One of the keystones of the Conservative party’s election manifesto was to reduce net migration to tens of thousands. Here Kerry Garcia outlines the latest plans.

Businesses and politicians alike have expressed concerns about the impact this will have on employers. The government recently set out its proposals for implementing this permanent cap on non-EEA migrants coming to the UK to work, but to what extent have employers’ concerns been addressed and what are the likely implications for employers?

At present there is an interim cap in place until 31 March 2011 which restricts the number of certificates of sponsorship which employers are able to issue to non-EEA nationals. At present the intra-company transfer category (‘ICT’) is excluded from the interim cap. This category is vital in that it enables multi-national organisations to transfer employees working for overseas branches to the UK branch. In the six months between December 2009 and May 2010 around 14,000 people obtained entry clearance to the UK under this category. 

Given the number of people entering the UK under ICT, the initial view taken by the Home Affairs Select Committee was that ICTs would also need to be capped to reduce net migration. This proposal has met with opposition politically and from businesses and it seems that this has had some effect. Theresa May recently announced that, when the permanent cap comes into effect on 1 April 2011, intra-company transfer applications will remain outside the cap but new restrictions will apply.

In particular, if a multinational company wishes to transfer an employee from one of its overseas offices to the UK office, the individual will need to earn £40,000 a year or more to qualify if the individual wishes to remain in the UK for more than 12 months. Those earning less than £40,000 will only be able to stay in the UK under this category for up to 12 months.

Even then, Tier 2 intra-company migrants who earn over £40,000 will only be permitted to remain in the United Kingdom for a maximum of five years and will not be eligible to apply for indefinite leave to remain.

Other changes announced include the fact that there will be an annual cap of 20,700 on the number of migrants allowed into the UK under Tier 2 (General). This route allows employers who are registered as sponsors to hire non-EEA nationals who have not previously worked at an overseas group office, provided there is no suitable British or EEA national to undertake the role. In addition, in order to qualify under Tier 2, migrants will have to fill a position which is classified by the UK Border Agency as a graduate occupation.

Importantly, the government also announced that Tier 1 (General) will no longer be a route available into the UK to work. This has always been a popular route, as it allows highly-qualified and well-paid migrants to come to the UK to work for any employer and the employer does not have to be a licensed sponsor. The current interim cap for this route was set at 13,000. The abolition of this route is therefore likely to have a significant impact on both employers and migrants.

In place of Tier 1 (General) there will be a new ‘exceptionally talented’ route. This will be limited to 1,000 applicants a year. There will also be no limit on the number of entrepreneurs and investors permitted to come to the United Kingdom. However, these categories are rarely used by employers or prospective employees.

It is unclear whether there will be transitional arrangements put in place to allow existing Tier 1 (General) migrants to extend their leave and to apply for indefinite leave.

Theresa May also indicated that, in order to limit net migration, the government will look at other immigration categories and consider limiting the number of students and family members allowed to enter the UK. She also indicated that fewer people may be able to settle in the UK on a permanent basis.

Given the risk that it will be harder to enter the UK under ICT next year, employers should try to plan ahead. Any employers who wish to transfer staff from overseas offices to the UK office in 2011 should consider starting the process as soon as possible to ensure that, where possible, the migrant applies for entry clearance before 31 March 2011. This is particularly important if the migrant will earn less than £40,000 and therefore will not be able to come to the UK for more than 12 months under the new intra-company transfer rules. Applicants can apply up to three months before they come to the UK so it is worth ensuring that applicants apply in March even if they are not intending to start work until June 2011.

As the only significant route available into the United Kingdom to work from 1 April 2011 will be under Tier 2, employers who are not already sponsors should consider applying for a sponsorship license as soon as possible. As it will be increasingly important for employers to be sponsors if they wish to hire or continue to hire any non-EEA nationals, existing sponsors should ensure that they are complying with their responsibilities so as to reduce the risk of losing their license or being downgraded.

Kerry Garcia is a senior associate in the employment and immigration team at law firm Stevens & Bolton LLP.

• Kerry can be contacted on 01483 734270 or by email: [email protected].