A briefing note on the immigration implications for Tier 2 workers of changes to salary, the Government’s Furlough Scheme and redundancy amid the COVID-19 pandemic

(Updated as of 2 November 2020) 

Key points from latest guidance

The Home Office last issued revised information on GOV.UK on 14 April 2020 however this guide has been updated to consider wage support schemes other than the furlough scheme. We have also added a new section covering the potential need to review your sponsor licence as a result of economic impacts caused by COVID-19.

Placing employees on unpaid leave

Before taking any decision to place Tier 2 employees on unpaid leave or to grant voluntary periods of unpaid leave, employers must consider their sponsor compliance duties. These stipulate that a Tier 2 sponsored worker cannot take four or more weeks of unpaid leave per calendar year, according to their normal working pattern. So, for a person working a five-day week, the number of days taken must be less than 20 and for a person working a four-day week, it must be less than 16 days. This is cumulative and not only in one single block.

The Home Office’s standard guidance indicates that the person’s immigration permission may be cut short if this occurs, and that a sponsor may also face compliance action. However, the Home Office Coronavirus (COVID-19) immigration guidance for Tier 2, 4 and 5 sponsors initially published on 27 March 2020 states that sponsors are not required to withdraw sponsorship and will not face enforcement action if an unpaid absence from work of any length is authorised and due to coronavirus. The absences do not need to be reported on the SMS. The guidance refers to absences including illness, isolation or inability to travel due to travel restrictions. Following the closure of schools and other childcare providers, our view is that an absence due to the need to care for children during the closures would also be covered as being due to the outbreak. When using this concession, sponsors should take care to make an assessment of whether each particular absence is ‘due to coronavirus’ and note this on the employee’s HR file for audit purposes.

Cutting salaries and/or reducing hours

If you are having to consider cutting salaries or reducing working hours, this may have implications for Tier 2 workers.

A drop in salary, whether made directly or as the result of a reduction in hours, has to be reported on the sponsor management system (SMS) within 10 working days. If a drop in salary takes a Tier 2 employee below one of the salary thresholds for Tier 2, such as the £30,000 general minimum for experienced workers under the Tier 2 General visa route, or the minimum appropriate rate for the specific occupation under the relevant SOC code (if this is higher than the applicable general minimum), then the usual position is that they cannot continue to be sponsored. There are some specific exceptions where workers can continue to be sponsored, including where they are absent on an unpaid basis due to parental or long-term sick leave.

On 3 April 2020 the Home Office announced a concession for sponsors who have temporarily reduced or ceased trading. These sponsors can temporarily reduce the salary of sponsored workers to 80% of the salary recorded on their CoS or £2,500 per month, whichever is lower. This concession sets aside the requirement for sponsored workers to satisfy the minimum salary threshold for their job type and visa category, including where they have been furloughed or otherwise covered by a wage support scheme (see further information on this in the separate section below). Once the temporary salary reduction has ended, the salary must be returned to at least the same level as previously indicated on the assigned Certificate of sponsorship (CoS).

Usually, if you have to drop the salary for someone who was granted a Tier 2 General visa based on the fact that you did not need to run the resident labour market test as their salary was above £159,600, and the drop takes them below this salary level, then the standard guidance requires the person to make a new visa application. However, the latest Home Office guidance does not appear to discount any type of Tier 2 sponsored worker from the salary reduction concession, including high earners, as long as the policy is company-wide with a view to avoiding redundancies and all workers are treated the same. We interpret this to mean that sponsored workers are not to be treated more or less favourably than non-sponsored workers. The concession also does not appear to be restricted to the situation where the salary reduction occurs as the result of a sponsored worker being furloughed. The Home Office may provide further clarity on these points in due course so please seek further advice from us if you have Tier 2 workers affected.

Deferring salary

Tier 2 workers must be paid in accordance with the information set out in their CoS, taking into account any subsequent changes reported on the SMS. If you choose to defer a sponsored worker’s salary, this should be reported on the SMS. You should also ensure the deferral arrangement is appropriately documented on the worker’s HR file.

If deterioration in the business’s financial circumstances results in the deferral becoming a salary reduction, then the information above on cutting salaries would apply.

Secondments and role changes

You may consider seconding a Tier 2 worker, for example where there is reduced need for them to carry out their role in your business. This is allowed if the secondment is so you can fulfil a contractual obligation with the receiving business, the worker will provide a service or work on a project with a specific end date, and the service or project will not be operated by you or anyone else after that time. You must also continue to have genuine responsibility for deciding the duties, functions and outcomes of the job the worker will do while on secondment, as well as being able to monitor the worker for the purpose of complying with your reporting duties.

You may also consider altering the duties of a sponsored worker such that the new duties do not fall within the job description on their CoS. This could happen as part of a secondment or due to changed operational needs. If so, a change of employment application (possibly including resident labour market testing) may need to be made. The only exception would be where the new duties still fall within the sponsored SOC code and the worker would not be moving from a shortage occupation within the code to a non-shortage occupation.

Normally, a change of employment application must be approved before a person can start working in their new role. However, the Home Office’s guidance on GOV.UK has stated since 14 April 2020 that a Tier 2 or 5 worker with a pending in-country change of employment application may start work in their new role before their application is decided, provided certain requirements are met. These are covered in our guide to the immigration implications of COVID-19 for UK employers under the section on moving immigration category.

In some cases a sponsored worker may wish to work abroad during the pandemic. See our separate article for further information on that scenario.

Using government wage support schemes for your employees

The government has put in place various wage support schemes for business, including the Coronavirus Job Retention Scheme (‘furlough scheme’) and the Job Support Scheme.

The furlough scheme was designed to provide UK employers with support for paying wages of staff who would otherwise have been laid off or made redundant (furloughed) as a result of COVID-19.

Its successor, the Job Support Scheme comprises two wage support schemes, one to support businesses required to close as a result of coronavirus restrictions and another to support eligible businesses that can stay open but are facing lower demand. General FAQS on the Job Support Scheme (open and closed) and information on the operating dates for each scheme can be found here.

The Home Office has made provision for wage support schemes to be applied to sponsored workers. This is set out in a concession first published on 3 April 2020 as an update to the Home Office’s COVID-19 guidance for sponsors.

Under the concession, sponsors can temporarily reduce the salary of sponsored workers to 80% of the salary recorded on their CoS or £2,500 per month, whichever is lower. These figures match those that were allowed by the furlough scheme. The reduction in salary must be part of a company-wide policy to avoid redundancies in which all workers are treated the same. Our view is that it would not be acceptable for sponsored workers to be selected for inclusion on a wage support scheme as a group because of their visa status, or for them otherwise to be treated more or less favourably than non-sponsored workers. Once the period of temporary salary reduction ends, the salary must return to at least the rate specified on the sponsored worker’s CoS. All changes in salary must be reported on the SMS within 10 working days of the change.

However, the job support scheme in place from 1 November 2020 is not as generous as the furlough scheme it replaces. Under the job support scheme, employees are required to work a minimum of 20% of their usual hours (and receive payment as usual) with the government contributing 61.67% of pay for hours not worked (capped at £1,541.75 per month) and employers contributing 5% (capped at £125 per month). Overall, this means employees will receive at least 73% of their normal pay (if their monthly wages do not exceed £3,125), although employers are able to top this up if they choose. The Home Office has not amended the salary reduction concession to mirror the new figures provided for in the job support scheme. This means that unless an amendment is forthcoming, if you intend to apply the job support scheme to a sponsored worker, you must still ensure the concession is also met, which may mean  providing additional hours or topping up wages in some cases.

There will also be extra considerations for those employees who you intend to place on a wage support scheme who are working for you on a Tier 2 sponsored work visa.

During any period of time on a wage support scheme, Tier 2 employees are permitted to undertake training or do voluntary work in some circumstances. Supplementary employment is allowed, but only in a shortage occupation or in the same role and at the same level as their sponsored role. Supplementary employment also must be for no more than 20 hours a week and outside of the working hours stated on the sponsored worker’s CoS.

Additionally, the payouts from the Government under wage support schemes derive from public funds. This may cause confusion or doubt given that Tier 2 sponsored workers and their dependants are prohibited from having recourse to public funds. In accordance with the definition of ‘public funds’ under the Immigration Rules, receiving funds that are made payable to employers through the scheme will not constitute recourse to public funds. However, where the Government indicates that any reduction in salary may entitle workers to support through the welfare system, it is important to note that this is not available to Tier 2 sponsored workers or their dependants. To claim benefits in this way would be in breach of their immigration conditions, which could lead to the individual’s immigration permission being cut short or to future applications being refused. It could also potentially lead to compliance action against you as a sponsor. 

If you are considering placing Tier 2 workers on a wage support scheme, we would recommend you contact us for specific advice on appropriate actions including the following:

• Reporting all changes in salary or working hours on the SMS as a change in migrant circumstances

• Ensuring earnings do not drop below the amount permitted by the concession

• Keeping detailed records of what has occurred, including records of the actions you have taken across the business to avoid redundancies, in case of future audits

• Reminding any Tier 2 workers who covered by a wage support scheme of the immigration conditions they have that restrict work, training and volunteering

Terminating the employment of Tier 2 workers

Unfortunately, you may be forced to consider terminating the employment of sponsored workers or making them redundant as a result of the economic downturn. In this circumstance, employers are required to notify the Home Office of the end of their employment by submitting a report on the SMS within 10 working days of the employee’s last day of employment.

In normal circumstances, notifying the Home Office of a sponsored worker’s termination or redundancy will initiate the process of visa curtailment and, after they have left the UK, a 12-month ‘cooling-off period’.

The Home Office will then issue the worker with a ‘curtailment notice’ shortening their permission to stay in the UK to 60 calendar days and confirming the new visa expiry date. If there are fewer than 60 days remaining on the visa when the Home Office letter is issued, no change will be made to the expiry date. The curtailment will also apply to any dependent family members.

Between termination of employment and the new expiry date, the individual is permitted to seek alternative sponsorship or to submit an application for further permission to stay in an alternative category for which they qualify. However, if they are not able to find a new sponsor the individual and any dependent family members will be expected to leave the UK or face enforced removal.

On leaving the UK, the 12-month cooling-off period will be triggered, and they will need to wait for this to end before they will be eligible to apply under the Tier 2 category once again. The cooling-off period can be bypassed only where the individual’s new guaranteed salary exceeds the high earner threshold of £159,600, for Tier 2 General migrants or £120,000 for Tier 2 Intra-Company Transfer migrants, or where their original Tier 2 CoS was assigned for three months or less.

The Home Office’s COVID-19 guidance for UK visa applicants and temporary UK residents currently confirms that people with a visa expiring between 24 January 2020 and 31 May 2020 will be allowed to extend their stay in the UK in circumstances where they would normally have to apply from abroad, but that all other requirements and fees for applications remain unchanged.

For now, aside from sponsors not needing to report working from home due to COVID-19, or COVID-19-related absences, all other reports must be made as normal.  It is possible that further requirements may be waived once the Home Office has had an opportunity to further consider the implications of the situation as it develops, but this is not guaranteed. Please contact us for further advice should you have specific questions about the impact of termination on any sponsored employees.

Reviewing your sponsor licence

The economic impacts of COVID-19 may also have implications for your sponsor licence.

It may be necessary to add or remove key personnel from your licence due to staffing changes, for example where employees with sponsor licence responsibilities go on sabbatical, are made redundant or otherwise leave your business.

It may also be necessary for sponsored employees to be moved from one licence to another, or for a new licence to be applied for due to corporate restructuring.

The Home Office may also need to be informed of changes to group structure due to the need to evidence the intra-company links between entities when sponsoring Tier 2 Intra-Company Transfer migrants, or if you hold a licence which covers a number of UK entities within your group.

For further information

Please see our guide for other immigration issues raised by COVID-19. If you have any queries regarding this, please contact your usual contact or a member of the immigration team.

For information and guidance on issues including business continuity, contractual considerations and employer/employee relations visit our COVID-19 hub.

This publication provides general guidance only: expert advice should be sought in relation to particular circumstances.

(Updated as of 2 November 2020)