offered employment to international students to address said shortages are also now finding this option less easy, since additional changes to student visas and associated dependant stipulations are impacting Scotland’s attractiveness as a study destination and therefore reducing this recruitment pool.

In addition, the review later this year of the Graduate visa route – through which companies can meantime leverage non-sponsored staff – creates further uncertainty around the issue. Any new tightening of the eligibility criteria certainly won’t help the hospitality sector and would do nothing to solve the long-term problem; if sponsorship becomes necessary, then the new entrant rates mentioned at the outset might still be prohibitive to employers.

Businesses should ensure their voices on the importance of immigration to the economy are heard directly or via relevant trade bodies such as HR in hospitality.

A wider review by the Migration Advisory Committee (MAC), expected later this year, will be another major opportunity before businesses to be heard and to shape the system that they are now so dependent upon.

Kelly Hardman is a solicitor (senior manager) with Fragomen