The Tier 2 (Intra-Company Transfer) Visa system will soon be amended, making it more difficult for multinational companies to transfer foreign employees into the UK. The changes to the UK Tier 2 (Intra-Company Transfer) Visa were announced in March and are scheduled for initial implementation this Autumn.
The amendments were enacted in response to allegations of exploitation, particularly within the IT industry. The new restrictions will hinder the ability of all multinational companies to transfer talented foreign staff. The actions of the few it seems will soon impact the many.
Multinational companies must be aware of the imminent changes and, where necessary, apply for staff transfers now before the amendments take effect.
The current rules for Tier 2 (Intra-Company Transfer) Visas
Under theUKTier 2 (Intra-Company Transfer) (‘ICT’) Visa, any multinational company wishing to transfer an employee from a foreign branch must:
There are four categories of ICT Visas:
- The ‘Long-term Staff’ category allows for the transfer of staff for a period of between 12 months and five years. This can be extended to nine years where the transferee is to be paid a salary of more than £155,300 per annum. To qualify, the foreign employee must have worked for the foreign branch of the multinational company for at least 12 months and receive a salary of at least £41,500 or the relevant rate for that occupation as set out in the Code of Practice, whichever is higher.
- The ‘Short-term Staff’ category allows for the transfer of foreign staff for a period of no more than 12 months. Again, there is a requirement that transferees must have worked for a foreign branch for at least 12 months. Under the current rules, short-term transferees must earn at least £24,800 per annum or the rate relevant to that occupation as set out in the Code of Practice.
- The ‘Graduate Trainee’ category facilitates international transfers of up to 12 months for the purpose of a graduate trainee programme. Transferees must be recent graduates with at least three months experience in a foreign branch of the multinational. The salary threshold is also £24,800.
- The ‘Skills Transfer’ category facilitates the transfer of all foreign staff, not just graduates, for a period of up to six months, to gain knowledge and skills required to perform their role overseas, or to pass on skills to UK staff. There is no threshold of prior employment. The minimum salary is again set at £24,800.
All ICT Visa applicants must satisfy the maintenance requirement for themselves and any dependants. In most circumstances, this means the employee must have £945 in savings, although the requirement is not applicable to A-rated sponsors.
If the transferee’s visa is for a period of more than three years they must also satisfy English language requirements.
ICT Visas are also not subject to the same annual limit that other Tier 2 Visas are restricted by. There is also no requirement for the multinational company to advertise the position prior to hiring a foreign employee, though the company will be required to detail the reasons for the intra-company transfer in their application.
The Migration Advisory Committee’s (MAC’s) investigations
In December 2015, the MAC released its “Review of Tier 2: Balancing Migrant Selectivity, Investment in Skills and Impacts on UK Productivity and Competitiveness” report.
MAC determined that in recent years, the ICT Visa had been exploited by companies hiring out transferees to third party organisations on either a one-off project or a contract for continual service.
IT multinationals with Indian-based branches were singled out for abusing the system by outsourcing tens of thousands of relatively junior, non-specialist IT workers and farming them out to UK companies.
These companies have been accused of using the ICT visa as a loophole to recruit foreign staff without having to first search the domestic market.
There is also a suspicion that they are paying their workers less than those with similar experience and skills in the UK would earn.
Consequently these ‘multinational’ contractors have a substantial cost advantage over domestic competition.
“Although these lower costs are passed onto clients in part, this use of the route disadvantages IT firms within the UK who do not have access to this source of labour and UK workers in the IT sector. Additionally, we are not convinced that the use of third-party contracting is contributing to the stock of IT skills within the UK workforce,” MAC reported.
Summary of the changes
Following many of the recommendations of MAC, the Government announced significant reform to the Tier 2 (Intra-Company Transfer) Visa in March 2016.
These changes are predominantly designed to streamline the ICT Visa into a single visa category.
The changes will be implemented on a staggered timeline.
In Autumn 2016, the ‘Skills Transfer’ category will close and the minimum salary required for ‘Short-term’ ICT visas will increase to £30,000.
In April 2017, the ‘Short-term’ Category will close altogether, and the minimum salary threshold of £41,500 will apply to all ICT Visas, regardless of their length of employment.
As the only exception to this rule, recent graduates will be required to earn a salary of only £23,000 (a reduction from the current requirement of £24,800). Each multinational company will also be permitted to bring 20 graduates into the UK under this new system, rather than five.
Other changes implemented from next April are, paradoxically, designed to relax the present rules. These changes are said to bring policy in line with the UK’s international trade obligations to provide a visa route for senior managers and specialists.
Any transferee earning a salary of £73,900 or more will no longer be required to demonstrate any prior service at a foreign branch of the company.
Nine-year visas will now be available to any employee earning £120,000 (a reduction from the current salary threshold of £155,300).