How to manage an increasingly international workforce. 8 June 2016

Transcription

1 How to manage an increasingly international workforce 8 June 2016

2 Visa issues and United Kingdom requirements Gillian Brownlee Senior Associate Immigration Team

3 Visa issues and United Kingdom requirements Immigration is often overlooked during the initial pre-assignment discussions and employers focus on employment and taxation issues The requirement for a visa regardless of country should never be an afterthought Immigration has become a complex area of law so it should be given equal importance alongside employment and taxation Allow enough time to consider an international new hire or an inter-company transfer As an employer you first need to consider: Immigration: appropriate work visa (business visitors are not permitted to work in the UK) Employment contractual provisions Legal and taxation Why is immigration so important?

4 Compliance the law Immigration, Asylum and Nationality Act Section 15: an employer may be liable for a civil penalty if they employ someone who does not have the right to carry out the work in question - Section 21: it is an offence to knowingly employ an adult subject to immigration control without formal work permission 12 July Immigration Act 2016 (Commencement No 1) Regulations 2016 (SI 2016/603) provisions that come into effect on this date include: - A broader definition of what constitutes a criminal offence for employing illegal workers (for employers) - Increased maximum penalties for employing illegal workers - The creation of a criminal offence for working illegally (for employees) - Additional powers for immigration officers to search and seize documents - From 12 July 2016 employers will face criminal prosecution if it can be proved that the employer had reasonable cause to believe that an employee is disqualified from employment by reasons of the employee s immigration status - The test for culpability, from actual knowledge of illegality to reasonable cause has therefore been lowered

5 Compliance prevention of illegal working There is greater emphasis on Compliance not only in the United Kingdom but in other jurisdictions (similar requirements i.e. need for correct work permission, document checks and legal penalties for non-compliance) United Kingdom: an employer can avoid becoming liable for a civil penalty and prosecution by carrying out simple specified document checks on people before employing them to ensure they are allowed to work in the UK UK Visas and Immigration (UKVI) pre-arranged or unannounced visit - Ensure Prevention of Illegal Working Checks are carried out at the appropriate time - Maintain your Statutory Excuse when employing non-eu nationals in the United Kingdom - Check the overseas employing entity s pre and post-employment check requirements (consider the law for each country and comply with that country s legislation) - Tier 2 migrants: report when required to do so via your Sponsor Management System - Don t be complacent

6 Compliance salaries Salary information on a Certificate of Sponsorship (CoS) When you assign a CoS to a migrant you must give three pieces of information about the salary package: The gross salary figure which must represent the total amount paid to the worker, gross of any tax paid whether paid in the UK or overseas, and must include any permitted allowances and guaranteed bonuses (a discretionary bonus is not permitted) A separate figure for the total of all allowances and guaranteed bonuses (including cost of living allowance and accommodation allowance) A detailed breakdown of each allowance and each guaranteed bonus showing their value The figure stated in the Employment Contract or Secondment Agreement must not be inflated in expectation of any tax relief, such as relief on expenditure related to the employment, or tax incurred by the employment of a resident worker, but not incurred for a migrant Salary may be paid abroad or in the UK but the overseas salary must be converted into pounds sterling at the time of assigning the CoS

7 Compliance Annex D of the Points Based System You must give the UKVI, when asked, any documents relating to your sponsored migrants or the running of your organisation that it considers relevant to assessing your compliance with your duties as a Sponsor The UKVI may ask for details of your recruitment practices so that they can make sure that a resident labour market test was carried out Sponsors are required to retain certain copy documents in accordance with Annex D of the Tier 2 and 5 guidance for sponsors Including the signed and dated Employment Contract or Secondment Agreement Why: because the UKVI will cross check the financial data with the information stated on the assigned CoS UKVI will check to ensure the sponsored employee is being paid at or above the appropriate rate of pay stated in the codes of practice for skilled workers / ensure pay is not undercutting the resident labour market UKVI will also consider a sponsored employee s payslips which must clearly show the name, NI number (if applicable), tax code, any allowances paid and deductions

8 Compliance Annex D of the points based system A copy of any contract of/for employment/services between the Sponsor and the migrant must clearly show all the following: The names and signatures of all parties involved The start and end dates of the contract (if applicable) Details of the job, or piece of work that the migrant has been contracted to do An indication of how much the migrant will be paid The names and signatures of all parties involved Where the migrant receives any allowances as part of their salary package, evidence of the value of those allowances must be kept unless they are clearly shown in a contract of/for employment/services, or on the migrant s payslips Non-compliance may prompt the UKVI to revoke the Sponsor Licence

9 EU referendum We don t know which way the referendum will go and we don t know what the final outcome will be if the United Kingdom votes to leave What we do know: - We can be fairly sure that the rights of EU citizens to live and work in the United Kingdom won t change overnight on 23 June - If we vote to leave the EU, long negotiations between the United Kingdom and the EU will follow - United Kingdom has two years to negotiate the terms on which it will leave the EU. During that period the UK remains a member of the EU and free movement rules will continue to allow EU citizens to live and work in the United Kingdom and to allow EU citizens to move to the United Kingdom - If negotiations result in EU citizens no longer having full free movement rights with the right to live and work in the United Kingdom, there will almost certainly be special transitional rules for EU citizens already living in the United Kingdom at the date the United Kingdom left the EU - Any transitional rules will have to be generous not least because similar reciprocal rules would be imposed on the millions of British citizens who live in the rest of the EU by other Member States

10 EU referendum Possible transitional rules: Would not require EU citizens to leave the United Kingdom Would recognise periods of lawful residence already completed as EU nationals to be counted towards indefinite leave to remain when EU nationals complete five years residence Would not require EU citizens already in the United Kingdom who have not yet completed five years of lawful residence to immediately make applications to be granted leave to remain under the United Kingdom Immigration Rules - It is unlikely that the UKVI would have the resources to consider these applications What should your EU citizen employees do now? - EU citizens who live and work in the United Kingdom and concerned about an exit from the EU should take the necessary steps to protect their status in the event of a vote to leave on 23 June

11 Life Cycle of a Global Case Benjamin Sookia Global Immigration Manager Immigration Team

12 Life cycle of a global case Stage 1: Work permit application Case initiated. Questionnaire sent to HR/Assignee within 24 hours. High Touch Call (HTC) with HR/Assignee and cocounsel. Full assessment and process overview within 24 hours of HTC. Document preparation/collection. KN assists with document procurement (if required). Work permit application filed within 24 hours. Work permit approved, notification to Assignee and HR. Stage 2: Entry visa application Entry visa filed in the Assignee s country of residence/nationality (N.B this stage is required only for certain nationalities/countries). Entry visa approved - Assignee travel ready. Travel to host location within validity of visa. Stage 3: Residence permit application Residence permit filed. Residence permit approved, notification to Assignee and HR. Work/Residence permit stored in case management system and tracked for future renewal support within 24 hours of receipt. Request feedback from Assignee and HR. Note: This document has been drafted and provided by Kingsley Napley LLP. This document should be used for information purposes only. This information should not be relied on as an exhaustive explanation of the law or the immigration issues involved without seeking legal advice as immigration rules are prone to change and subject to variation dependent on the specific immigration laws of each jurisdiction. BIS/030616

13 Contractual provisions: Mobility clauses and relocation Matthew Perry Solicitor Employment Team

14 Relocation of employees Reasons for relocation: Knowledge sharing (longer/shorter term arrangements) Work ceasing in current location New premises (reduce costs, size of premises) As part of a company merger Reasons for employee opposition: not being able to afford a house at the new location not wanting to leave current home family situation, such as caring for older parents children's education increased travel costs and time

15 Legal position General Position: It will constitute a change in the terms of the contract (Aparau v Iceland Frozen Foods plc [1996] IRLR 119) Unless. A term can be implied to authorise such a change i.e. (Jones v Associated Tunneling Co Ltd [1981] IRLR 477 and Courtaulds Northern Spinning Ltd v Sibson [1988] IRLR 305). The contract itself authorises the change (mobility clauses)

16 The restricted use of mobility clauses Contra proferentum rule The case of United Bank v Akhtar [1989] IRLR 507 The employer should give reasonable notice The employer had to exercise its discretion to provide relocation expenses to make performance of the contract possible The employer should not act in a way to undermine trust and confidence

17 Where the change is not authorised Options: Seek the employee s express agreement Unilaterally impose the change and rely on employee conduct Terminate employment and offer on new terms

18 Potential claims Unfair dismissal claim Breach of contract claim Discrimination - Meade-Hill and NUCPS v British Council [1995] IRLR 478 Redundancy TUPE if connected with business transfer

19 Handling relocation Explaining why the change is necessary (vs potential restructuring/job losses) Provide reasonable notice Support the employee Incentives (financial and non-financial) Timing during salary review or bonus etc.

20 How to support employees Set realistic expectations (the role, length of assignment, compensation, impact on career) Work permits/visas Look-see trip Cross-cultural training Departure services Destination services (housing, utilities, bank accounts, schools) Language training Medical check ups Previous assignee contact Avoid out-of-sight-out-of-mind syndrome

21 Relocation agreement Core considerations: Currency (cost of living fluctuations) Expatriate benefits (housing, car schooling, accommodation, medical insurance etc) Length of relocation (terminable on notice, separate to employment relationship?) Responsibility for performance and management of the employee Any limits on repatriating the employee (i.e. not meeting costs if he or she is dismissed for gross misconduct) Conditional upon immigration documents Which law governs the relationship? What happens at the end?

22 Expenses Agree clearly with employee where expenses are to be paid Consider repayment upon termination (sliding scale approach based upon length of time served) although note re: penalty clause Specialist advice should be sought on tax issues (exemptions for Income Tax and NICs) Tax indemnity from employee

23 Taxation issues Always seek specialist advice (Private Client department at KN or an external tax adviser) Resident/domiciled? Double taxation PAYE and transferring the employee Dual contracts Tax equalisation Affects non-employment income of employee also

24 Summary An employee may have doubts about relocation Relocation may be difficult without a mobility clause Even with a mobility clause, the employer must be reasonable There are various potential claims It is advisable to support the employee Agree the terms of relocation prior to moving Specialist tax advice should always be sought

25 The international application of UK employment legislation. What do employers need to know? James Murray, Solicitor Employment Team

26 Three questions to consider 1. Jurisdiction 2. Choice of law 3. The territorial scope of UK statutory employment law protection

27 Why should employers care about these rules? Employers who routinely send individuals abroad or, in some cases, bring in foreign individuals for extended periods, need to ensure they are not caught out. Is specialist advice needed, e.g. if you wish to terminate or discipline an individual already working abroad? Is the business able to structure its affairs so as to mitigate the potential risk?

28 Jurisdiction the Recast Brussels Regulation (1) Article An employer domiciled in a Member State may be sued: (a) in the courts of the Member State in which he is domiciled; or (b) in another Member State: (i) in the courts for the place where or from where the employee habitually carries out his work or in the courts for the last place where he did so; or (ii) if the employee does not or did not habitually carry out his work in any one country, in the courts for the place where the business which engaged the employee is or was situated. 2. An employer not domiciled in a Member State may be sued in a court of a Member State in accordance with point (b) of paragraph 1.

29 Jurisdiction the Recast Brussels Regulation (2) Article An employer may bring proceedings only in the courts of the Member State in which the employee is domiciled. 2. The provisions of this Section shall not affect the right to bring a counter-claim in the court in which, in accordance with this Section, the original claim is pending.

30 Choice of Law the Rome I Regulation Articles the contract shall be governed by the law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract. The country where the work is habitually carried out shall not be deemed to have changed if he is temporarily employed in another country. 3. Where the law applicable cannot be determined pursuant to paragraph 2, the contract shall be governed by the law of the country where the place of business through which the employee was engaged is situated. 4. Where it appears from the circumstances as a whole that the contract is more closely connected with a country other than that indicated in paragraphs 2 or 3, the law of that other country shall apply."

31 The territorial scope of UK statutory employment law protection The Lawson v Serco categories: 1. Employees ordinarily working in Great Britain; 2. Peripatetic employees where the employee s base should be treated as the place of employment; and 3. Expatriate employees where something more than just having been recruited in Great Britain by a British employer is required.

32 Cases following Lawson v Serco Duncombe v Secretary of State for Children, Schools and Families: "it is a mistake to try and torture the circumstances of one employment to make it fit one of the examples given [in Lawson v Serco], for they are merely examples of the application of the general principle. Ravat v Halliburton: The question of fact is whether the connection between the circumstances of the employment and Great Britain and with British employment law was sufficiently strong to enable it to be said that it would be appropriate for the employee to have a claim for unfair dismissal in Great Britain.

33 Factors to be considered Where the employee was recruited Where the work is done (although this will not always be decisive) Where the employee is based The parties choice of law What has been said to the employee as to which system of law will apply Where the employment relationship has been managed (e.g. HR) Where the employee's home/family are and/or whether s/he has accommodation here Where the employee gets paid and in what currency Where the employee pays tax and makes social security contributions Where the employer is registered/the business is based Connections with government/the State and/or representing Britain abroad

34 Lodge v Dignity & Choice in Dying Mrs Lodge, an Australian citizen, asked her employer if she could move home to Melbourne, but continue to perform the same role On moving to Melbourne the Claimant took up Australian residence, paid Australian taxes and was subject to the Australian pension regime. She did not pay tax or National Insurance in the United Kingdom. While in Melbourne she carried out her duties remotely. She generally did her work during the hours 8.00 am to 5.00 pm local time but also made herself available during the evenings from time-to-time so she could, if necessary, be in contact with the London office during London office hours. She returned to London in January of each year for a period of two weeks in order to assist with the annual audit and on two other occasions in each year (for a roughly a day each).

35 R (Hottak) v Secretary of State for FCA Mr Hottak was employed by the British government as an interpreter and worked with British forces in Afghanistan. He worked under a local contract of employment, which was governed by Afghan law and was paid in US dollars. He suffered intimidation and death threats as a result of his work and this led to his decision to leave employment. Mr Hottak was granted asylum by the UK. He brought judicial review proceedings challenging the legality of the British Government s Afghan scheme. This scheme provided protection and benefits, including relocation opportunities, to Afghan nationals working with the British forces in Afghanistan. He complained that similar schemes put in place during British operations in Iraq had been more generous than the Afghan Scheme and that this was either direct or indirect discrimination on the grounds of nationality under the Equality Act 2010.

36 Olsen v Gearbulk Mr Olsen, a Danish peripatetic employee, lived in Switzerland, but travelled extensively under his employment contract. He worked for a Bermudian company and his employment contract was governed by Bermudian law. His salary and expenses were processed in Bermuda. His contract specified his base being Switzerland and the accommodation rented in Surrey was taken in the name of a family company. He spent more time working in the UK than in any other jurisdiction (just under half his working time) and was paid in sterling. However, he took steps to minimise his connections with and time spent in the UK so he would not be subject to UK taxation.

37 Mitigating risk factors Ensure contracts for employees and contractors have foreign law and foreign jurisdiction clauses. Run HR services, including recruitment, locally in the jurisdiction, as far as possible. If not practical, then formalise the arrangement. Payroll should be in the local currency and employees should pay tax and make social security contributions locally.

38 What would a Brexit mean for these rules? Brussels Regulation, cf Lugano Convention Rome I Regulation, cf. Rome Convention What happens to Lawson v Serco?

39 The Global Harmonisation of Policies and Terms and Conditions of Employment Adrian Crawford Partner Employment Team

40 Is a global contract feasible? Divergence in local laws: e.g. notice, holiday. Divergence in legal obligations and practices e.g. termination provisions, grievance and disciplinary procedures.

41 Areas where harmonisation should be considered Where ethical or reputational considerations apply. Where legal obligations cross borders.

42 Areas where harmonised policies may be appropriate Minimum working conditions. Supply chain verification. Equality and diversity. Bribery and corruption. Global mobility.

43 Equality and diversity An individual may have the right to bring a claim in the Employment Tribunal even if based outside Great Britain. Actions which take place outside Great Britain may be referred to as evidence of discriminatory conduct or attitudes within Great Britain. Difficulty of reconciling different local laws and attitudes: a protected characteristic in one jurisdiction may be associated with criminal conduct in another.

44 Bribery Act 2010 Offences include bribing another person, offences relating to being bribed and bribery of foreign public officials. These offences committed if any act or omission takes place in the UK or even outside the UK if the person has a close connection with the UK e.g. British citizen or UK resident. Offence of failure of commercial organisations to prevent bribery and the adequate procedures defence.

45 Facilitation payments Facilitation payments: operations in some territories may not be viable for UK businesses. NB: US Sarbanes-Oxley Act 2002: applies to any company listed on a US exchange.

46 Brexit and beyond: the future of employment law? Adam Lambert Partner Employment Team

47 A brief history of UK workers rights in Europe the formative years Resistance in the 80s and 90s: TUPE 1981 (1977 Acquired Rights Directive) Working Time Directive (throughout the 90s) Maastricht opt out (1992) Jacques Delors: European Social Action Programme (early 90s) Social Dumping

48 A brief history of UK workers rights in Europe the expansion years Repeal of Maastricht opt out (1997) Employment lawyers heaven Gold plating European legislation: TUPE (2006) Working Time Regulations (2007)

49 A brief history of UK workers rights in Europe the quiet years Focus on employment law that doesn t come from the EU

50 Where will Brexit take us? Workers view: Brexit is a serious threat to workers rights Employers view: Brexit means getting rid of pointless red tape

51 Where will Brexit really take us? Trade agreements same or equivalent laws Cultural inertia: rights around for too long to be removed Removal of gold plating?

52 A brief future of UK workers rights in Europe the picking away years Agency Workers Regulations Capital Requirements Directive (CRD IV) Data protection Moving away from unpopular ECJ decisions But: Change of Prime Minister? Football

53 Questions Adrian Crawford Partner, Employment +44 (0) Adam Lambert Partner, Employment +44 (0) Gillian Brownlee Senior Associate, Immigration +44 (0) James Murray Solicitor, Employment +44 (0) Matthew Perry Solicitor, Employment +44 (0) Benjamin Sookia Global Immigration Manager +44 (0)

54 Kingsley Napley LLP is authorised and regulated by the Solicitors Regulation Authority