Employing people from outside the UK – how recent and future changes to UK immigration laws could impact your business

Immigration is never far from the headlines and never has it been so widely discussed as in the lead-up to the EU referendum. There is much debate over whether leaving the European Union would mean that nationals of the European Economic Area (or EEA, being the EU member states plus Norway, Lichtenstein and Iceland) would lose their visa-free access to the UK. Whilst the post-Brexit future for EEA nationals is deeply uncertain, we do know what measures the Government will be implementing in respect of migrants from outside of the EEA and those working here illegally. As discussed in this article, the Government is implementing measures to make the UK an increasingly hostile place for people who are here illegally, whilst also trying to strike a balance between reducing overall immigration but not discouraging those who can add value to our economy.

Clamping down on illegal working

The Immigration Act 2016 which recently came into force (and will be enacted over the next few months through regulations) will introduce new measures to make the UK a more difficult place to live and work illegally. As set out in our recent blog, once implemented, a new offence of illegal working for workers will be created and those working here illegally will face a potential sentence of up to 6 months and/or a fine and their earnings may also be seized as the proceeds of crime. Employers who know, or have reasonable cause to believe, that they are working illegally will also face tougher sentencing and fines. Whilst the maximum fine for employers will remain at a hefty £20,000 per illegal worker, the maximum custodial sentence will be increased from 2 to 5 years. Immigration officers will also be given new powers to close some employer’s premises for up to 48 hours where illegal working is suspected and the employer cannot provide evidence of right to work checks.

To avoid these potentially devastating penalties, businesses must have in place a clear system for checking each employee’s right to work in the UK. This involves checking the employee’s passport, ID card and visa (if they have one) and being satisfied that the evidence that they provide shows that they are legally permitted to do the job on offer. Currently, employees from the UK or the EEA can work here without a visa, but most others will need some form of visa to work legally in the UK. Employers must keep a record of each check to ensure that they maintain a “statutory excuse” against a penalty. If you employ someone on a visa which will expire at some point in the future, you also need to have a clear system in place for checking their right to work when this expires.

The Immigration Act 2016 builds on the Immigration Act 2014 which received Royal Assent two years ago and made what was described at the time as “fundamental changes” to the immigration system. Amongst these changes was the introduction of the right to rent scheme which came into force earlier this year, which requires landlords of residential premises to check the immigration status of prospective tenants and other occupiers. The Immigration Act 2016 also widened the potential penalties under the right to rent scheme so that they mirror the tougher penalties for employers who employ illegal workers. The combined effect of these measures will be to make it much harder for people to live and work here illegally and to put the burden of checking this on to those offering homes and jobs.

Changes to the rules on sponsored workers

The Immigration Act 2016 also contains the power to introduce a new “skills levy” on businesses sponsoring workers from outside the EEA. This is expected to be introduced in April 2017 and the Government has announced that the charge will be £1,000 per worker per year (there will be a lower charge of £364 for small and charitable sponsors). The Government’s aim is to encourage employers to recruit and train UK employees, rather than employ them from overseas, and the money will go towards funding apprenticeships. Whilst some migrants will be exempt (those in PhD level occupations, on Tier 2 Intra Company Transfer Graduate Trainee visas and those transferring from Tier 4 General visas to Tier 2), for the majority of employers this will mean that the cost of employing someone from outside of the EEA will be significantly higher.

This new charge will join the various existing costs associated with sponsoring workers. Employers who want to recruit staff from outside of the EEA will firstly need to apply for a sponsor licence if they don’t already have one – the fee for a 4-year licence is currently £1,476 (£536 for small or charitable sponsors). If you want to then sponsor someone on a Tier 2 visa you’ll need to assign a certificate of sponsorship (at a cost of £199) and then the visa application fees can range from £437 to £1,828 per person. There is also the relatively new immigration health surcharge to pay of £200 per year of the visa.

The new skills charge is just one of a number of measures that will be implemented over the next year as part of the Government’s pledge to reduce net migration to the UK from the hundreds of thousands to the tens of thousands. Just over half of the 300,000 or so people migrating to the UK are from outside of the EEA and so our immigration laws can control whether they are given permission to work or study here to a certain extent. The main changes in the pipeline that employers need to be aware of are:

• The minimum salary that can be paid to workers on Tier 2 (General) visas is increasing sharply. Currently the minimum is £20,800 (or the minimum rate for the role, if higher) but from April 2017 this will increase to £30,000 for most experienced workers (those aged over 25 and not switching from a student visa). Since April of this year there has also been a new minimum salary of £35,000 for Tier 2 migrants applying for indefinite leave to remain.
• The Immigration Health Surcharge of £200 per worker per year will eventually be payable by all Tier 2 migrants – since April 2016 people from Australia and New Zealand have had to pay this and from autumn 2016 those applying for a Tier 2 Intra Company Transfer (ICT) visa will also be charged.
• There will be significant changes to the Tier 2 ICT route – two of the four sub-categories will be phased out with the skills transfer category being closed to new applicants in autumn 2016 and the short term staff category being closed in April 2017 (and the minimum salary for the short term staff route increasing to £30,000 in autumn). By April 2017 only the graduate trainee and long term staff routes will remain. The graduate trainee route will be slightly more accessible with employers able to employ 20 graduate trainees each year. Otherwise, only employees who have worked for the overseas group company for 12 months (or who are paid £73,900 or more) will be able to apply for an ICT visa in the long term staff route.
• Some employees may find it easier to hire staff from outside the EEA, though – from autumn 2016 extra weighting will be given to overseas graduates applying for a Tier 2 General visa and they will be able to switch roles once they have completed training without applying for a new visa. Also, from April 2017, those relocating high value business to the UK won’t need to advertise the role and it will be easier for them to be sponsored, although we don’t yet know how either of these measures will operate in practice.

If your business relies on recruiting or transferring employees from outside of the EEA then you may have to review your existing recruitment practices and/or budget for the increased costs of sponsoring workers once these changes take effect over the next year.

Employmentbuddy.com