UK: New Tier 2 Guidance

Last Updated: 12 August 2009
Article by Caron Pope and Louise Carson

The UKBA has today published new Tier 2 guidance designed to provide a more practical and workable system for employers issuing Certificates of Sponsorship under Tier 2.

These changes follow months of lobbying the Government and working with Home Office contacts to refine the Points Based System "PBS" to better meet business needs. This is a positive sign that the UKBA is listening to employer concerns and we will continue to feed in to the UKBA over the coming months.

The main changes published today:

1. Changes to the Resident Labour Market Test for senior employees

Employer concerns that the JobCentrePlus in not a suitable forum for advertising very senior roles have been addressed. From today employers will not be required to advertise the role in the JobCentrePlus where:

  • the prospective earnings for the role in question amounts to £130,000 or above AND falls under the SOC code 1112 (Directors and Chief Executives) and SOC code 2411 (Legal Partners); or
  • there may be stock exchange disclosure requirements.

Employers should note that the role will still need to be advertised in accordance with the Codes of Practice.

Further, SOC code 1112 does not include a requirement that a director should be a board director i.e. it can denote a level within an organisation rather than the legal office. Related job titles are: Chief Executive (major organisation), Company Director (major organisation), Director (major organisation), General manager (major organisation), Managing Director (major organisation).

Job descriptions should involve elements of the following:

  • analyses economic, social, legal and other data and plans, formulates and directs the operation of a company or organisation
  • consults with subordinates to formulate, implement and review company policy
  • prepares, or arranges for the preparation of reports, budgets, forecasts or other information
  • plans and controls the allocation of resources and the selection of senior staff
  • authorises funding for policy implementation programmes and institutes reporting, auditing and control systems

Clearly many roles paying over £130,000 will fall outside this category if they are not at a senior level and with the management responsibilities detailed. This change is nevertheless extremely welcome.

2. Tier 2 (General) migrants will no longer be required to be on UK payroll

This is a particularly useful ruling for those joining a smaller office, or coming to the UK for a period of employment as a precursor to taking up their main role overseas, or who are transferring to the UK on an assignment and who do not neatly fit the ICT category.

3. Milkrounds

This has been a particularly problematic area for employers. As our Law-Now of 1 July confirmed, a concession is currently in place (until 30 September) to allow a CoS to be issued on the basis of:

  • A milkround recruitment programme over 12 months ago, and was undertaken in the last three years; and
  • The individual has accepted a formal offer of employment.

No further advertising in JobCentrePlus is required. This is particularly useful to law firms and other sectors who recruit individuals a number of years in advance and then sponsor their studies until the individual begins work.

Following a meeting with the UKBA on 24 July, it has been agreed that new guidance will be issued to formalize this arrangement and in particular

  • Remove the JobCentrePlus requirement completely requiring advertising on a graduate recruitment website (list to be finalized) and one other medium (as per the Code of Practice)
  • A four year period to be allowed for milkrounds.

4. Promotions

The guidance now states that under the Sponsor's reporting duties, where an individual is promoted, this will be deemed a "change of role" and the appropriate action should be taken. In the case of a Tier 2 (General) migrant, the appropriate action will include the employer advertising the role to the resident labour force and the migrant applying for fresh leave to remain before beginning work in the new role.

We are seeking further guidance as to how a promotion will be defined. However, this will include a scenario where the migrant continues to work for the Sponsor but their core duties, responsibilities or position within the hierarchy of an organisation changes. We will publish a further Law Now when we receive further information.

5. Allowances

The UKBA have recognised that short-term assignees may have higher accommodation costs that other intra-company transferees, and that this should be considered when awarding migrants salary under Tier 2. The UKBA will now take in to account the accommodation allowance up to a proportion of 40% of the gross salary, where a migrant:

a) applies for entry clearance; and

b) for 12 months or less

For example, if a migrant is applying for entry clearance for 6 months and will have a salary plus non-accommodation allowance (e.g per diem allowance) of £14,000, up to £8,000 of any additional accommodation allowance can be included when making a points assessment under Tier 2.

Future Developments

We welcome these changes to Tier 2 and we are also strongly encouraged that the UKBA have recognised the need to review policy and guidance under PBS going forward. We understand that over the coming months, UKBA will be looking at the following issues to ensure a workable system.

Maintenance

UKBA recognises that the current requirements of holding funds for three months without the balance dropping for one day is unduly punative and they are looking at sensible ways to improve this (for example possibly shortening the period the funds must be held for and/or allowing funds available on credit cards).

Internships

The UKBA have recognised that Employers used the old WPSI (Work Permit Student Internship) to good effect and that they are now experiencing difficulty trying to fit these individuals under Tier 2. The UKBA are looking to introduce a new short-term student internship category (to be limited to 3 months) to be introduced to sit either under Tier 5 (without the need for an overarching sponsor) or within Tier 2 without the need for the resident labour market test (RMLT).

Longer Internships to facilitate knowledge transfer/upskilling

The UKBA is keen to retain Tier 5 as the category for temporary workers but appreciates the difficulties for Sponsors identifying entities prepared to act as overarching sponsors where an employer would previously have used the Training and Work Experience Scheme ('TWES'). It is currently drafting new guidance for Government Departments to make it easier for it to support overarching sponsors and the UKBA is also looking at ways that it can facilitate easier communications between the overarching Sponsors and Government Departments. As part of the UKBA investigations, they will consider:

  • Removing the need for the overarching Sponsor to act as the Sponsor and issue the COS and allowing the employer as Sponsor to issue (as under Tier 2); and

Introducing a category of temporary worker who will be able to come to the UK to up skill / gain knowledge to take back to their home country - again limited in duration (2 years has been suggested), no RLMT and no switching into a permanent role.

Conclusion

The new guidance published today is a positive step towards making the PBS more employer friendly. We are hopeful that over the coming months, they will revisit the topics outlined above and will be able to respond to employer's concerns in relation to maintenance and the addition of suitable categories for short-term internships and knowledge sharing. Watch this space!

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 11/08/2009.

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