Options For Immigration For Businesses That Want To Grow In The UK
For companies expanding into the UK without a local entity, navigating UK immigration laws is crucial when employing foreign workers. One option is the Tier 2 (General) visa, requiring sponsorship by a licensed employer and meeting skill and salary criteria. Alternatively, the Tier 1 (Entrepreneur) visa suits those establishing UK ventures but demands significant investment and a detailed business plan. Short-term projects may utilize the Tier 2 (Intra-Company Transfer) visa, facilitating temporary staff transfers. However, complications arise from evolving UK immigration laws, administrative burdens, and Brexit-related uncertainties, necessitating careful consideration and compliance to effectively navigate the process of employing foreign talent in the UK.
Employer of Record
In the past few years, job interactions have become more complex. The worker performs their day-to-day duties under the supervision of a company (the client company), but their employment contract is held by a third party—an employer of record (EoR). The client company contracts with the EoR to receive the worker’s services, while the EoR handles the worker’s standard human resource responsibilities, such as taxes and payroll.
Using an EoR, businesses seeking to expand into the United Kingdom can transfer a team member or hire a new employee in the country without forming a separate firm. They save some of the typical HR expenses and logistical hassles by outsourcing to the EoR. On paper, it is an elegant approach; however, the model is not risk-free. Typically, EoRs are used to help organizations initially explore a new market or when the growth strategy calls for only one or two recruits. The vast majority of businesses exit an EoR within approximately 18 months. The epidemic has sparked a boom in the market for third-party EoRs; by 2028, their market share is projected to climb significantly.
From the standpoint of UK immigration, acquiring a work-based visa for the employee a corporation wishes to move to the UK presents complications. The main work-based visa route, the “Skilled Worker” route, requires the worker to have a UK-based sponsor. This company must apply for and obtain a sponsor license, as well as agree to a variety of reporting and recordkeeping obligations pertaining to the sponsored workers. The worker then applies for a visa that permits them to work in a certain capacity for the sponsor listed on their application.
In the United Kingdom, the sponsor must always be responsible for the “duties, function, and consequences or outputs” of a worker’s position. This isn’t usually a problem as long as the person is only doing work for their registered employer. However, if a sponsored worker is working for a company other than their sponsor, it becomes a much bigger problem.
The EoR’s sponsor license could be revoked by the Home Office. This would result in all licensed workers having their visas revoked.
A sponsored worker may contract with a third party, but only if a number of conditions are satisfied. First, the duration of the employment contract must be limited so that the worker is not performing a continuing routine function. As was already said, the sponsor must keep an eye on or be responsible for what the worker does every day.
EoRs that assume the position of sponsor for foreign workers and then outsource them to client organizations may violate their sponsorship responsibilities and suffer severe consequences. The EoR’s sponsor license could be revoked by the Home Office. This would result in the visas of every worker on the license being revoked. The companies they actually work for will be in a race against time to establish a UK entity and implement UK employment contracts and a payroll provider in order to assume the sponsorship relationship and maintain their employees’ stay in the UK.
Alternatives? The route for UK expansion workers
A company seeking to grow in the UK may be tempted by the seeming ease of employing an EoR, but there are considerable risks connected with doing so, not least for sponsoring visas. Consider other visa routes that offer greater stability and security.
Launched this year, the Global Business Mobility—UK Expansion Worker Visa (GBM) lets foreign companies deploy up to five workers to the United Kingdom to assist in establishing a UK entity. Although the ultimate objective is to establish a legal entity, a firm adopting this method will simply be required to demonstrate an “intention” to do so at the time of application, as well as a UK footprint in the form of a Company’s House registration or a UK-based office address. To prove the need for expansion into the UK, you may need a business plan, but you don’t need to set up anything in the beginning to get a two-year GBM visa for foreign workers.
To qualify for a GBM visa, workers must meet specific qualifying standards. They must be taking on degree-level roles in the United Kingdom and reach the pay criteria of £44,400 or the going rate for the role if they have worked abroad for the company for at least a year. If they have worked for less time, they must earn more than £73,900 in the United Kingdom.
Some expansion is required. The route anticipates that the UK entity will be established within two years, allowing the workers to subsequently apply for the skilled worker visa, which offers the prospect of permanent residency after five years.
EoRs offering sponsorship help should be handled with caution by enterprises with UK development aspirations and visas to procure. The British expansion worker method is unquestionably more complicated. However, a few of the processes, such as the creation of a UK organization, are not very burdensome and provide assurance to the employer and employee that they will not violate immigration law in the future.
