Legal

Can employers furlough Tier 2-sponsored workers?

11 May 2020 By Jackie Penlington

The job retention scheme is a lifeline for many businesses but, as Jackie Penlington explains, extra consideration is needed when furloughing migrant staff

Can Tier 2 employees be furloughed?

The good news is that employees sponsored by their employer under the Tier 2 sponsorship regime can potentially be furloughed. Under the furlough scheme, the sponsoring company can only furlough eligible Tier 2 employees who are directly employed and paid by a UK employer. In practice, this is more likely to be Tier 2 (general) migrants, as many Tier 2 (intra company transfer) migrants remain employed and paid by the overseas company and are seconded to work for the UK company. 

The government’s current guidance states that it is possible to furlough foreign nationals. However, the immigration guidance from the Home Office specifically states that furloughing must be down to the company temporarily reducing or ceasing trading and any reductions must be part of a company-wide policy to avoid redundancies where all workers are treated the same. This again differs to the HMRC guidance that permits furloughing in a wider range of circumstances. 

We recommend that, given the immigration guidance, employers retain evidence of the reduction in trading because of Covid-19 and, where possible, evidence to show that each furloughed employee has no work and would otherwise have been made redundant. The employee’s salary must also return to its previous level once the furlough arrangements have ended. 

The Home Office has helpfully confirmed that furloughed Tier 2 individuals will not be breaching the condition of their Tier 2 visa to have no access to public funds.

Do employers have to top up salaries of sponsored employees? 

It is unclear whether employers need to comply with the Tier 2 minimum salary requirements where a Tier 2 migrant is furloughed. Employers should consider topping up salaries where the new reduced salary does not meet the Tier 2 salary level for that role.

Particular consideration should be given to individuals sponsored under the Tier 2 (general) ‘high earner’ category, if the new salary brings them below the £159,600 high-earner threshold. Specific advice should also be sought for migrants whose role was advertised as part of the Tier 2 process.

As usual, sponsors must report any change in salary level. Where this is down to furloughing, sponsors should explicitly state that this is the reason in their notification on their sponsor management system.

What about level 1 users on the company’s sponsor licence?

All companies holding a Tier 2 sponsor licence must have a current employee (or office holder) who acts as the ‘level 1 user’ on the sponsor licence. This is the person who carries out the day-to-day sponsorship activities on the licence. 

Sponsors can have more than one person named as level 1 user on the licence, and they need to ensure they do not furlough their only level 1 user. This would leave them without access to their sponsor management system, as that person cannot undertake any work while furloughed. 

Is unpaid leave applicable?

Usually, sponsors must stop sponsoring a migrant who is on unpaid leave for four weeks or more in total in any 12-month calendar period. However, this has been relaxed so Tier 2 employees can be placed on unpaid leave if their absence is down to the pandemic; current Home Office guidance notes illness, a need to self-isolate or inability to travel because of restrictions as potential reasons for the absence. Sponsors should make a notification that the individual is on unpaid leave because of Covid-19 and retain evidence of the employee’s absence for this reason for any future audit.

Do not forget your responsibilities

While this is a difficult and hectic time for employers, those with sponsored employees need to ensure they consider the implications of any changes for their sponsored migrants. Their sponsor obligations must continue to be fulfilled or they risk jeopardising their sponsor licence.

Jackie Penlington is a managing associate at Stevens & Bolton

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