UK: The Temporary Immigration Quota: A Sign of the Things to Come?

The UKBA published details on the new interim quota on 19 July (the same day it came into effect). Please see the new Tier 2 and Tier 5 guidance here.

What is included in the quota?

• The interim quota will run from 19 July 2010 to 31 March 2011.  However, a Sponsor's use of its allocation will be reviewed in October 2010 and again in January 2011 and the allocation can be recalibrated depending on usage. 
• The quota includes all Tier 2 (General) COS and therefore applies to all new hires as well as extensions for any Tier 2 (General) migrants or old style work permit holders who did not relocate to the UK as intra-company transferees.
• The quota includes any COS which were issued in error or were not used e.g. because the migrant decided not to take up the role.
• Sponsors will receive a letter from the UKBA shortly confirming its allocation.  This allocation is based on the Sponsor's usage between 19 July 2009 to 31 March 2010. As this was at the height of the economic downturn with low recruitment levels, the allocation for some Sponsors may well fall short of current COS usage levels.
   
• Each Sponsors' allocation under the temporary quota will be reduced to allow enough flexibility for a pool of unallocated COS to be taken up by new sponsors and existing sponsors with "special requirements".  Please see below.

What steps should Sponsors take to assess the impact of the quota on their business?

• Sponsors should undertake an assessment of how many Tier 2 (General) COS were issued between July 2009 – March 2010. If CMS Cameron McKenna managed your PBS applications during this period, we should be able to help you with this assessment.
• This figure should then be compared with the temporary allocation granted by the UKBA. The Sponsor will then need to assess whether the allocation will be enough for the next 9 months to enable it to:  

• Sponsors need to decide how to split their temporary allocation between any new employees and existing employees who require extensions.
• Sponsors may wish to consider switching Tier 2 (General)  migrants who can qualify into Tier 1 (General) - the quota does not apply to in country Tier 1 applications. This would free up their COS allocation.

What are the employment law implications of this quota ?

Our initial review of the quota guidelines has highlighted a number of potential employment law issues:

• What are the options and risks for a Sponsor from an employment law perspective if either it cannot extend a migrant's permission to work in the UK because it has no COS left under its quota or it selects to extend the permission to work of another migrant worker in preference? What defence would an employer have to potential claims by employees/ ex-employees as a result?
• What procedure would an employer need to follow to terminate an employee's employment if it were unable to extend his permission to work in the UK due the quota, and what are the risks if it gets that process wrong?
• What provisions, if any, should employers build into their employment documentation or policies to deal with the situation that they may not be able, or may choose not to, extend that employee's permission to work?
• What impact will the limit have for employers acquiring businesses through TUPE with a number of migrant workers?

Our Employment law team will provide a Law-Now update in the next few days which will cover a number of the key issues.

Impact of the quota on different profiles of Sponsors

"Low volume" sponsors

Where sponsors have used very few or no COS, they will be given a zero allocation.  This will not affect their ability to continue to employ existing Tier 2 (General) migrants but if a COS is required to extend the leave of an existing employee, the Sponsor will have to apply for exceptional treatment to be able to issue a COS to retain that migrant.

"B" rated Sponsors

Their allocation will be set to zero and they will not be able to apply for allocation until their rating is upgraded.

New Sponsors

New Sponsors will automatically be issued with a zero allocation for Tier 2 (Generals) and will need to submit a form COS (AR) (see below) to request an initial allocation. If they are awarded a B rating they will have to sign up and pay for an action plan set by the UKBA before any request will be considered.

Exceptional approval for additional COS

Requests will only be considered by completing a form COS (AR) which can be found here.

There will be a defined number available per month (levels not yet published).

The application procedure will be as follows:

• The form will have to be submitted by the Authorising Officer- representatives cannot submit. For extensions, the form must be accompanied by a copy of the details page and current visa endorsed in the migrant's passport. Strangely there is no reference to having to provide a copy of the ICFN if one has been issued to the Tier 2 migrant.
• Requests will be considered by "a panel of UK Border Agency managers" on the first working day of each month for all requests received by the 25th of the previous month. Urgent requests outside of this timeline can be decided by the Deputy Director for Sponsorship or nominated deputy.
• A decision will be made within 5 working days. The panel's decision is final and there is no appeal against a refusal.
• The UKBA will consider applications based on the following (in descending order of importance).
   

• If successful, the SMS will be updated. However the guidance states that "it is likely that most requests will be unsuccessful".

• The exceptional COS must be used for the role specified.
• If applying for an additional COS to extend an existing migrant's leave, an application cannot be made more than 60 days before his leave expires (NB it is his leave date rather than the COS date which is key).

Requesting additional COS – A Case study in practical problems!

A Tier 2 (General) migrant's leave expires on 2 November 2010. He has a 3 month notice period in his contract. The Sponsor does not have enough COS in its temporary allocation to apply to extend his leave to remain.  The earliest it can apply for an exceptional COS is 60 days before his leave expires i.e. Friday 3 September 2010.

This request for exceptional treatment will be considered on Friday 1 October (the first working day of October) .  A decision will be given within five working days i.e. by 8 October 2010.  If the application is refused, the Sponsor will have to terminate the employee's employment with a little over three weeks notice.

Aside from logistical issues in terminating his employment, the Sponsor will have a legal obligation to pay 3 months notice even though the employee will only be able to work for a 3 week period and will have to make arrangements to leave the UK in that time if he cannot find another immigration category to switch into.

Summary

• For many Sponsors, the interim quota is going to pose real difficulties for operational and planning reasons.
• Employers need to identify future resourcing needs and which migrants have leave expiring between before 31 March 2011 to obtain a true snapshot of their Tier 2 (General) needs.
• Employment law issues and processes need to considered along with immigration concerns as part of any review process.
• Tier 2 (General) Migrants who meet the points for Tier 1 (General) should be encouraged to switch to reduce pressure on the temporary allocation.
• Employers need to make submissions on the quota as part of the consultation process.  As highlighted in our most recent Law-Now  on the permanent quota from April 2011.  The interim quota is potentially the start of a whole new long term quota system with enormous implications for the business community.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 20/07/2010.