Don’t Get Caught In A Work Visa Trap

Employing overseas workers when setting up in the UK can be a complicated business. If a company does not have, or does not yet want a UK-based entity to employ these workers, what options are available, particularly if they will need work visas in place?

Over the last couple of years, more complex employment relationships have emerged that need to be borne in mind. These triangulate the employment relationship between the worker, the employer and the Employer of Record (EoR). Under this arrangement, the worker carries out their day-to-day work under the supervision of a company (the client company) but their employment contract sits with a third party – the EoR.

The client company contracts with the EoR to receive the benefit of the worker’s services while the EoR carries the general HR responsibilities for the worker such as tax and payroll.

A new dawn?

So what does this mean for companies looking to expand their business into the UK? Well, using an EoR allows a company to transfer a team member or hire someone in the UK, without needing to incorporate an entity. They avoid some of the usual HR costs and logistical headaches, which are outsourced to the EoR.

On paper it is a neat solution; however, the model is not without risks. EoRs are often engaged to help companies initially explore a new market or where the growth plan only involves one or two hires. However, a majority of companies will find themselves having to transition out of an EoR within 18 months or so.

From a UK immigration perspective, problems arise when it comes to obtaining a work-based visa for the individual a company wants to transfer to the UK. The main work-based visa, the Skilled Worker route, requires a UK-based entity to act as a sponsor for the worker. This entity must apply for and secure a sponsor licence and sign up to myriad reporting and record-keeping duties in respect of the workers they sponsor. The worker then applies for a visa, which allows them to work in a specific role for the sponsor detailed on their application.

Risky business

Under the current rules, the sponsor must take responsibility, at all times, for the “duties, function and outcomes or outputs” of a worker’s role while they are working in the UK. This isn’t usually a problem when the worker is carrying out tasks and is under the exclusive supervision of their registered employer, but becomes much more problematic when a sponsored worker is in reality working for a company other than their sponsor.

In some circumstances, the Home Office could revoke the EoR’s sponsor licence. This would lead to all the workers on the licence having their visas curtailed”

A sponsored worker can work on a contract basis with a third party but only if a number of stipulations are met. First, the contract for the work must be time limited, so the worker is not fulfilling an ongoing routine role. Secondly, the sponsor must, as mentioned above, retain oversight or responsibility over what the worker is doing day to day.

What’s the alternative?

The apparent simplicity of using an EoR is clearly tempting for a company looking to expand into the UK, but the risks associated with using them, not least for sponsorship visas are significant. Given that, it’s worthwhile considering other visa routes that offer more stability and security.

The Global Business Mobility-UK Expansion worker visa (GBM) was launched last year to allow overseas companies to send a team of up to five workers into the UK to help set up a UK entity. Although the end goal is the setup of an entity, the company using this route will only need an “intention” to set one up at the time of application, and be able to show a UK footprint, either in the form of registration at Companies House or a UK-based office address.  

The GBM Sponsor Licence is for transitioning workers of an overseas company who have been employed for over 12 months to the UK. This Sponsor Licence will enable the employee to work in the UK for up to 5 years. If the Employee uses this type of Certificate of Sponsorship, they will not be able to apply for Indefinite Leave to Remain (ILR, which is the UK equivalent to Permanent Residency) after the expiration of their visa. 

The workers will need to meet certain eligibility requirements to obtain the GBM visa. They will need to be taking on roles in the UK that are at degree-level and meet the salary threshold of £44,400 or the going rate for the role if they have worked overseas for the company for 12 months or more. If they have worked for less time then they will need to be earning above £73,900 in the UK.

The second option is the Undefined Skilled Worker License, which allows for individuals based in the UK who wish to obtain a visa to stay and work in the UK for your company, who may or may not have worked for the company for less than 12 months. The difference between the two is that for Undefined Skilled Worker CoS, the individual must already be in the UK.

Various commentators have pointed out that for businesses with UK expansion plans and visas to source, EoRs offering sponsorship support should be approached with caution. The UK expansion worker route is certainly more involved. However, a number of the tasks, such as creation of a UK entity are not particularly onerous and provides security for the company and the worker that they are not going to fall foul of immigration law later down the line.

Understanding the employment options open to your business can make a big difference to your growth story.  We’re right here for all your needs, and you can contact us for help and support in a number of areas, from tax and payroll to accounting and banking.