The UK’s new immigration regime, 6 months on: Five Tiers, and Five tips

Although the first elements of the UK’s “tough, new Australian style” Points Based System for immigration were implemented at the end of February 2008, and the roll-out has continued in stages since, the most significant impact – supposedly the “D-day” for employers – has been the introduction of Tier 2 at the end of November. By sweeping away all but the last vestiges of the long-established work permit system, and forcing employers who wish to sponsor non-EEA migrant employees to apply for licenced status, Tier 2 demonstrates the UK Border Agency (UKBA) ’s determination to “get tough”. Applicant employers are obliged to open their HR records to UKBA inspection, without notice, and those who have taken too relaxed an approach to anti-illegal working compliance find themselves exposed as they accept the burdens of scrutiny and liability which accompany licensed sponsor status.  This is precisely the Government’s intention.

So, six months on, how is the new system – and how are those forced to use it – faring?
Since “D Day” coincided neatly with the gathering economic storm and a consequent climate of hiring freezes and redundancy, many HR and legal functions adopted a “wait and see” approach, and initial take-up of the system was, to say the least, unenthusiastic. Government advertising featuring pictures of hurdles and warning of dire consequences (fines and imprisonment) for those employing illegal workers did not encourage employers to rush to expose themselves to scrutiny, either. Slowly but surely, however, the Home Office has slammed the gate on alternative routes, and many employers have since concluded that there is no alternative to biting the bullet and applying for sponsor licensing.
Even as they do so, the immigration environment continues to harden and the regulatory grip has tightened. Reflecting the wider shift away from light touch regulation and the laissez-faire approach, UKBA is revisiting, with increasing force, situations which, a few years ago, it would have let pass by. Immigration routes which employers once took for granted become less accessible or, in some cases, close forever. As the high tide of popular discontent about foreign workers reaches level not seen since the 1970s, the Government wants to be seen to be “protecting” the resident labour market – and to be in control of a perennial election issue. 
Here is a brief review of developments within the five tiers of the PBS:
Tier 1 – Highly skilled workers
For skilled employees with a job offer, Tier 1 offered a relatively accessible alternative to the sponsorship route until, at the end of March 2009, UKBA ramped up the criteria by demanding a master’s degree or approved equivalent for all new applicants. The impact was felt immediately, not just by employers who had regarded this as a convenient escape route from sponsor licensing, but for increasing numbers of redundant work permit-based city workers. 
Tier 2 – Skilled workers with a job offer
Although employees with work permits are allowed to remain in post for the duration of their immigration permission, the sands of time are running out for many and, unless they qualify for indefinite leave on the basis of five years’ continuous employment, they will be dependent on a licensed employer for continued sponsorship.
Meanwhile, the Government has tightened its shortage occupation criteria and now demands highly prescriptive advertising – including through its Job Centre Plus scheme – for all but intra-company transfer, religious worker and sports applications.
Fast track arrangements for extending in-country immigration permission (leave to remain) for applicants switching into Tier 2, have run into predictable difficulty, due to lack of Home Office capacity in meeting demand. In practice, this means that many employees required to travel frequently on business can be trapped in the UK whilst waiting for time-critical immigration applications to be filed or concluded. In order to address this, UKBA is unveiling an enhanced fast track service, the detail of which is awaited in early June.
The most ominous development, which has escaped the attention of the wider media – but is of increasing concern to employers’ organisations, including the CBI, concerns consultation currently being undertaken by the Migration Advisory Committee (MAC), which reports to Government on labour market needs. The MAC has been asked to consider the case for restricting Tier 2 to shortage occupations only. The potential implications are huge. In particular, it would mean that employers would no longer be able to transfer skilled staff from overseas offices to the UK on an intra-company transfer basis unless they happened to be in a small number of MAC-approved shortage occupations. In practice, this may be a bridge too far for business and commerce, and represent a regulatory overshoot at the very time the UK needs non-EEA talent and expertise to harness the opportunities of economic recovery.
Tier 3 – Low skilled, temporary workers
Unsurprisingly, the suspension of Tier 3 continues indefinitely. The assumption that low-skilled labour needs can be met from the expanded European Union is more or less unchallenged. 
Tier 4 – Students
Students, universities and educational institutions are also caught by the demands of sponsorship – and must register in order to sponsor overseas students.
Tier 5 – Youth mobility, temporary and miscellaneous
Employers have been surprised by the restrictive nature of Tier 5. Only a handful of friendly Governments,  UK Government or regulatory bodies and employers in specialist sectors such as charities or the arts can t sponsor migrants in the miscellaneous categories which comprise Tier 5. Even here, there are annual quotas – for example, the quota for Japan has already been reached. The biggest impact has been on internships in the financial and commercial sector; long-established migration routes such as Training and Work Experience (TWES) work permits and exchange programmes (BUNAC, IAESTE, etc.), have been wholly or partially shut down.  Employers wishing to sponsor high-calibre non-EEA students, with a view to future long-term employment, find that the only available route is through Tier 2. With its attendant requirement to advertise (and therefore set up competition with the resident labour force) for such positions, this sits awkwardly with employers’ diversity policies and desire to foster global talent. Regulatory bodies representing groups of employers, such as the Law Society, have themselves registered as Tier 5 sponsors in order to fulfil a “third party” sponsor role, but this is proving only a partial solution.
Top tips
All employers who employ non-EEA employees, or who may do so in future, should take steps to protect themselves from liability for illegal working  as UKBA rapidly steps up its enforcement activity. If you have applied, or are applying, for a sponsor licence, the spotlight will be on you. Here are some top tips:
1.                   Anti-illegal working compliance: make sure that your systems are up to scratch in ensuring that all employees have permission to work before they enter employment in accordance with the Government guidance on the prevention of illegal working. At the same time, ensure that you are familiar with the Government’s Code of Practice on avoiding discrimination in undertaking those checks. This means following the prescribed steps for inspecting, copying and retaining copies of original documents. For those employees subject to immigration control whose employment commenced on or after 29 February 2008, you must re-check every 12 months. Failure to do all of this may mean that there will be no statutory excuse if a breach is exposed. If you are applying for a sponsor licence, UKBA will come calling sooner or later, and knows what to look for. 
2.                   Employee management: employers are increasingly finding that hitherto undetected immigration problems are coming to light. Handling the consequent employee issues in a non-discriminatory but effective manner is a challenge. Even where internal investigation concludes that status is illegal, dismissal is not always a safe or sensible course of action. Avoid panic reaction and, if in doubt, take advice.
3.                   If you have not applied for your licence already, consider doing so now.  If you have work permit employees approaching expiry, you will be faced with the prospect of being unable to continue their employment if you do not act. The reality is that non-licensed employers will be unable to sponsor employees – which is exactly how the Government intends it to be. Once the economy turns and the hiring freezes thaw, those without a licence may find themselves commercially disadvantaged. 
4.                   Before applying for your licence, make sure you are ready – read the Government guidance (yes, all of it), troubleshoot historical immigration problems which come to light and make sure that your anti-illegal working compliance and HR systems are robust. Audit your files for historic compliance. Ask: can you comply with the enhanced responsibilities – the generic and tier-specific duties to notify UKBA of a range of circumstances affecting sponsored employees – once licensed? How should your HR processes be enhanced? Do you suspect lurking problems with the immigration status particular employees which you need to address, but are afraid to confront?
5.                   If you are already licensed, you may have escaped a UKBA inspection. But sooner or later, UKBA will call. And if they have called before, they may be back.  Do not be found wanting – ensure that your anti-illegal working measures are robust and that you are on top of your sponsor’s responsibilities – but that you have not exposed yourself to employment claims by acting in a discriminatory manner in getting there. See 1- 4 above.
 
Welcome to a brave new world!
Matthew Davies leads the business immigration practice at Fox Williams LLP. He can be contacted on 020 7628 2000 or at mdavies@foxwilliams.com
 
Articles are correct at the time of publication
 27 May 2009

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