Shifting ground: the broad impact of recent UK immigration policy changes

On 22 July 2025, the UK government marked a significant turn in its approach to immigration, implementing the first wave of changes outlined in its latest immigration white paper. These reforms, aimed at reshaping the future of the UK workforce, carry implications for all business. While much discussion has centred on sectors like retail, hospitality, and accommodation, the new rules have sent ripples through the entire economic landscape, affecting organisations of every kind.

Key changes to the immigration landscape

Several pivotal changes came into effect in July, each one designed to tighten existing requirements and redefine eligibility for those seeking to work in the UK:

• Skills threshold raised: The required skill level under the Skilled Worker route has been increased from RQF Level 6 to RQF Level 3.
• Salary thresholds and going rates increased: The minimum salaries and going rates for most occupations have increased.
• Closure of visa routes for care workers: The specific visa pathway for care workers and senior care workers has been closed for overseas recruitment, removing a vital channel for addressing personnel shortages in social care.
• Establishment of the Temporary Shortage List: This new mechanism identifies roles experiencing acute shortages, providing a degree of flexibility for affected employers, but only for those occupations that make the cut.

Each of these measures brings new barriers and considerations for employers, international job seekers, and existing staff whose status may be affected.

An intensifying challenge for UK employers

Labour shortages have remained a persistent challenge in the UK, exacerbated by shifting immigration policies over the past two years. The recent increases in salary thresholds and skills requirements, coupled with the closure of certain visa routes, make it increasingly difficult for employers to address ongoing gaps with international talent. The scope of these changes is not limited to any one sector; they impact everything from agriculture and manufacturing to services, logistics, and more.

A particularly far-reaching aspect of the new rules is the reversal of earlier, post-Brexit relaxations, which now prevent sponsorship of certain occupations unless they appear on the Temporary Shortage List. While transitional arrangements exist for those already sponsored prior to 22 July 2025, new sponsorship for many roles is now out of reach.

Profound effects throughout the workforce

Though the list of affected roles is extensive within the retail, hospitality, and accommodation sectors, its breadth underscores the impact across the supply chain and beyond. From managers and directors, buyers and procurement managers, to chefs, butchers, and bakers, the limitations on sponsorship for these roles reflect the wider implications for all industries reliant on both skilled and lower-skilled labour.

Crucially, the increased salary thresholds do not merely serve as a deterrent for employers considering sponsorship; they pose a real financial barrier. Even organisations able to budget for higher salaries may find themselves unable to sponsor new migrant workers if the role does not meet the updated skills criteria. As a result, workforce planning, recruitment strategies, and budget allocations require urgent reassessment.

Challenges facing existing international talent

The effects of these policy changes are not limited to new sponsored workers. Organisations are witnessing mounting issues among their existing international staff, many of whom may struggle to meet new sponsorship rules based on salary or skill level. Key concerns for employers include:

• Retention of staff: Uncertainty over immigration status and potential impacts on employees’ families can drive attrition, particularly among skilled workers whose visas may be up for renewal or extension.
• Budget constraints: Increased Immigration Skills Charge (ISC) costs, paired with higher required salaries, place additional pressure on organisational budgets.
• Compliance challenges: Staff who do not meet revised sponsorship rules may be unable to switch roles or extend visas, further complicating workforce stability.

With additional changes set to take effect from next month, employers are urged to assess their exposure and take steps to mitigate risks. The most prudent organisations are reviewing their talent pipelines, sponsorship arrangements, and succession planning well in advance.

Broader implications and unintended consequences

The UK government’s recent approach appears to be more focused on policy goals than on comprehensive impact assessment. The absence of a holistic review means that the true reach and complexity of these changes may only become evident over time. For instance, losing the ability to retain key international staff could result in critical employment gaps, affecting not just productivity but also continuity and service delivery in certain sectors such as Financial Institutions, International Trade and Manufacturing.

The broad sweep of these reforms is felt by large multinational corporations and small local enterprises alike. Businesses at every scale must now contend with a more constrained talent pool, higher costs, and greater administrative complexity. This environment demands agility, foresight, and proactive engagement with new and evolving immigration requirements.

Looking ahead: strategies for adaptation

In light of these significant changes, organisations must consider the following actions to navigate the new landscape:

• Conduct workforce impact assessments: Scrutinise current and future staffing needs against the new immigration requirements to identify vulnerabilities.
• Review sponsorship arrangements: Ensure compliance with updated skills and salary thresholds; anticipate potential issues with extensions or role changes for existing staff.
• Enhance talent retention strategies: Support international staff through clear communication, assistance with visa issues, and robust HR processes.
• Monitor policy developments: Stay informed of forthcoming changes, particularly those expected in the coming months and consult immigration specialists where needed.
• Budget for increased costs: Account for higher salary thresholds and ISC fees in recruitment and retention planning.
• Engage with sector networks: Collaborative dialogue within and across industries can help share insights and solutions to common challenges.

Certain recent changes are expected to significantly affect individuals and may result in operational disruptions for businesses. For instance, consider a scenario involving an employee working under a dependent partner visa, linked to a Skilled Worker visa holder. If the Skilled Worker loses their visa—such as through redundancy—and is unable to secure new employment, it may become necessary for the dependent's employer to sponsor her, provided the position qualifies for sponsorship. However, if the role is listed on the Temporary Shortage Occupation List, sponsorship complications arise, as roles on this list preclude dependents. Consequently, the affected family may choose to relocate outside the UK, potentially impacting business continuity.

The July 2025 changes to UK immigration policy represent more than a tightening of rules. They signal a fundamental shift in how organisations must think about talent, workforce planning, and future growth. While the immediate impacts are most visible in sectors already grappling with shortages, such as retail, hospitality, and living, the underlying issues touch every employer who depends on a diverse and skilled workforce.

As the government prepares for further reforms later this year, our recommendation is that all organisations act decisively, remain vigilant, and adapt to the evolving immigration landscape to safeguard their workforce and ensure operational resilience. The conversation will undoubtedly continue, and the effects of these policies will shape the UK’s labour market in the short to medium term.

Robie Ramos is a Managing Associate in our Employment team in Newcastle. He specialises in global mobility & immigration, helping corporate clients navigate the UK's complex immigration landscape. Additionally, he supports clients with UK outbound immigration through our global network of member firms via Lex Mundi.

For practical solutions and expert insights, listen to our new HR Moments Podcast, where Gearalt Fahy and Robie Ramos discuss strategies for navigating the new immigration landscape – just in time for International Trade Week!