Employing foreign workers in the UK – Guide to new Licensing Regulations for Employers
24 August 2008
Introduction:
The UK Border Agency (part of the Home Office) has announced that from "the end of November" employers who wish to employ skilled migrant workers from countries outside the EEA (i.e. the countries of the EU, Norway, Iceland and Liechtenstein) and Switzerland must first apply for a licence. Charities and small businesses must pay £300 for a licence and all other employers will be charged £1,000. In addition employers must obtain a 'Certificate of Sponsorship' for each migrant worker at a cost of £170 per certificate. Breach of these regulations may lead to civil or criminal penalties. Employers who wish to apply for a licence are urged to do so before 1st October. Background:
The principle that employers are liable for checking the immigration status of their employees was established by the Asylum and Immigration Act 1996. A further 6 statutes culminating in the United Kingdom Borders Act 2007 have increased employers' responsibilities and replaced the previous work permits with a points based system based on the Australian model. These licensing regulations impose considerable burdens on all employers who wish to employ skilled migrant workers from outside the EEA and Switzerland ("SMWs") in six areas:
• the rigidities of the points system itself;
• the financial costs of applying for a licence and obtaining a Certificate of Sponsorship;
• the administrative complexity of the application process;
• ongoing administrative obligations to monitor the immigration status of SMWs;
• the risk of civil and/or criminal sanctions for non-compliance;
• the risk of breaching the Race Relations Act 1976. Summary of the Points System:
Non EEA migrants who wish to work in the UK must fall within one of five categories or 'tiers'. Only tiers 2 and 3 are likely to be relevant to the majority of employers: SMWs are classified as tier 2 and low skilled workers filling a temporary/seasonal demand constitute tier 3. The licensing regulations relate to tier 2 or SMWs. Tier 3 workers are currently barred from working in the UK. To be eligible to work SMWs must score a minimum of 70 points in the following areas:
• Skills (a minimum of level 5/NVQ);
• Proficiency in the English language;
• Expected earnings of at least £17,000 p.a.;
• Savings of at least £800 for those applying from within the UK but additional savings of at least £600 per dependant for those applying from outside the UK;
• Formal educational qualifications. In addition a prospective employer must be able to satisfy one of two tests: either the SMW's job must be included in a list of occupations deemed by the Government as incapable of being filled by domestic/EEA labour or the employer must satisfy the UK Border Agency ("UKBA") that they have been unable to fill the vacancy from within the domestic/EEA labour market. Financial Costs:
Charities and small businesses (a small business for these purposes must satisfy at least two of the following tests: annual turnover no greater than £5.6m, balance sheet no greater than £2.8m and a maximum of 50 employees) are liable for a fee of £300 for a licence application; all others must pay £1,000. Note that the fee is payable on application and will not be refunded if the application is refused or withdrawn. Employers with more than one place of business in the UK may make one application, and pay one fee, for all places of business but subsequent additions will incur a further fee. Once a licence has been granted each SMW employed requires a 'Certificate of Sponsorship' at a cost of £170 per employee. Intra-group company transfers of SMWs are permitted without the need for an additional licence where there is evidence of common ownership or control. Similarly transfers between joint venture companies do not require an additional licence. Applying for a Licence:
The UKBA will use a rating system to determine whether an employer is deemed to represent a sufficiently low risk of employing SMWs who are not entitled to work in the UK. The factors rated (on a scale of 1-3 where 1 represents the highest standard, 2 indicates technical breaches such as a discrepancy between the job description on a work permit and the job held in fact but where the employer has a reasonable explanation and 3 indicates substantial shortcomings) are separated into two groups. In the first group:
• Historical/current compliance with the work permit system;
• Record keeping systems;
• Checks on the accreditation/qualifications of all employees;
• The ability to monitor the immigration status of all employees;
• The ability to monitor contact details of migrants;
• The ability to monitor the whereabouts/attendance record of migrants. The second group concerns the ability of an employer's HR function to carry out 'sponsorship' duties [see group 1 above and 'Administrative obligations' below]. Note that the standards expected of employers apply regardless of the size of the employer: there are no 'small employer' exemptions or derogations. Employers who apply for a licence may expect to receive 'pre-licensing' visits from the UKBA. To satisfy the requirements of the UKBA an employer must achieve either a score of 1 in both groups and thus an 'A' rating (indicating little or no risk of breaching immigration law) or a score of 1 and 2 giving a 'B' rating (indicating partial compliance). Employers given a 'B' rating will be given a "time-limited action plan" the object of which is to ensure that they achieve an 'A' rating. Administrative obligations of Licence holders:
The principal HR obligations of a licence holder are set out in the first group of factors above. In particular HR must copy (and retain for at least two years from termination of a SMW's contract of employment) all relevant documentation showing a right to work in the UK; assess the immigration status of a migrant as indicated by a considerable number of 'stamps'; take reasonable steps to check for forged documentation; ensure that a SMW is not employed beyond the expiry of a 'certificate'. Additionally a licence holder is required to establish an administrative hierarchy of notable complexity:
• Applications must be made by a senior manager (the "Authorising Officer") who would normally be expected to be the key contact for the UKBA. However the AO may appoint a "Key Contact" to liase with the UKBA;
• The AO is responsible for vetting SMWs by checking the Home Office and Police computer systems;
• Either the AO or a "Level 1" user appointed by the AO will have administrative access to the UKBA "Sponsorship Management System" and will assign individual certificates named SMWs;
• Further minor administrative roles are assigned to a "Level 2" user. Note that a licence cannot be voluntarily relinquished without proof that the employer no longer retains any SMWs. The UKBA has published a number of Codes of Practice and Guidance Notes (inevitably voluminous) for employers. Useful contact details are: the Immigration Enquiry Bureau 0870 6067766; the Work Permit Support line 0114 2074074; the Sponsorship and Employers' Helpline 0845 0106677; the Employers Checking Service www.bia.homeoffice.gov.uk/employers/employerssupport/ecs. Sanctions for non-compliance
The UKBA seeks to ensure compliance by making pre-arranged or unannounced inspection visits to licence holders. Civil penalties include a fine of up to £10,000 per migrant worker, revocation of a licence, demotion to a 'B' rating and 'naming and shaming' of offending employers. Where there is evidence that an employer "knowingly employed an illegal migrant worker" criminal sanctions include an unlimited fine and/or 2 years imprisonment. Avoiding Race Discrimination
One last but important point; to avoid allegations of race discrimination all prospective employees regardless of their appearance should be required to provide documentary evidence showing their entitlement to work in the UK. N.B. This note is a summary of an area of law bedevilled by detailed complexity and should not be taken as a definitive statement of the law relating to the immigration status of prospective employees. Professional advice should be obtained.
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