Fashion is an international business in an increasingly international world.  As surely as trends and designs cross national boundaries, the people who generate them are ever more mobile; those with in-demand skills, ideas and business plans relocate to pursue opportunity.  Yet legal challenges and expensive liabilities lie beneath this dynamic picture.  

Immigration – The New Frontier

EEA Nationals enjoy free access to the UK labour market – except that Bulgarian and Romanian nationals are still subject to specific work permit or other permission to enter employment for the first 12 months and unless they have evidence of having acquired exemption. Croatia is set to join the EU and is expected to be subject to similar restrictions.  For non-EEA nationals, though, things are getting tougher.  Amid tightening economic conditions and a constricting labour market, the Coalition Government  committed from the outset to reduce net non-EEA economic migration from hundreds to tens of thousands per year.  As it pulled the levers to tighten New Labour’s flagship Points Based System, it choked off many well-worn routes for industry professionals.  

There are stringent and costly penalties for ignoring the rules.  Businesses employing non-EEA nationals without the right permission for the jobs they are in face civil penalties of up to £10,000 per worker and could lose their right to sponsor others; in cases of deliberate or negligent wrongdoing, criminal sanctions await.  Checking original documents and status before employment begins, and at yearly intervals thereafter for those with time limited immigration permission is essential and practice and offers statutory protection against penalties.  It is vital to get proper permission to employ all non EEA nationals, and to select the right category under which to make the application.

There are new and greater restrictions on switching between immigration categories, and paths to indefinite leave (permanent residence) are being closed; it is therefore essential that business and key individuals select the right category from the outset when planning for the longer term.

Here is a summary of the current landscape:

1. The Highly Skilled

Senior executives, designers and entrepreneurs wishing to establish or join creative businesses in the UK naturally gravitated to the stand-alone, sponsor-free status afforded by Tier 1 (General) – the successor to the Highly Skilled Migrant Programme. Tier 1 (General) was an early target for restrictions and closed completely to new applicants in April 2011.  Now, only those already in the category can apply to extend.  Yet would-be applicants with imaginative ideas, sponsorship or investment still have options:

  • Tier 1 (Entrepreneur) – this category has been enhanced to offer a route for those with £200,000 or more (reduced to £50,000 in certain circumstances) available for investment in new or existing UK businesses.  The applicant  must make the investment with 3 months and engage hands-on with the development of the business, including creating employment for local employees.
     
  • Prospective Entrepreneur is a new business visitor category specifically for those coming to explore opportunities for entrepreneurship, for a limited period.
     
  • Tier 1 (Investor) has been enhanced to become more attractive to major investors whose investment will exceed £1 million, a significant proportion of which may be invested in UK companies.
     
  • Tier 1 (Exceptional Talent) is for top international talent with endorsement from four “designated competent bodies” including the Arts Council (for arts and culture) and the Royal Academy of Engineering for engineering applications, including manufacturing processes. Numbers are strictly capped. Leading designers and inventors will consider this route.
     
  • Tier 2 (General) and Tier 2 (Intra-Company Transfer) both offer accelerated routes for UK based employers granted sponsor licences by the UK Border Agency to employ the highly skilled, which bypass the numerical caps applicable to other roles.

2.    Skilled Employees
UK employers, including the UK arms of international businesses, can apply for sponsorship licence to employ skilled non-EEA nationals under the sponsorship arrangements of the Points
Based System.

  • Tier 2 Intra-Company transfer enables sponsors to bypass the Resident Labour Market Test (see below) and to allocate certificates of sponsorship to overseas employees within the same group of companies who have been employed for a requisite period and meet the skills and qualifications criteria for the skilled role in question; the category is subdivided into:
     
  • Tier 2 ICT (Long Term Staff) for transfers up to 5 years
     
  • Tier 2 ICT (Short Term Staff) for up to 12 months
     
  • Tier 2 (Graduate Entrepreneur) for UK graduates with their sponsor’s backing for business ideas
     
  • Tier 2 ICT (Graduate Trainee)
     
  • Tier 2 ICT (Skills Transfer) for short term, one-off transfers to acquire or impart skills and experience in a role which will not displace resident worker.

There is no numerical cap, but transfers are now time–limited, usually to no more than 5 years depending on the subcategory, after which options for alternative status are intentionally restricted.

 

  • Tier 2 (General) requires a Resident Labour Market Test – a highly prescribed advertising and recruitment effort – in most cases, with waivers for designated shortage occupations, senior level roles paying more than £150,000 per annum and some concessions e.g. for Tier 4 students switching category.

3.    Temporary Workers, Students and Interns

The UK Fashion industry is a magnet for young talent from across the world. Internships enable businesses to cope with the shows without busting the salary bill. The options here are:

  • Tier 5 – useful for work experience this category is for specialist temporary roles only. This may not include all internships in the industry but may be an option for specific technical skills or crafts e.g. tailoring, shoe making, jewellery design and making.
     
  • Tier 4 (General) students sponsored by their UK educational institutions may access the employment market, but hours and duties are restricted and filling full-time, permanent vacancies is not allowed. Summer internships are covered; there are relaxations on the resident labour market test for those securing job offers for skilled roles with Tier 2 sponsors on graduation.

3.    Family and Ancestral routes

  • Family and ancestral routes exist for some Commonwealth nationals (typically those with a grandparent born in the UK) or those who can derive citizenship through a British parent; and for spouses and partners of UK and EEA nationals who will live with them in the UK, the latter exercising European treaty rights related to free movement and family life.

Conclusion

The rules are not as straightforward as most business would like to believe – or as the last Government led them to expect.  Nasty pitfalls await the unwary.  Careful due diligence, and taking legal advice in cases of doubt or concern, are highly recommended.  The immigration and associated employment law risks can be severe otherwise; don’t be tempted to break the rules!

This article was written by Matthew Davies, Partner at Fox Williams and Head of its Business Immigration Practice.  He can be contacted on mdavies@foxwilliams.com   
 

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