The new rules for Tier 2 applications come into force on 6 April 2011.

This Law Now highlights what we consider to be the key practical issues for employers, their sponsored employees and the processes for recruiting migrants in the future. Our Law Now on 17 February provides further detail on the operation of the new quota system.

Tier 2 Migrants

Tier 2 (ICT)

While this route is not impacted by the permanent quota and falls under a Sponsor’s unrestricted COS allocation, various criteria have changed and sub categories have been added.

There are now 4 sub categories

- Long term staff (“LTS”)

- Short term staff (“STS”)

- Graduate trainees

- Skills Transfer

LTS – Key features

  • 12 months experience required with Sponsor overseas
  • Minimum annual salary package of £40,000
  • Approved for any period up to a maximum period of 5 years (3 years plus 2 year extension)
  • No return to UK as Tier 2 (ICT) for 12 months after visa/leave expires (“12 month cooling off period”) which will affect business planning
  • Cannot qualify for settlement (ILR)

Example 1 – Impact of the Cooling Off Period on LTS

1st May 2011 – Enters as Tier 2 LTS for 2 years – visa valid to 1st May 2013

1st May 2012 – Leaves the UK after 1 year – SMS Notification made of end of UK employment

1st May 2013 – Original 2 year visa expires – 12 month cooling off period runs from this date

1st May 2014 – Cooling off period ends – Sponsor may now apply for fresh COS if migrant required in the UK again.

NB: The cooling off period only applies to a further period of Tier 2 ICT sponsored employment – someone may still return to the UK as a short term business visitor (for meetings, discussions, fact finding) or as a Tier 2 (General) migrant (provided the resident labour market is conducted and no suitable candidates identified) during the 12 month cooling off period.

Example 2 – Impact of the Cooling Off Period on LTS

1st May 2011 - Enters as Tier 2 LTS for 6 months

1st October 2011 - Sponsor decides to extend for 1 year – application approved in-country to 1st November 2012

1st March 2012 - Employer decides to end assignment – SMS notification made of end of UK employment

1st November 2012 - Original 18 month visa expires – 12 month cooling off period runs from this date

1st November 2013 - Cooling off period ends – Sponsor may now apply for fresh COS if migrant required in the UK again

Key message

  • Applying for a CoS for a longer period than is actually required to give flexibility in case an extension is needed may impact on ability of migrant to return to the UK on assignment in the near future.

It is unclear what impact this will have on Multiple Entry COS – we are awaiting clarification from the UKBA.

STS - Key features

  • 12 months experience required with Sponsor overseas
  • Minimum annual salary £24,000
  • Approved for maximum period of 12 months (no extension possible)
  • No return to UK as Tier 2 (ICT) for 12 months after visa /leave expires (“12 month cooling off period”) unless returning as an LTS
  • NB Cooling off period applies only to returning as a Tier 2 (ICT). It does not apply to former LTS or STS migrants returning to the UK as a Tier 2 (General) if the Sponsor undertakes a resident labour market test as required

Example Impact of the Cooling Off Period on STS

1st May 2011 – Enters as Tier 2 STS for 6 months

1st October 2011 – Sponsor decides to extend the assignment — Extension approved to 30th April 2012 (up to the 12 months allowed in total)

30th April 2012 – Visa expires – Migrant must leave the UK

1st May 2013 – 12 month cooling off period ends. Sponsor may now apply for fresh COS if required in the UK again

Example 2 STS and returning as an LTS

1st May 2011- Enters on Tier 2 STS for 6 months

1st October 2011 – Sponsor decides to extend for 6 months. Extension approved to 30th April 2012 (up to the 12 months allowed in total)

1st June 2012 – Migrant returns to UK as LTS – no cooling off period applied – may then remain for up to 5 years

Graduate Trainees/Skills Transfer

  • May come to the UK for up to 12 months
  • 12 month cooling off period unless returns as LTS

Recruiting migrants from within the UK

Switching from a Tier 2 (ICT) to Tier 2 (General) while in the UK is not permitted. The migrant must leave and obtain a fresh visa from his home country

This may impact on recruitment processes.

Example Recruiting a migrant already in the UK as a Tier 2 (ICT)

1st April 2009 – Tier 2 (ICT) migrant transferred to UK for Employer A

1st May 2011 – Employer B makes him an offer of employment having undertaken Resident Labour Market Test as required (NB Not required for roles with salary package of £150,000 or over)

Migrant cannot switch in country from Tier 2 (ICT) to Tier 2 (General)

Employer B will have to apply for a restricted CoS (unless for a role with salary package of £150 000 or over)

If approved the migrant will have to leave and make a visa application as Tier 2 (General) from outside the UK

Key Message

  • Employers must check the basis on which migrant workers already in the UK have permission to work for their current employer. If they entered as a Tier 2 (ICT), a return trip overseas will have to be factored in for the migrant and any family members here as his dependants. If the salary is for £150,000 or less, a resident labour test will be required and the quota will apply.

NB: This does not apply to WP holders issues under the old scheme pre November 2009.

Change of Employment – A Reminder!

The new guidance retains the provision that where there is a reduction in salary or allowances to those shown on the CoS a change of employment application must be made i.e. a new CoS must be issued and passport submitted.

Example – Impact of reduction for Tier 2 ( ICT)

  • Tier 2 (ICT) migrant – receives base salary of £100,000 and school fees of £25,000 for his child
  • School fees cease when his child completes education
  • As this is a reduction to his allowances a new Cos must be issued even though his base salary is above the appropriate rate

Example – Impact of reduction for Tier 2 (General)

  • Tier 2 (General) – receives base salary of £100,000
  • Car allowance of £10,000
  • Car allowance removed as part of company wide benefits review
  • As this is a reduction to his allowances a change of employment application is required. As this is a Tier 2 (General) application a fresh resident labour market test will have to be undertaken before the Sponsor could issue a new COS

We have raised with the UKBA whether this is the intended result where it is clear that the migrant is still receiving well in excess of the market rate.

Settlement (Indefinite Leave to Remain)

From 6 April 2011

  • Migrant must be free of unspent convictions. Guidance will be published shortly
  • Employer must certify that it continues to require him for employment and the migrant is paid at least the appropriate rate for the job as per the SOC codes

Key Message

If there are significant changes to the SOC codes rates of pay between a CoS being issued and the migrant applying for ILR, unless the migrant’s salary is increased, his application will fail

Qualifying for Settlement

Since 6 April 2010 new Tier 2 (ICTs) have not been able to qualify for settlement but are able to extend for as long as their Sponsor has needed them in the UK.

From 6 April 2011 Tier 2 LTS will be limited to a maximum period of 5 years with no extension permitted after this date.

A Tier 2 (General) can amalgamate time spent in the UK as a Tier 2 (ICT) and Tier 2 (General) towards the required 5 year period only if he entered as a Tier 2 (ICT) before 6 April 2010.

Example: Where time as a Tier 2 (ICT) can count towards settlement

1st April 2009 – Tier 2 (ICT) approved

1st September 2011 – Returns to UK as Tier 2 (General) for new employer

1st April 2014 – May apply for ILR

Example: Where time as a Tier 2 (ICT) cannot count towards settlement

1st June 2010 – Tier 2 (ICT) approved

1st September 2011 – Returns to UK as Tier 2 (General) for new employer

1st September 2016- Qualifies for ILR – previous time spent as Tier 2 (ICT) is not taken into account.

Conclusion

Careful thought will have to be given at the outset as to which type of visa to apply for – i.e. LTS (assuming salary threshold met) to allow for an in-country extension beyond 12 months if needed against the impact of the 12 month cooling off-period if an extension is not applied for.

Recruiting migrants who were transferred by their current employers to the UK will require planning and additional time as well as factoring in the quota issues.

Salary and allowance reductions for Tier 2 migrants need to be carefully monitored and Sponsors may need to factor in the time and cost of additional COS applications.

While the new rules are not as restrictive as originally anticipated, they are complex and will have an effect on recruitment and business planning. While the PBS is clearly enabling the Government to work towards its aim of reducing net migration, the original objective of the PBS operating as a simplified immigration system appears to be a rapidly fading memory!