Immigration - What will David Cameron's "One last go" mean for employers?

November 20, 2014

It is hardly news that immigration is in the news. When is it not? Six months from a General Election, it rides high on the political agenda and is clearly exercising politicians and public alike. HR Law offers a brief roundup of recent Government announcements, policy developments and practical changes – and considers how far they will really affect employers.

The big picture

The PM is obviously frustrated and rattled at the lack of headway in delivering his manifesto promise to reduce net migration from hundreds to tens of thousands by the end of this Parliament. He won’t achieve it. He wants “one last go” at the issue before the election. A Conservative minister gets into hot water for saying some areas of the UK are “swamped” by migration; a former Labour Home Secretary under whom it spiralled exponentially defends him. The Archbishop of Canterbury calls for a “generous” immigration policy. UKIP taunt the coalition and say they can deliver real results that the public wants. Business is saying something different, and eyes with trepidation policy ideas which could reduce its access to a lower cost and more flexible workforce. Our European partners warn us of isolation if we break with fundamental EU principles of free movement and labour market access. The Home Office presses on with refinements of detail to immigration law in practice, and ramps up its focus on enforcement. So, is it all about to change again? Well, no. Not really.

Teasing out the real issues for employers

European free movement and labour market access

With European free movement back on the agenda amid the UKIP backlash, the Government is talking tough. Detail is lacking, but the PM has promised a raft of announcements and a proposal “by Christmas” to limits numbers, in part by blocking access to benefits. It welcomed an ECJ ruling (11 November) on a German case which appears to support the legality of properly defined restriction of access to benefits provided rights of free circulation are not interfered with. A lot of legal argument may yet hang on that proviso.

How will it affect employers? We shall see what the PM’s announcement contains. But there is little business can do to prepare, and no likely discernible impact beyond the lowest-skilled margins of the labour market.

Changes to Tier 1

Phased implementation from 20 October of a Statement of Changes in Immigration Rules HC 693 has wide-ranging effects including a raising of the new investment threshold in Tier 1 (Investor) to £2 million.  A few employees are Tier 1 (Investor) migrants; we dealt with a case recently, but there will be little wider impact. Policy clarifications emphasised that Tier 1 (Entrepreneur) is strictly for the self-employed migrant and that any disguised employment amounting to a de facto employment relationship is expressly prohibited. This may throw up anomalies for professional practices with LLP structures whose migrant partners make a capital contribution, but where HMRC decides to challenge self-employed status. New Home Office guidance on Tier 1 categories was published on 17 November and reflects the latest changes.

Changes to Tier 2

Tier 2 (General) - greater powers are being given to Entry clearance officers and caseworkers to refuse applications wherever there are “reasonable grounds” to believe that that the job advertised does not really exist or has been exaggerated to meet the Tier 2 skills threshold, or has been tailored to block out resident workers based on requirements which are not really core. There is some evidence of “abuse” (a favourite Home Office word) in this area. Sponsors beware; HR should be vigilant when used pressure from managers who do not grasp that manipulating the system in this way is a serious breach with painful – and sometimes criminal – consequences.

Tier 2 (ICT) –a drafting error has been corrected which caused post-2011 permission in Tier 2 (ICT) to count towards a maximum permitted 6 years in other Tier 2 categories. It will no longer do so.

A new Online Application Service is being introduced for some Tier 2 applicants which promises a more user-friendly experience than the paper form and more intuitive questions. Those with experience of online entry clearance applications will reflect that being online with the Home Office is not always an intuitive or easy experience.

Changes to Visitor rules

When the Government promises simplification in an immigration route, confusion and layering of complexity often follows. The Home Office has been turning its attention to the issue of Visitors. 

Lack of clarity as to the scope of acceptable business visitor activity – i.e. when there is a risk of crossing the line into work – has long vexed employers, and required careful analysis on a case-by-case basis.

There were limited changes earlier this month, but extensive proposals to redraft Visitor rules are out for consultation. It is acknowledged that the present list of “permitted activities” is too imprecise and open to interpretation. Permitted Paid Engagements (PPEs) are to be redefined and there will be rationalisation of the present guidance and rules. How far “exceptions” permitting hands-on productive “work” within Visitor routes will survive is one of the issues; an option is to move them into defined PPEs. We will report on this as matter develop.

And finally…

Is immigration good for the economy?

A pertinent question for employers. Recent survey results have been seized on by all sides of the debate. Certainty is always elusive when discussing immigration.

The Government argues for prudence and control. Liberals to the left and libertarians to the right are dismissive of these instincts, arguing that risk is overstated and its management overvalued.

A much-reported conclusion of a recent UCL study on the fiscal contribution of migrants was that new EU migrants had contributed almost £5bn to the economy via net tax receipts over benefit claims in the run-up to 2011. However, Migration Watch UK has criticised the headline report’s highly selective use of data. Elsewhere, the same study concludes that non-EU migrants cost the UK taxpayer £117bn between 1995 and 2011. The longer time frame may be very significant: migrants age like everyone else, and as they do so, become less economically productive. 

Now, the CBI has drawn attention to skills gaps and, at its November conference, urged the PM that Europe and immigration are a solution, not a problem. David Cameron promised reforms to enable more skills training for the resident workforce. Training is expensive, of course. Migrant labour often comes fully trained and helps to suppress wage demand to boot – great for your bottom line. Chief Inspector of Schools Sir Michael Wilshaw declared this month that employers have a “moral imperative” to improve training to the resident workforce at their cost rather than reach for the immigration lever. So which will employers prefer? Does the labour market have morals? Another one for HR to ponder.


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