CIPD - Employing overseas workers

International HR

Mergers and Acquisitions

Revised November 2008

This factsheet gives basic introductory guidance. It:

offers advice to employers considering employing migrant workers
introduces the law and employers' responsibilities
covers other areas including contracts and personnel issues.

Organisations may choose to employ overseas workers for a variety of reasons. In order for this policy to succeed the HR department/function should ensure that the organisation is equipped to deal not only with the ‘hard’ issues such as contracts, immigration permissions and pay but also the ‘soft’ issues. These may include employment for the overseas worker’s partner, schooling for the children and help with the family’s adjustment to a new culture.

In March 2006, following a wide-ranging consultation exercise, the Home Office published proposals for a new Points Based System (PBS) managing the flow of migrants from outside the EU coming to the UK for work or study¹. The new system is being introduced in a phased manner, with processes being tested at each stage before firm implementation dates are announced. The Government carries out impact assessments of each stage of the proposals before implementation. As each stage is implemented, existing arrangements are withdrawn, so it is essential to check the latest information (see Useful contacts section below). For more information CIPD members can see our members’ factsheet on Immigration law changes.

Go to our factsheet on Immigration law changes: what employers should know

Reasons for employing overseas workers

To perform jobs requiring specialist skills (for example, technical or language skills) that are not available in the UK.
To fill vacancies for which there are not enough UK applicants (so called 'shortage occupations').
On secondment or transfer from an overseas division for developmental assignments that will also introduce new ideas into the UK organisation.
To fill temporary vacancies requiring a pre-existing skill set, temporary transferees may be considered for permanent positions where immigration rules allow.

Overseas workers in the UK

There are several broad categories of overseas nationals:

Those who are free to enter, remain and work in the UK with minimal restriction on their length of stay or ability to enter or change employment. These include nationals of the ‘old’ EEA countries, Swiss nationals and nationals of other countries who have been granted indefinite leave to remain.
Those with greater, but still limited restrictions on their ability to enter and work in the UK. These include the newer ‘Accession 8’ EEA countries, Commonwealth nationals with UK ancestry and dependants of British citizens and EEA nationals.
Those admitted with temporary permission as students or participants in short-term employment including exchange schemes, or for training or work experience.
Those admitted to work in certain sectors on a ‘permit free’ basis (but still requiring specific and time-limited permission).
Those requiring full employment-based permission to work in the UK, usually through a sponsored employment with a specific employer, but sometimes on a stand-alone basis via Tier 1 of the new PBS.

Entry to the UK

Whether or not a work permit or equivalent permission is required, overseas nationals must comply with the entry requirements of the various immigration Acts and Regulations. In practice, this usually means applying for an Entry Clearance Visa at a British Diplomatic Post abroad (ie British Embassy, Consulate or High Commission) before travel.

The ‘old’ European Economic Area (EEA) countries are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Liechtenstein, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, UK.

Ten new countries joined the EU on 1 May 2004: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. The Home Office has established a Worker Registration Scheme to monitor participation in the labour force from eight of the above countries (not Cyprus or Malta) - for more details see the section below on employers' responsibilities in respect of work permits.

On 1 January 2007 Bulgaria and Romania became members of the European Union, but Bulgarians and Romanians still need work permits or their equivalent take employment in the UK. Bulgarians and Romanians are often referred to as ’A2’ nationals.

Work permits

Work permits were the principal mechanism for employers to bring staff to the UK or to vary their status once within the UK until 27 November 2008, when Tier 2 of the new PBS was introduced. Work permit applications (including applications to extend existing work permits) received by 26 November 2008 will continue to be considered, as will applications for immigration permission based on a work permit approval. Although no fresh applications for work permit approval can be made, work permit-related immigration decisions will still be made into the Spring of 2009.

Sponsorship

Tier 2 of the PBS replaced work permits on 27 November 2008. Under Tier 2, only employers registered with and licensed by the Home Office are permitted to issue a Certificate of Sponsorship (CoS) to a named individual, who must then apply for permission to enter the UK based on a skill set, experience and profile broadly equivalent to the current work permit criteria. The employer must have undertaken a strict verification exercise similar to that required for a work permit application in order to issue a CoS. Applications for employer licensing under the Register of Sponsorship have reached barely a quarter of the Government’s estimate as at the opening of Tier 2. This reflects a high level of employer anxiety about the new ’reporting duties’ in relation to sponsored employees which form part of the new arrangements, and general concern about increased liabilities for foreign workers.

Highly Skilled Migrant Programme/Tier I

The Highly Skilled Migrant Programme (HSMP) was introduced in 2002 to provide stand-alone immigration permission for employment or self employment for skilled, graduate professionals able to contribute the UK economy. The scheme was subsequently revised several times.

Tier 1 was phased in to replace HSMP by the end of June 2008. The principle of stand-alone immigration permission for highly skilled migrants based on qualifications, age and earnings is preserved.

Employers’ responsibilities for avoiding illegal employment

Under Section 8 of the Asylum and Immigration Act 1996, an employer is guilty of a criminal offence if, between 27 January 1997 and 28 February 2008, it employed someone who did not have permission to work in the UK when they entered employment. Fines are imposed if employers are found to be employing workers illegally.

A statutory defence can be established if the employer can show that, at the time employment commenced, it had inspected and retained copies of documents evidencing that the person could work, in accordance with statutory criteria published by the Government, and had no reason to believe that evidence was false.

Under Section 15 of the Immigration, Asylum and Nationality Act 2006, (‘the 2006 Act’) employers are liable to a civil penalty if they (by implication, carelessly or unknowingly) employ someone after 28 February 2008 who requires, but lacks, permission to work in that particular role. As with Section 8, a statutory ‘excuse’ can be established if the employer has carried out specific checks on original documents and retained copies. However, the checks must be repeated at least every 12 months, where the employee has time-limited immigration permission whereas one check was sufficient under the previous regime.

Section 21 of the 2006 Act specifies that it is a criminal offence to knowingly employ a person after 28 February 2008 who requires but lacks immigration permission, to be in that role. There is a maximum prison sentence of two years and an unlimited fine for employers caught in breach. In practice, Section 21 is aimed at employers who deliberately flout the law in order to exploit vulnerable employees and undercut legal competitors. The merely careless or negligent will, generally, be dealt with under Section 15 (see above).

Employers have to check and copy specific original documentation to obtain a ‘statutory excuse’ in respect of any new employees who may turn out not to have permission to work. The Government has issued guidance² which sets out what employers need to do including tips on how to check authenticity and what to photocopy and retain (see also the Useful contacts section below). Checks must be completed before employment begins.

Depending on the document or documents produced, employers will establish either that the employee has a permanent right to work in the UK (List A documents) or that the permission is time-limited (List B documents). Some documents are acceptable when presented alone; others must be inspected and copied in combination.

Employees who produce List A documents need not be re-checked. Those which produce List B documents must be re checked not less than every 12 months.

Employees need to be satisfied that the documents genuinely relate to the person and have not been tampered with. They are not expected to be experts in forged documents. Employers applying for sponsorship licensing under PBS are expected to demonstrate good compliance with prevention of illegal working guidance.

Employees who are nationals of countries that joined the EU on 1 May 2004, within 30 days will need to register under the Accession Worker Registration Scheme unless exempt, or from Cyprus or Malta. Employers will need to provide the employee with evidence of employment, such as a contract or letter, to facilitate each application under the Worker Registration Scheme, and keep a copy of the employee’s application until the certificate of registration is received. More details are provided in the government guidance.

Employers who try to avoid prosecution by refusing to consider for a job anyone who looks or sounds foreign, are likely to be in contravention of the Race Relations Act 1976 – for more information see our factsheet dealing with racial discrimination.

Go to our Race, religion and employment factsheet

Any checks that are made should be done in a non-discriminatory manner in accordance with the Government guidance³ originally issued under Section 22 of the Immigration and Asylum Act 1999 and revised under section 23 of the Immigration, Asylum and Nationality Act 2006. The Government recommends that all job applicants should be treated in the same way.

The contract

Contracts will vary depending on whether the assignment is temporary or permanent. For short secondments, it is often easier for the employee to retain home country pay and benefits, topped up by a per diem allowance.

This checklist indicates items to be considered when drawing up the contract of employment:

expected duration of assignment
termination during an assignment and the period of notice at end of an assignment
details of pay, including (for secondments) who pays and in what currency
other financial benefits such as relocation costs and pension contributions
taxes and social security payments
applicable law during assignment; for example foreign nationals employed in the UK have the same statutory employment rights as their British counterparts but may also be subject to the mandatory employment laws of the home country
having a dual contract for employees who divide their working time between the UK and another country.

Payment

In general, wages and conditions for overseas workers should be the same as those for UK employees doing the same job. The terms of employment must be in accordance with UK legislation including that on the national minimum wage and working time regulations. For secondments, the employees will continue to be paid by their original employer at their normal salary.

Problems may arise if the pay of the new employee is significantly higher than for comparable UK staff. If this is a regular occurrence, there needs to be a policy dealing with the situation. Where the employment is only temporary, it is possible to pay at a higher rate, without upsetting the permanent UK workforce.

Tax

Tax rules are complex and depend on the length of stay, the personal circumstances and whether the UK has any reciprocal arrangement with the worker’s country of origin. For example, the employer’s contribution to an overseas worker’s pension scheme is generally taxable but in some circumstances these taxes can be relaxed. Organisations should seek expert advice on these issues before drawing up a contract with an overseas worker.

Personnel issues

Recruitment

When recruiting overseas, verification of information supplied by the applicant is essential. For qualifications or employment history:

ask to see originals if copied documents look strange
check on the status of the educational establishment and the qualifications awarded
follow up references
thoroughly check anything which seems suspicious.

If your organisation has divisions overseas, the HR department/functions in these operations will be able to assist with recruitment. Otherwise it may be advisable to use an outside agency which has experience abroad.

Face-to-face interviews may be conducted either in the candidate’s home country (which is easy to arrange and cost-effective when interviewing several candidates) or in the UK (which has the advantage of letting the candidate see both the organisation and the area before making a decision).

When interviewing, care must be taken to avoid discrimination. The guidance³ mentioned above will also provide advice.

As Internet usage increases, it becomes more valuable in recruitment - see our factsheet on E-recruitment for further information.

Go to our E-recruitment factsheet

Particular advantages of using the Internet when recruiting overseas workers are:

it reaches a wide range of possible applicants worldwide
it provides global coverage 24 hours a day
it can shorten the recruitment cycle time
it is an inexpensive way of reaching an international audience.

However, employers wishing to employ individuals under Tier 2 of the PBS, and who rely on advertising to demonstrate a test of the resident labour market must adhere to Government guidelines in order to demonstrate compliance with the rules of PBS.

Relocation

The benefits package must include a fair relocation deal. This should include payments for:

travel costs for the employee and family
temporary accommodation at the start of the assignment
cost of shipping possessions
return trips to the home country (as agreed in the contract).

Sometimes the rest of the family may choose to remain in the home country which means that the overseas worker is likely to want to make more trips home during the employment period.

Apart from financial help with relocation, practical help should be given in finding accommodation and with practical tasks such as obtaining a driving licence and credit cards.

See our factsheets on relocation, managing international assignments, and international recruitment for more information.

Induction

A new overseas worker should follow the same induction programme as any other employee – see our factsheet on induction for more information.

Go to our Induction factsheet

However, it may be necessary to supplement this with additional orientation sessions since all induction programmes make assumptions about the new employees having a basic understanding not only of UK employment but also of UK society in general.

If your organisation regularly employs overseas workers from a particular country (for example a Japanese company in the UK seconding employees from Japan), there will already be an informal network of expatriate staff. This network will make the family feel welcome and will provide advice based on personal experience.

For an organisation employing an overseas worker where this network does not exist, the use of a co-worker as a ‘buddy’ may be helpful. Preferably this co-worker should have a similar domestic situation to the new employee and so be able to give practical advice on the day-to-day issues facing the entire family, not just the new employee.

Multi-cultural organisations

Managers should be trained so that they can communicate effectively with people from other cultures and to be sensitive to different communication styles and attitudes to work. It is particularly important to recognise that ideas about team working vary from one culture to another. For example, some place greater emphasis on consensus and collaboration whereas others value clear direction from strong leadership in a strict hierarchy. Again, some encourage honesty, even open criticism, whereas others would prefer more diplomacy and conciliation, with no show of strong feelings.

It is possible to build effective teams by having a clear framework that does not ignore cultural differences but encourages communication and ensures that everyone understands the common goals.

Useful contacts

Employer’s Helpline – General: Tel: 0845 010 6677
This helpline provides guidance and advice on the prevention of illegal working, on the document checks necessary to establish a statutory excuse or defence, and related matters.
Employer’s Helpline – Verification Service: Tel: 0845 010 6677
This service enables employers to verify the entitlement to work of people currently awaiting the outcome of in-country application already filed with the Home Office.
Home Office UK Border Agency – information for employers and sponsors
Business Link - Check the eligibility of your migrant workers [interactive online tool]
Home Office UK Border Agency - Working in the UK
HM Revenue & Customs – Coming to work in the UK

References

HOME OFFICE. (2006) A points-based system: making migration work for Britain. Cm 6741. Croydon: Home Office. Available at http://www.homeoffice.gov.uk/documents/command-points-based-migration
HOME OFFICE. Border and Immigration Agency. (2008) Comprehensive guidance for employers preventing illegal working: February 2008. London: Home Office. Available at: http://www.bia.homeoffice.gov.uk/employers/
HOME OFFICE. Border and Immigration Agency. (2008) Guidance for employers on the avoidance of unlawful discrimination in employment practice while seeking to prevent illegal working. London: Home Office. Available at: http://www.bia.homeoffice.gov.uk/employers/

Employing overseas workers