The UK is currently undergoing a major overhaul of its immigration rules. The reforms are being phased in over a number of years beginning with the introduction of the new points based system for Tier 1 (highly skilled migrants) and 2 (skilled workers) over 2008 and 2009. This is particularly relevant to US companies with UK subsidiaries looking to move skilled employees from the US or elsewhere into the UK and it is recommended that employers act quickly to benefit from the old system while it is still available.

Tier 1—Highly Skilled Workers

On 30 June 2008 the Tier 1 Application process replaced the previous Highly Skilled Migrant Programme (the HSMP). In real terms not much has changed for this category of employee. The Tier 1 application process:

• still provides a means by which highly skilled individuals can work in the UK without an employer sponsoring them; and
• still incorporates a points based entry requirement whereby applicants are awarded points on the basis of their age, qualification and salary.

The key changes under Tier 1 are:

• applicants must be able to demonstrate a high level of language fluency;
• applicants must show they have a certain level of funds in their bank account for a period of time before entering the UK; and
• applicants now only need to make one application which will cover both their right to work in the UK and their right to enter and remain in the UK.

For employers looking to relocate employees to the UK, the Tier 1 process offers a simpler option than the new Tier 2 system as there are no obligations on the employer to register with the UK Border Agency (UKBA) or sponsor the application. However, this might also be a disadvantage for retention purposes as once in the UK the employee will be able to move freely between employers.

Tier 2—Points-based system replaces the work permit system for skilled workers

The new Tier 2 skilled worker scheme will replace the existing work-permit entry system in November 2008.

Work Permits—still available until November 2008

Under the work permit system, UK companies can effectively sponsor a work-permit for non-EEA skilled employees for up to five years during which time the individual's right to work and remain in the UK would be linked to their employment. By "skilled" the employees generally would need to be employed in a managerial or technical capacity rather than simply a manual or administrative role and have either three years experience or a qualification equivalent to a UK degree or Higher National Diploma.

Broadly speaking, if the employee is a board member or is transferring to a UK subsidiary from a group company outside of the EEA (an "inter-company transfer") the process is fairly straightforward. Where this is not the case, the process is more onerous. The UK employer is required to demonstrate that they have tried to recruit someone with the necessary skill-set in the UK but without success. This involves proving that a recruitment search was carried out and explaining why any UK-based applicants were not suitable for the role.

The new Tier 2 points based visa system

From November 2008, it will no longer be possibe to apply for a work permit. The new system applicable for skilled workers is a points based system (PBS) whereby an applicant must obtain 70 points to be awarded a "certificate of sponsorship" by their new UK employer. Points are awarded on the basis of the employees' qualifications and earnings, whether it is an inter-company transfer, whether the role that the employee is destined to do in the UK is for a shortage occupation, and whether the role has been advertised within the UK with a view to finding a UK national to fulfil it. Whereas work permits can be granted for up to five years from the outset, Tier 2 visas will be granted for up to three years with the possibility to extend for a further two years.

Applicants will also be required to satisfy a maintenance requirement by providing documentary evidence to show that they have sufficient funds to cover their first month in the UK and they must also demonstrate their English-speaking ability.

New registration and licence requirements for sponsoring Tier 2 employers

Tier 2 employers must register with and obtain a license from the UKBA.

To obtain a licence the UK company must be able to demonstrate that it is a legitimate organisation working within the laws of the UK, that it is not a threat to immigration control and that it is fully committed to fulfilling its sponsorship duties. This last limb of the test involves an assessment of the company's internal HR capability to ensure that the employer can comply with its record-keeping and reporting functions. An "authorising officer", permanently based in the UK, must also be appointed to ensure that the company meets all of its obligations under the Tier 2 PBS.

In addition, the sponsor must maintain copies of all documents relating to the migrant's right to work in the UK and maintain up to date records.

Tier 2 employers must also report certain information about the migrant's attendance record and any changes in the migrant's employment status within 10 business days to the UKBA. Finally, sponsoring employers are required to report to the police any information that suggests terrorism or other criminal activity.

Risks for the employer

Failure to comply with any of the above requirements can result in a downgrading or removal of licence.

This is in addition to the sponsoring employer's general liability for illegal workers. Employers have long been obliged to check and obtain copies of all documents relating to an employee's immigration status and could face a fine of £5,000 per illegal worker if they failed to do so. However, since 28 February 2008, employers are also required to carry out follow-up checks on employees to ensure that their immigration status is up to date. The maximum fine for breach of these rules is now £10,000 per illegal worker but moreover a new criminal offence has been introduced whereby a director, manager or person acting in one of those roles can be guilty of knowingly employing an illegal worker and sentenced to two years imprisonment.

Conclusion

The new Tier 2 PBS is designed to make applying for a visa a more transparent process. However, the PBS also places more onerous obligations on the sponsor which in real terms will make it both harder and riskier to employ non-EEA nationals under the Tier 2 system.

Employers who are considering transferring a skilled employee employed outside the EEA into the UK or recruiting a non-EEA national to work in the UK in the next few months should carefully consider applying under the old work permit system before its replacement in November 2008. Although employers applying for a work permit for the first time will still have to supply certain information about the company to the UKBA, this is relatively straightforward as compared to registering under the new Tier 2 system.

Alternatively the new Tier 1 application system still offers a means by which non-EEA nationals can work in the UK without sponsorship from an employer.