Global mobility: Wipe away a tier
14 March 2016
The government could soon decide to cut the numbers of workers eligible for intra-company transfers, which could have serious consequences for employers. Colin Cottell reports
Thu, 17 Mar 2016 | By Colin Cottell
An increasingly popular route used by international companies to bring workers from outside the European Economic Area (EEA) to the UK could be under threat if the government implements the recommendations of an influential committee.
The Migration Advisory Committee (MAC) was asked to carry out a review of the UK’s current Tier 2 skilled workers visas, and to advise the government on “significantly reducing the level of migration from outside the EU” while balancing this with the needs of employers and the UK economy as a whole.
In its report published in December, MAC highlights the growing use of a special category of Tier 2 visa: intra-company transfer (ICT).
The ICT route is for existing employees of multinationals, who are transferred to the UK to fill a specific vacancy or for training that cannot be filled by an EEA worker.
Unlike the Tier 2 general route, there are no limits on how many workers can come to the UK to work via this route, and according to the Home Office the number grew from 28,653 in 2009 to 44,680 in 2014.
Transfer value
ICTs are valued by many international companies. In a statement, Chris Marsh, director of group resourcing at Atkins, says: “As an international engineering and professional services consultancy, it’s critical that we can recruit or move existing talent across our business, so intra-company transfers are an important means of achieving this.”
At a seminar at law firm Baker & McKenzie in February, Professor Sir David Metcalf, chairman of MAC, reiterated the point, telling the audience: “The conventional transferee is a Japanese auto engineer coming from Toyota and going to work at
its plant in Derby, let’s say supervising the installation of an assembly line, and here for perhaps five years. My view is that UK plc benefits enormously from this route.”
However, Metcalf went on to contrast this with another category of ICT. “The typical firm is a consultancy which brings in Indian IT workers — they comprise 90% of third-party contracting. They immediately farm them out [to UK companies].” Although international regulations require such workers to be specialists and senior managers, “often it is very routine work”, Metcalf continued, “so one questions whether these are specialists and senior managers”.
Recruiter contacted the top 10 sponsors of third-party ICT transferees in 2015, based on Home Office figures. Not all responded, and those that did referred us to NASSCOM (The National Association of Software and Services Companies), the trade body representing companies such as Tata Consultancy Services and Infosys, who use ICTs to transfer Indian IT workers to the UK to service business process outsourcing contracts for their clients.
One of these clients is British Airways. A spokesperson confirmed that the airline used the services of Tata Consultancy Services, which according to MAC, last year brought more than 6,000 workers into the UK via the ICT route, but declined to comment further.
Gagan Sabharwal, a director of NASSCOM, denies any suggestion these visas are not being used in the way intended. Sabharwal tells Recruiter: “These jobs have to be done by Indian workers because there is no one with skills available locally in the UK.”
While opinions differ on this point, the recommendations, which include raising the minimum salary threshold of £41.5k for some 61% of ICT transferees (see Routes to Work, p29) made by MAC in its report are clearly aimed at cutting the flow of these workers, although as Metcalf acknowledges “it is not possible to be definitive concerning the reduction in numbers associated with the proposals”.
“That depends on how employers respond. Will they raise pay to the higher thresholds? Might EU workers substitute for a reduced flow from outside the EU?” Metcalf questions.
Immigration complication
Carole Nel, director of immigration services, EMEA and Asia at international talent mobility firm MSI Global Solutions, says MAC’s recommendations will further complicate a UK immigration system that is already more complex and expensive than others in Europe.
“Some of our clients already say ‘they can’t be bothered’, and this will make bringing these workers in even more complicated and expensive,” she says. Already she says “some of them just give up, and this will make things worse. It takes time and companies want projects done yesterday.”
It is also likely to accentuate the trend for companies not to sponsor transferee’s dependents. “This can be an issue for the Indian IT specialists, whereby they are young professionals and are usually of an age where they start a family.” Nel predicts one outcome will be for companies to recruit more European workers.
However, Sabharwal says “it is too early to say” what the effects of MAC’s recommendations might be: “In the short-term I don’t see there being any impact.”
Although, he adds, in the longer-term, “it might force some companies to move some of those jobs offshore”.
Nigel Roxburgh, founder of the UK National Outsourcing Association, agrees offshoring of IT jobs currently done by Indian ICT transferees is a possibility. However, it depends on the role. “If the role involves writing code, there is no reason why the person has to be in the UK.”
On the other hand, where workers with particular skills are in demand, such as Cobol programmers, he says it is more likely that companies will be prepared to pay more than the proposed £41.5k salary threshold, so allowing them to continue to bring these workers into the UK.
At the seminar, Metcalf acknowledged the risk that jobs currently undertaken in the UK could be moved overseas. “We have had discussions with some of the major consultancies who use this route. They do say they are potentially mobile and they could use some offshoring but the only thing I would say about that is their clients do like some of the work to be done in their base. I take it seriously, but one shouldn’t take it too seriously.”
Question marks
While uncertainty about how firms might react to MAC’s recommendations leave question marks about their impact on the flow of migrant workers, Tony Haque, who leads Baker & McKenzie’s global and immigration practice in the UK, told the London seminar that it was possible to say how many workers would not have been granted a visa had the new salary threshold been applied in the past.
According to MAC’s report, 72% (11,792) of applicants, who entered the UK via the short-term ICT route (up to 12 months) in the year to August 2015, would have been excluded on the grounds of salary. Haque described the effect as “severe”. In contrast, only 15% or 1,034 of ‘conventional’ applicants would have been excluded.
In his statement, Atkins’ Marsh says the firm does not use intra-company transferees supplied via the third-party contracting route, so any changes to the rules “would not have an impact on Atkins. However, we do use the ICT route to enable a flow of staff between our global design centre in India and our UK business… enabling them to work as a team on a project.
“The proposed immigration health charge and immigration skills charge, and the increase in required experience from one to two years, is likely to have a negative impact for us by reducing our flexibility to operate in this way.”
However, with political pressure building to cut the number of migrant workers coming into the UK, restricting numbers entering via the ICT route may just be something that employers will have to learn to live with.
INTRA-COMPANY TRANSFERS (ICTs)
Short-term: for employees staying in the UK for up to 12 months
Long-term: the intention is to stay between 12 months and five years and one month
Graduate trainee: recent graduates staying in the UK up to 12 months
Skills transfer: overseas employees transferred to the UK for up to six months
ROUTES TO WORK
Conventional route: An international company transfers employees to the UK who continue to work for it
Third-party contracting route: An international company transfers employees to the UK, who are used to service contracts for third-party clients
MAC’s recommendations — third-party route: Raise the annual salary threshold for short-term (up to 12 months) intra-company transferees from £24.8k to £41.5k
Both third-party and conventional route: Increase length of transferee’s previous experience with the employer from 12 months to two years, except for the graduate trainee route and skills transfer route, which should remain at six months
An annual £200 a year charge per transferee to pay for their use of the NHS: A skills levy of between £500 and £2k per transferee per year, aimed at reducing employers’ reliance on hiring migrant workers
FROM APRIL'S RECRUITER MAGAZINE
The government could soon decide to cut the numbers of workers eligible for intra-company transfers, which could have serious consequences for employers. Colin Cottell reportsAn increasingly popular route used by international companies to bring workers from outside the European Economic Area (EEA) to the UK could be under threat if the government implements the recommendations of an influential committee.
The Migration Advisory Committee (MAC) was asked to carry out a review of the UK’s current Tier 2 skilled workers visas, and to advise the government on “significantly reducing the level of migration from outside the EU” while balancing this with the needs of employers and the UK economy as a whole.
In its report published in December, MAC highlights the growing use of a special category of Tier 2 visa: intra-company transfer (ICT).
The ICT route is for existing employees of multinationals, who are transferred to the UK to fill a specific vacancy or for training that cannot be filled by an EEA worker.
Unlike the Tier 2 general route, there are no limits on how many workers can come to the UK to work via this route, and according to the Home Office the number grew from 28,653 in 2009 to 44,680 in 2014.
Transfer value
ICTs are valued by many international companies. In a statement, Chris Marsh, director of group resourcing at Atkins, says: “As an international engineering and professional services consultancy, it’s critical that we can recruit or move existing talent across our business, so intra-company transfers are an important means of achieving this.”
At a seminar at law firm Baker & McKenzie in February, Professor Sir David Metcalf, chairman of MAC, reiterated the point, telling the audience: “The conventional transferee is a Japanese auto engineer coming from Toyota and going to work at
its plant in Derby, let’s say supervising the installation of an assembly line, and here for perhaps five years. My view is that UK plc benefits enormously from this route.”
However, Metcalf went on to contrast this with another category of ICT. “The typical firm is a consultancy which brings in Indian IT workers — they comprise 90% of third-party contracting. They immediately farm them out [to UK companies].” Although international regulations require such workers to be specialists and senior managers, “often it is very routine work”, Metcalf continued, “so one questions whether these are specialists and senior managers”.
Recruiter contacted the top 10 sponsors of third-party ICT transferees in 2015, based on Home Office figures. Not all responded, and those that did referred us to NASSCOM (The National Association of Software and Services Companies), the trade body representing companies such as Tata Consultancy Services and Infosys, who use ICTs to transfer Indian IT workers to the UK to service business process outsourcing contracts for their clients.
One of these clients is British Airways. A spokesperson confirmed that the airline used the services of Tata Consultancy Services, which according to MAC, last year brought more than 6,000 workers into the UK via the ICT route, but declined to comment further.
Gagan Sabharwal, a director of NASSCOM, denies any suggestion these visas are not being used in the way intended. Sabharwal tells Recruiter: “These jobs have to be done by Indian workers because there is no one with skills available locally in the UK.”
While opinions differ on this point, the recommendations, which include raising the minimum salary threshold of £41.5k for some 61% of ICT transferees (see Routes to Work, p29) made by MAC in its report are clearly aimed at cutting the flow of these workers, although as Metcalf acknowledges “it is not possible to be definitive concerning the reduction in numbers associated with the proposals”.
“That depends on how employers respond. Will they raise pay to the higher thresholds? Might EU workers substitute for a reduced flow from outside the EU?” Metcalf questions.
Immigration complication
Carole Nel, director of immigration services, EMEA and Asia at international talent mobility firm MSI Global Solutions, says MAC’s recommendations will further complicate a UK immigration system that is already more complex and expensive than others in Europe.
“Some of our clients already say ‘they can’t be bothered’, and this will make bringing these workers in even more complicated and expensive,” she says. Already she says “some of them just give up, and this will make things worse. It takes time and companies want projects done yesterday.”
It is also likely to accentuate the trend for companies not to sponsor transferee’s dependents. “This can be an issue for the Indian IT specialists, whereby they are young professionals and are usually of an age where they start a family.” Nel predicts one outcome will be for companies to recruit more European workers.
However, Sabharwal says “it is too early to say” what the effects of MAC’s recommendations might be: “In the short-term I don’t see there being any impact.”
Although, he adds, in the longer-term, “it might force some companies to move some of those jobs offshore”.
Nigel Roxburgh, founder of the UK National Outsourcing Association, agrees offshoring of IT jobs currently done by Indian ICT transferees is a possibility. However, it depends on the role. “If the role involves writing code, there is no reason why the person has to be in the UK.”
On the other hand, where workers with particular skills are in demand, such as Cobol programmers, he says it is more likely that companies will be prepared to pay more than the proposed £41.5k salary threshold, so allowing them to continue to bring these workers into the UK.
At the seminar, Metcalf acknowledged the risk that jobs currently undertaken in the UK could be moved overseas. “We have had discussions with some of the major consultancies who use this route. They do say they are potentially mobile and they could use some offshoring but the only thing I would say about that is their clients do like some of the work to be done in their base. I take it seriously, but one shouldn’t take it too seriously.”
Question marks
While uncertainty about how firms might react to MAC’s recommendations leave question marks about their impact on the flow of migrant workers, Tony Haque, who leads Baker & McKenzie’s global and immigration practice in the UK, told the London seminar that it was possible to say how many workers would not have been granted a visa had the new salary threshold been applied in the past.
According to MAC’s report, 72% (11,792) of applicants, who entered the UK via the short-term ICT route (up to 12 months) in the year to August 2015, would have been excluded on the grounds of salary. Haque described the effect as “severe”. In contrast, only 15% or 1,034 of ‘conventional’ applicants would have been excluded.
In his statement, Atkins’ Marsh says the firm does not use intra-company transferees supplied via the third-party contracting route, so any changes to the rules “would not have an impact on Atkins. However, we do use the ICT route to enable a flow of staff between our global design centre in India and our UK business… enabling them to work as a team on a project.
“The proposed immigration health charge and immigration skills charge, and the increase in required experience from one to two years, is likely to have a negative impact for us by reducing our flexibility to operate in this way.”
However, with political pressure building to cut the number of migrant workers coming into the UK, restricting numbers entering via the ICT route may just be something that employers will have to learn to live with.
INTRA-COMPANY TRANSFERS (ICTs)
Short-term: for employees staying in the UK for up to 12 months
Long-term: the intention is to stay between 12 months and five years and one month
Graduate trainee: recent graduates staying in the UK up to 12 months
Skills transfer: overseas employees transferred to the UK for up to six months
ROUTES TO WORK
Conventional route: An international company transfers employees to the UK who continue to work for it
Third-party contracting route: An international company transfers employees to the UK, who are used to service contracts for third-party clients
MAC’s recommendations — third-party route: Raise the annual salary threshold for short-term (up to 12 months) intra-company transferees from £24.8k to £41.5k
Both third-party and conventional route: Increase length of transferee’s previous experience with the employer from 12 months to two years, except for the graduate trainee route and skills transfer route, which should remain at six months
An annual £200 a year charge per transferee to pay for their use of the NHS: A skills levy of between £500 and £2k per transferee per year, aimed at reducing employers’ reliance on hiring migrant workers
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