Around 80 current routes of entry to the UK (including work permits) are being replaced by a five tier system using objective, points-based criteria - the Points-Based System (‘PBS’).

Individuals from outside the UK will now make their application under the PBS to a British Diplomatic Post in their home country as opposed to the Border & Immigration Agency (‘BIA’) in the UK.

The roll-out of the PBS began in February 2008 and full implementation is expected by the end of the first quarter of 2009. City firms, from investment banks to hedge funds, which often look to hire nationals from countries outside the European Economic Area, could face significant penalties if they are not prepared for the imminent changes.


The tiers - a summary

Under the PBS, anyone wanting to come to the UK to work or study must qualify under one of the tiers.

Tier 1: will cover those highly skilled individuals which the BIA believes will be best placed to contribute to the UK’s growth and productivity. It will, amongst other schemes, replace the existing Highly Skilled Migrant Programme. Under Tier 1, applicants will be awarded points based on factors including their academic qualifications, previous earnings and age. Applicants applying from within the UK after 29 February 2008 will need to apply under the PBS which will then be rolled out for Indian nationals in April 2008 and worldwide from June 2008.

Tier 2: will cover skilled workers who have an offer of employment from a UK company and will, effectively, replace the current work permit scheme. It is expected to go live during the third quarter of 2008 but, as yet, no further details have been released. Under Tier 2, in addition to their offer of employment, individuals will need to gain points based on factors including qualifications, prospective (as opposed to previous) salary and evidence that the company has been unable to source the position through the European labour market.

Tiers 3-5: are likely to be less relevant for businesses as they will cover low-skilled workers, students and mobility/temporary workers respectively. Further details on these Tiers are expected throughout the course of the year.


English language requirement

One of the key features of the PBS is that the BIA will require all migrants (with the exception of those in the Tier 1 (Investor) category) to have minimum English language skills. As such, applicants will need to demonstrate their English competence by passing an approved English language test, holding a Bachelors degree that was taught in English or being a resident of a ‘Majority English-Speaking Country’ - these include Dominica and Jamaica but not India or South Africa. This could have significant consequences for employers in a number of sectors which have, historically, transferred staff from their Asia-Pacific and Russian operations and who did not previously - under the work permit regime - require language skills.


Sponsorship

Under the PBS any employer wishing to employ migrant workers who qualify under Tiers 2-5 will need to register with the BIA as a sponsor. Registration will involve providing the BIA with a variety of documentation including audited accounts and evidence of registration with HM Revenue & Customs. Once registered, businesses will be able to issue their own certificates to individuals that they wish to employ without having to first obtain BIA approval. Individuals will then use the certificate (an electronic reference number) to complete their visa application.

Sponsoring employers will be assessed by the BIA and given an ‘A’ or ‘B’ rating. Where an employer is given a ‘B’ rating, their ability to issue certificates will be restricted and the company will be given a time-limited action plan to address the BIA’s concerns. If the company does not comply it is likely to lose its sponsorship licence thereby preventing it from bringing non-EEA nationals into the UK until the BIA is satisfied that it is compliant. Employers’ ratings will be shown on a public register.


Employers’ responsibilities and penalties

The trade off for employers being able to issue their own certificates is that they will be subject to greater responsibilities for managing migrant workers throughout their employment. Employers will be required to:
* maintain various records including copies of passports, contact details and - when they are introduced - biometric ID cards;
* comply with their ‘reporting duties’ which will include keeping the BIA informed if migrants do not turn up for work and of any changes to their job or salary; and
* comply with all immigration laws.

Companies will need to ensure that their HR practices are in order as they can expect to receive audits from the BIA to ensure that they are meeting their obligations. Failure to do so could, again, result in the downgrading or loss of their sponsorship licence.

Significantly, new civil and criminal penalties came into force as of 29 February 2008, meaning companies that employ individuals without full permission to work in the UK will face fines of up to £10,000 for each unauthorised worker (the previous maximum was £5,000). In addition, businesses which knowingly employ an individual without permission to work in the UK may be prosecuted for a criminal offence and for the first time potentially face an unlimited fine and/or imprisonment. It is therefore extremely important for companies to ensure their recruitment practices are compliant.


Inflexibility concerns

It remains to be seen as to whether the PBS will represent a substantial improvement to the current system which has, in many respects, served UK businesses well. Indeed, whilst the BIA’s intentions are admirable, only time will tell if existing concerns relating to the inflexibility of a rigid points-based system, the accessibility of caseworkers in British Diplomatic Posts overseas and the increased obligations on employers are justified. What is clear is that UK businesses need to be prepared for the changes in order to avoid delays in hiring or transferring non-EEA staff and incurring penalties, the knock-on costs of which could have serious implications on their ability to employ migrant workers.

Jonathan Goldsworthy is an associate in the International Employment Group at law firm Bird and Bird. Jonathan undertakes a wide variety of business immigration work and regularly obtains work permits, Highly Skilled Migrant approvals and further leave to remain for clients as well as advising them on a range of other business-related immigration issues as part of their international HR strategies. Jonathan is currently presenting update seminars and briefings on the implementation of the new Points-Based System.

For more information about Bird & Bird’s International Employment Group - please visit www.twobirds.com

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