Interim limits on Certificates of Sponsorship - a legal minefield for employers 

On 19 July 2010 the UK Border Agency (UKBA) started to implement interim limits on non-EU economic migration under tiers 1 and 2 of the points based system. UKBA states that the aim of these measures is to achieve an overall reduction of 5% in the number of applicants in these categories compared to the equivalent period last year. This interim limit will run from 19 July 2010 to 31 March 2011. In April 2011 the Government intends to be in a position to implement new immigration policies following the current consultation exercise (see below).

All sponsors holding a tier 2 (general) licence have, or are due to receive, notification from UKBA setting out how many Certificates of Sponsorship (CoS) they may issue under tier 2 (general) during the period of the interim measures.

UKBA states that the allowance has been calculated by assessing the CoS usage of each sponsor for the equivalent period from 19 July 2009 – 31 March 2010. It says that it has then applied a reduction to each sponsor who used two or more CoS during this period, leaving a pool of unallocated CoS for distribution to new sponsors and existing sponsors who have special requirements.

Many sponsors have already received notification that their allocation has been reduced to zero and others have seen their numbers significantly reduced, including some who have tested the Resident Labour Market, made a job offer and cannot now issue the CoS they were expecting to assign to the candidate. This is causing significant disruption.

Each sponsor’s CoS usage will be monitored closely during the period of the interim limit and reviewed in October 2010 and January 2011. It is likely that UKBA will make adjustments depending on usage.

We expect the interim measures to be accompanied by a significant increase in enforcement action against sponsors who are not complying with their duties. Revoking the licences of non-compliant sponsors will enable UKBA to re-allocate their CoS allowance to other sponsors. Penningtons' immigration team has assisted a number of tier 2 sponsors who have had their licences suspended pending investigation by UKBA of administrative oversights (failure to notify UKBA when a level 1 user has left, changes to the key contact, failure to provide updated address details, etc). Sponsors should ensure that they are fully compliant with all aspects of sponsorship.

Employment law

Many sponsors may not have fully appreciated that the limit will impact not only on their ability to sponsor new migrant workers but also their ability to continue to sponsor current employees when their current work permit or tier 2 leave expires.

If a sponsor does not think they will be able to offer a job to a prospective employee or continue to employ an existing employee because their allocation has been reduced, they must ensure that any decision not to commence sponsorship or to terminate the sponsorship of a particular individual is made in accordance with existing employment legislation.

In our July 2009 update and following the case of Osborne Clarke Services v Mr A Purohit we reviewed a number of employment tribunal decisions (including Osborne Clarke) where employers making immigration-related decisions had risked falling foul of employment legislation.

In order to comply with legislation, employers must consider all available options such as whether or not the migrant qualifies in their own right for leave to remain (see below) and/or whether or not the employer should make an application to UKBA for a CoS using the ‘exceptional consideration’ route (see below).

Employers should carefully record their efforts to retain or recruit workers whose employment in the UK may be impacted by the Government’s intention to restrict migrant workers so there is an accurate log supporting any decision made in the event of a claim to the employment tribunal.  An employer who only follows UKBA policy and ignores employment legislation puts themselves at significant risk of a successful discrimination and/or unfair dismissal claim. Penningtons' employment team is able to provide advice on these issues. 

Applications using the exceptional consideration procedure

If a sponsor does not have a CoS and they need to issue one to a new or an existing worker under tier 2 (general), UKBA now requires the sponsor to make an application to them for exceptional consideration. UKBA will then decide whether or not to issue a CoS and allow the sponsor to employ the migrant worker under tier 2 (general).

UKBA has stressed that the number of CoS available for exceptional consideration cases will be limited and there is no guarantee that a request for an extra CoS will be granted.

There is a specific application form which sponsors must complete. The form requires sponsors to explain why new posts which do not appear on the shortage occupation list are 'critical' to their business. Sponsors are also required to provide the following information on the form:

-  details of all current work permit/tier 2 (general) workers whose leave will expire on or before 31
    March 2011 and whose leave the sponsor wishes to extend

-  details of all migrants to whom the sponsor either has already, or intends to, allocate a CoS from
    their interim limit. (Sponsors must be very careful because if they then use a CoS for another
    purpose, this can trigger enforcement action against them.) 

UKBA will only consider an application if the following general conditions are also satisfied:

- the sponsor must be A-rated on all their sponsor licences on all tiers and categories at the point
   they submit the request; and

-  the number of CoS requested must take into account any available CoS remaining in the sponsor’s
    existing allocation.

It is essential that sponsors know who their sponsored workers are (under tier 2 and the work permit scheme) and know when their leave is due to expire.

Sponsors must then decide which of their existing CoS batch are to be issued to specific named workers so that they can provide this information to UKBA when they apply under the exceptional consideration procedure for any further CoS.

UKBA states that requests for exceptional consideration will be considered and ranked against the following criteria (starting with the highest ranking):

1)  work permit or tier 2 (general) extension for an existing sponsor

2)  work permit or tier 2 (general) extension for a new sponsor

3)  new shortage occupation post for an existing sponsor

4)  new shortage occupation post for a new sponsor

5)  non-shortage occupation post for an existing sponsor

6)  non-shortage occupation post for a new sponsor

Under the exceptional consideration provisions, a CoS should only be requested for an extension where the migrant’s leave is due to expire within the next 60 days. Where the CoS is required for an individual whose leave is due to expire in more than 60 days then the request for exceptional consideration will be rejected by UKBA and the sponsor informed.

UKBA states that the requests for exceptional consideration will be considered by a panel of UKBA managers to ensure consistency of decision-making. The overall allocation of CoS available for exceptional cases will be divided across the months of the interim limit. UKBA has not provided any detail as to how the panel will determine applications.

UKBA states that the panel will meet on a monthly basis on the first working day of the month. All requests for exceptional consideration received before the 25th of the previous month will be considered at the next panel. Any requests received from the 25th onwards will not be considered at the next panel but will be rolled over to the following month’s panel. Sponsors will be notified of the result of their request for exceptional consideration within five working days of the panel meeting. Where the request for a CoS has been successful then the sponsor management account will be updated.

Where an urgent decision is required before a panel then a decision will be made by the Deputy Director for Sponsorship or nominated deputy.

UKBA states that any CoS allocated to sponsors following a request for exceptional consideration must be used for the role for which it was requested. Failure to do so may result in future requests for exceptional consideration being refused and further compliance action being undertaken as appropriate.

We consider that it is important that sponsors generally check that they are compliant with the rules of sponsorship before making an exceptional CoS request. We undertake on-site assessments and if you would like to arrange for one of our team to visit you, please contact us.

How to make a strong exceptional consideration application and what to do if it is refused

UKBA has stated that the panel’s decision is final: there is no appeal or reconsideration process. However, sponsors can choose to resubmit their request at any time.

Penningtons' immigration team has designed a process which includes an expedited review of the individual's personal circumstances in order to check if they are eligible for leave to remain in their own right. For instance, many senior workers may qualify under the tier 1 (entrepreneur/investor) or marriage/unmarried partner rules and we also have expertise in dealing with posted workers and the transfer of employees under Vander Elst and GATS principles.

If an application for exceptional consideration to issue a CoS is to proceed, a member of our trained and experienced team then prepares a tailor made business case to accompany the application. We expect UKBA to issue a CoS where we have submitted a robust business case and if they refuse the application then it is possible, if the sponsor chooses, to put the matter before a High Court judge who will review whether or not the decision is reasonable and lawful. In our experience, where a strong case has been submitted by our team, UKBA will approve the application rather than force the matter to be reviewed by a judge.

We expect over time that UKBA will publish detailed criteria as to how they will assess applications. Our immigration team's partners are holding urgent talks with them in order to try and assist all parties in avoiding a scenario where tier 2 sponsors who have a strong business case have no alternative but to refer refusal decisions to the court. It is important that UKBA and sponsors continue to work together in order to benefit the UK economy. 

Are the interim measures and the exceptional consideration requirements legal?

As we mentioned in our July 2010 update, Penningtons’ partners consider that the manner in which the interim measures have been implemented may be deemed unlawful. We are urging UKBA to work within the UK's legal framework and provide businesses with transparency and certainty.

In terms of the exceptional consideration process, we have written to UKBA and set out our concern that there appears to be no power in the Immigration Rules of the Immigration Act 1971 which allows the Secretary of State to accept, consider and decide applications from sponsors on an exceptional, discretionary and non-transparent basis.

Paragraph 63A of Appendix A of the Immigration Rules states that the Secretary of State may limit Certificates of Sponsorship. It does not however provide the Secretary of State with the power to issue CoS on an exceptional and discretionary case by case basis to some sponsors. We will update our news page as soon as we have a response. 

In relation to the implementation of interim limits generally, in July 2010 in R (English UK Ltd) v Secretary of State for the Home Department [2010] EWHC 1726 (Admin), the High Court ruled in favour of our client, English UK’s, application for a judicial review of the Government’s decision to increase the level of English language course that foreign students applying to come to the UK under tier 4 may study. The court ruled that because the provision was substantive the detail must be subject to parliamentary scrutiny. Because the detail had been implemented by way of a change to the sponsor guidance, the court found the implementation of such a significant change in that manner to be unlawful. Our client took legal action after many attempts to negotiate with UKBA and in order to save thousands of jobs in the private education sector.

It is our position that the restrictions imposed by the interim measures and the disruption to business caused by them are of such importance to the economy that the matter should be placed before Parliament urgently.  It is difficult to see why Parliament would approve such an arbitrary system which is already leading many businesses to consider whether or not they can operate from within the UK. 

For many tier 2 sponsors with urgent recruitment needs, recourse to the courts which can take many months to conclude and which can be stressful and expensive is not a viable option. However, if significant numbers of businesses complain to their MPs and/or the Parliamentary Ombudsman then this should trigger the process of parliamentary scrutiny.  Information about how to make a complaint can be found on the UKBA website.

Other immigration options

Penningtons also has a leading private individual immigration team, which has expertise and experience in a number of solutions which may be used as alternatives to issuing a CoS, such as:

- unmarried partner and spouse applications

- tier 1 general* and entrepreneur and investor sole representatives

- interns under the tier 5 intern scheme (where the criteria are met) www.tier5intern.com 

- posted workers (where applicable)

- GATS (where applicable)

* please note that tier 1 (general) is also subject to caps.

We have designed a process for employers where we will assess a current or potential employee’s circumstances to ascertain if they will qualify for any other category on a fixed-fee expedited basis. If this is of interest to you, please contact  Philip Barth.

Consultation on non-EU economic migration - why it is important to respond

The interim measures are the start of the Government’s plans to restrict net migration which are due to be rolled out in full in April 2011. On 28 June 2010 the Home Secretary announced a consultation on non-EU migration that is due to close on 17 September 2010.

The Migration Advisory Committee is also carrying out a consultation that closes on 7 September 2010.

The consultation documents including information on how to respond for both are available on the UKBA website.  

It is important that sponsors respond to the consultation process, firstly in order to provide the Government with accurate data on the reasons for the use of skilled migration in the UK workforce.

Secondly, if the Government ignores the responses from those who have taken part in the public consultation and implements policies that are irrational and/or unreasonable in light of the data it has received and which will significantly restrict the ability of UK businesses to recover from the economic downturn, such action may be deemed to be unlawful. 

Institute for Public Policy Research

On 28 March 2010 the IPPR published a document entitled The Limits to Limits: Is a cap on immigration a viable policy for the UK?

The document examines the concept of a cap on immigration from a number of angles and the IPPR concludes in strong terms that a cap is not in the UK’s best interests. The document can be accessed  by clicking here and those responding to the consultation may wish to reference this research in their response.  

Upcoming events

In mid-September Penningtons' immigration team will be running a seminar where we will explain best practice for making an application for exceptional consideration under tier 2 and we will also review alternative immigration solutions.

Invites will be sent out before the end of August and if you would like to receive one, please send an email confirming this to Louise Elmgren.

If you would like to discuss any aspect of this update further, please contact:

                                 Nichola Carter                                                           Philip Barth