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Trade deals and immigration

How will future trade deals impact UK immigration policy?

With Brexit negotiations between the UK and the European Union progressing, the UK is keen to start trade talks with the EU as soon as possible. While a trade deal with the EU is a priority, other countries, including India and Australia, have expressed that, in the fullness of time, they also would like to negotiate their own trade deals with the UK.

The UK’s Brexit Secretary, David Davis, has stated that he is looking for a “Canada Plus Plus Plus” trade deal with the EU, a reference to the recent deal between the EU and Canada. Labor mobility is a key element of that deal, making it easier for certain skilled professionals from Canada to work temporarily in the EU, and vice versa.

We can also learn from other trade deals:

  • The Trans-Pacific Partnership (TPP) trade deal currently being negotiated between 11 Pacific Rim countries (notably not including the US, which withdrew from the pact) is also looking to include an element of labor mobility. For example, it is proposed as part of this deal that it will be easier for Australian employers to recruit people from Canada, Chile, Japan, Malaysia, Mexico and Vietnam by exempting them from the usual requirement of advertising the role to Australians as part of the immigration process. In return, Australians will get reciprocal access to the labor markets of these six countries.
  • Likewise, one of the outcomes of the Australia-United States Free Trade Agreement (AUFTA), which came into effect in 2005, was the US E-3 visa, which is available only to Australians. The E-3 visa is similar to the H1-B visa, however more generous in that it has a separate quota of 10,500, is renewable indefinitely and has the additional benefit of the spouse of the main visa holder being able to work. In contrast, the H1-B visa has a quota of 65,000 (for applicants of all other nationalities), is capped at six years and the spouse of the main visa holder is not able to work. Singapore and Chile enjoy similar preferential immigration routes to the US as a result of their free trade deals.

One of the key arguments for voting to leave the EU was that the UK would be able to negotiate its own trade deals. So what are our likely trading partners saying?

  • Australia has spoken of the need for “greater access” to the UK for Australian business people.
  • India has already stated that the UK will need to relax immigration rules and make it easier for professionals and presumably students from India to come to the UK.
  • The EU is another matter entirely with many competing priorities and parties. The degree of labour mobility post Brexit will depend on whether we see a “soft Brexit” or a “hard Brexit”, which is still very much to be decided.

What is certain is that any trade deal the UK negotiates after Brexit will be about more than goods and services. Labor mobility will be a key element and it is therefore inevitable that any future trade deals the UK agrees will have an impact on immigration policy.

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Trade deals and immigration

UK Immigration Update: Monthly quota exhausted?

Monthly allocation of Tier 2 (General) Restricted Certificates of Sponsorship (RCoS) could be exhausted for the first time since 2015

When an organization wants to sponsor a new hire or permanent transfer from outside the UK they will more than likely need to be allocated a Tier 2 (General) RCoS via a monthly cycle managed by UK Visas and Immigration. This monthly cycle ranks applications against a points test with higher paid roles, and those where the occupation is recognized as being in shortage, or skilled to PhD level, scoring more points.

In total there are 20,700 RCoS to be allocated each year, divided into monthly allocations. Any RCoS not allocated in a given month are rolled over to the next month. The allocation is front-end loaded, meaning that there are a high number available earlier in the year, to ensure that there are sufficient numbers available for the busy summer months (when we typically see more demand due to recent graduates applying, together with families moving to the UK for the start of the school year).

Below are some statistics from the year so far. We can see from this that front-end loading the allocation ensures that there are sufficient RCoS over the summer; however, as soon as the allocation decreases to 1,500 we see that the balance rolled over immediately drops.

Application period

New RCoS allocation

Balance rolled over from previous month*

Total RCoS available for allocation*

Number allocated

March 6 –  April 5

2,200

0

2,200

1,844

April 6 – May 5

2,000

332

2,240

1,832

May 6 – June 5

2,000

408

2,326

2,005

June 6 – July 5

2,000

321

2,591

2,440

July 6 – August 5

2,000

151

2,385

2,245

August 6 – September 5

2,000

140

2,387

2,008

September 6 – October 5

1,500

379

2,213

2,182

October 6 – November 5

1,500

31

1,759

1,747

November 6 – December 5

1,500

12

TBC

TBC

*when other factors taken into account (for example, RCoS that have been returned unused to be allocated again, certificates allocated to Croatian nationals and exceptional approvals outside the monthly allocation).

Full statistics are available on the UKVI website.

The lower monthly allocation since October, coupled with limited rollover, means that for the December 2017 allocation there may be as few as 1,512 RCoS available for allocation. Official figures from December have yet to be released; however, we should be prepared to see lower-scoring applications rejected. Applications likely to be impacted are those where the salary is at the lower end of the scale and the occupation is not recognized as being in shortage or skilled to PhD level. If the allocation is not exhausted in December, then the risk remains that the allocation will be exhausted in January. The last time we saw the monthly limit exhausted was in summer 2015.

This could continue to be an issue for employers until April 2018, when the year starts again with the higher allocation of 2,200 RCoS. Employers should manage expectations and be prepared for lead times to increase due to the need to resubmit RCoS applications where they are not successful in a given month’s allocation.

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UK Immigration Update: Monthly quota exhausted?

Mind the gap

Employment law issues seem to be rife with gaps at the moment. We have already reported on the gender pay gap, brought to the fore by the UK’s new reporting regulations for gender pay that took effect on April 6, 2017. However, it looks like we are now dealing with another gap: the skills gap that commentators believe will be one of the consequences of the UK exiting the EU. In fact, we are already seeing the effects, as potential migrant workers are reluctant to come to the UK at a time of such uncertainty. As a result, there is a significant shortage of workers to fill such typical blue collar jobs as drivers, electrician assistants and construction workers. Sectors such as healthcare, retail and construction are among those feeling the squeeze, as they are heavily reliant on EU migrant workers. A study by the Recruitment and Employment Confederation (REC) points out that EU migrants are over-represented in low-skilled jobs, filling 15 percent of them, compared with 7 percent by non-EU migrants and 78 per cent by Britons.

Furthermore, Brexit has led to curbed planned growth and investments for one in four small and medium-sized enterprises (SMEs), according to the latest “UK SME Confidence Index” from Vistage. And the shortage of workers has forced employers to raise starting salaries. According to the REC study, in August salaries increased at the fastest pace in nearly two years. This trend may not be sustainable over the long haul if it impacts too negatively on profitability and business sustainability.

In the meantime, automation and digitalization have been proposed as possible solutions to bridge the gap. However, whether replacement of people with machines is quite what voters intended back in June 2016 when the referendum took place is questionable at best.

 

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Mind the gap

MAC to examine the role EU nationals play in the UK

The UK government has tasked the Migration Advisory Committee (MAC), the government’s independent advisers on migration, to examine the role EU nationals’ play in the UK economy and society.

Amber Rudd, the Home Secretary, engaged the MAC to look into the British labor market, the overall role of migration in the wider economy, and how a modern industrial strategy should align with the UK’s immigration system. The MAC will consult with a wide cross-section of businesses, employer organizations and EU citizens working in the UK.

The importance of this initiative should not be underestimated, as free movement will end when the UK exits the EU. The government is working on plans to develop the flow of migration from Europe. (See: The rights of EU citizens in the UK, The Global Mobility Review, July 13, 2017 blog post). The UK and the European Commission had key discussions at the end of July, and the next round of negotiations is scheduled for late August 2017.

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MAC to examine the role EU nationals play in the UK

UK Queen’s speech: What might immigration look like after Brexit?

It may not have been accompanied by the usual pomp and circumstance, but the Queen’s speech on Wednesday, June 21 did provide some further clues as to what the government has planned for EU nationals post-Brexit. In the speech, the Queen confirmed that there are plans for an immigration bill that, if passed, will enable the government to end the free movement of EU nationals into the UK, but still allow the country to attract “the brightest and the best.” The bill would require EU nationals and their families to be “subject to relevant UK law,” she said.

This seems to suggest that we can expect to see a skills-based immigration system for EU workers following Brexit. Reading in between the lines, it also seems we can expect that EU nationals already working in the UK who choose to remain will be allowed to do so. However, those who do choose to remain will be subject exclusively to UK law, and will no longer enjoy the protections afforded by the European Court of Justice. Presumably this would work along the lines of Norway’s membership in the single market.

Currently EU nationals in the UK are advised to apply for permanent residency if they meet the qualifying criteria. The thinking being this may be sufficient to secure their stay in the UK after Brexit. Theresa May is in Brussels for Brexit talks today, where she is set to address EU leaders on her plans for the 3 million EU nationals currently residing in the UK, and the 1 million UK citizens currently residing in mainland Europe. We understand that full details of her plans will be published on Monday, ending the uncertainty that currently hangs over those who have exercised their right to freedom of movement, and over their employers.

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UK Queen’s speech: What might immigration look like after Brexit?

Criminal record check for Tier 2 UK migrants

uk-intracompany

From April 6, 2017, individuals applying to come to the UK to undertake certain jobs will be subject, along with any adult dependants (over the age of 18 years old) applying with the main applicant, to the requirement under the Immigration Rules to produce a criminal record certificate. The certificate must be produced from any country in which the applicant has been resident for 12 months or more, consecutively or cumulatively, in the previous 10 years.

Effective January 1, 2017, sponsors must inform prospective employees at the point they assign their Certificate of Sponsorship (CoS) that they may become subject to this requirement by the time they make their application. This will enable them to begin seeking certificates where needed at the earliest opportunity, and to lodge a complete application for entry clearance sooner.

Affected job titles are:

  • Dental practitioners
  • Education advisers and school inspectors
  • Further education teaching professionals
  • Health professionals not elsewhere classified
  • Health services and public health managers and directors
  • Medical practitioners
  • Medical radiographers
  • Midwives
  • Nurses
  • Occupational therapists
  • Ophthalmic opticians
  • Pharmacists
  • Physiotherapists
  • Podiatrists
  • Primary and nursery education teaching professionals
  • Probation officers
  • Psychologists
  • Secondary education teaching professionals
  • Senior professionals of educational establishments
  • Social services managers and directors
  • Social workers
  • Speech and language therapists
  • Teaching and other educational professionals not elsewhere classified including Special needs education teaching professionals
  • Therapy professionals not elsewhere classified
  • Welfare professionals not elsewhere classified

The requirement to produce a criminal record certificate already applies to those applying under Tier 1 (entrepreneur) or Tier 1 (investor) and any adult dependant relative of the main applicant in either of these categories.

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Criminal record check for Tier 2 UK migrants

Tax consequences for multinationals sending employees to Canada

US-and-Canada-flag-puzzle

Multinational corporations sending employees to foreign countries on business must be alert to the legal responsibilities that can arise from such transfers. Dentons partner Emmanuel Sala clarifies the Canadian and Quebec fiscal rules and mechanisms that govern US parent corporations with US employees employed in Canada. His article covers both Canadian federal and Quebec provincial payroll tax obligations. Regarding Canadian federal tax obligations, Emmanuel notes that if a US parent corporation is determined to have a “permanent establishment” (PE) in Canada, business profits attributable to the PE would be subject to Canadian federal income tax and various forms of tax relief would become unavailable. He provides an in-depth review of the most common situations that might give rise to a PE determination, including fixed-base, agency, construction-site and service. Emmanuel also discusses the possibility of implementing secondment arrangements to mitigate the risk of a PE determination.

Click to read article.

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Tax consequences for multinationals sending employees to Canada

Changes to the Tier 2 and Tier 5 immigration regime

On March 24, 2016, the UK government responded to the Migration Advisory Committee’s (MAC) review of Tier 2 policy and has announced numerous changes to Tier 2 policy going forward.

For Tier 2 (General) migrants:

  • Minimum salary threshold: increases to £25,000 in autumn 2016 and to £30,000 for experienced workers, while maintaining the current threshold of £20,800 for new entrants.
  • Waiver of Resident Labour Market Test (RLMT): in cases where the migrant will be relocating with a high-value business to the UK or, potentially, supporting an inward investment into the UK.

For Tier 2 (Intra Company Transfer [ICT]) migrants:

  • Single route for ICT migrants: all ICT migrants must qualify under a single route with a minimum salary threshold of £41,500. The Home Office will have closed the Skills Transfer and Short Term visa categories to new applications. Graduate trainees will have their own route with a lower salary threshold of £23,000 with an increased limit of 20 places per company per year.
  • New Immigration Health Surcharge: from autumn 2016, the charge will be extended to all transferees.
  • High earners’ threshold: reduced from £155,300 to £120,000 for migrants looking to stay in the UK for a period between five and nine years.
  • From April 2017, migrants paid more than £73,900 will not be required to have one year’s experience.

For both Tier 2 (General) and Tier 2 (ICT) routes:

  • New Immigration Skills Charge: employers must pay a levy designed to encourage them to invest in training UK employees. The levy is set at £1,000 per year per Tier 2 migrant from April 2017. A reduced rate of £364 per person per year will apply to small and charitable sponsors.

Several other recommendations made by the MAC on January 19, 2016, will not be implemented by the UK government. Accordingly, the government has confirmed the following:

  • ICT overseas service: migrants will not be required to have worked for their overseas company for 24 months, which would have been an increase from the current requirement of 12 months.
  • Tier 2 (General) in-country switching applications from Tier 4 will not be subject to the RLMT.

Finally, it should be noted that the Home Office has introduced the following changes which affect Tier 2 and Tier 5 sponsors:

  • Record-keeping duties: for new migrant employees, sponsors must keep copies of references, Disclosure and Barring Service (DBS) checks, job descriptions and qualifications.
  • RLMT: when a sponsor advertises a vacancy on Universal Jobmatch, it must take a screenshot on the date the vacancy is first advertised.
  • Genuineness test: if the Home Office refuses an entry clearance or leave to remain application because it does not consider the job role to be genuine, it may suspend the Sponsor License to carry out further investigation.

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Changes to the Tier 2 and Tier 5 immigration regime

Information on recent amendments to Russian migration rules

Employment and Labor

Federal Law No 199-FZ on Amendments to Articles 18.10 and 18.15 of the Administrative Penal Code and the Federal Law on the Legal Status of Foreign Citizens in the Russian Federation of June 29.06.2015 (the “Amendment Law”) was published and entered into force on June 30, 2015.

The Amendment Law requires foreign employees who change their name or passports to apply to the migration authorities to enter the appropriate changes to their work permits (i.e. to indicate the new name or new passport details in the work permit):

  • within 7 days of such change (if the name was changed or the new passport was received in the Russian Federation); OR
  • within 7 days of entering Russia (if the name was changed or the new passport was received outside the Russian Federation).

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Information on recent amendments to Russian migration rules

Global Employment Lawyer – Issue 3

Summer 2015

Global Employment Lawyer

The third edition of the Global Employment Lawyer provides you with practical content to keep you current on developments that effect your business goals around the globe. Our lawyers look at questions of religious accommodation as well as the unpleasant income tax consequences of temporary visas in the US; managing “difficult employees” in Canada; reducing workforce due to redundancies in China; imminent changes to Polish labor law; recruitment of non-resident foreign workers in Angola; employing foreign workers in Israel and whistleblowing in the UK.

Read more

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Global Employment Lawyer – Issue 3