COVID-19 EXPERT LEGAL INSIGHTS

Urgent Home Office guidance required for furloughed Tier 2 sponsored workers

1 April 2020

As employers grapple with the new furlough leave guidance from Government and what it means for their business and workforce, we are seeing numerous questions regarding employees with a visa, particularly Tier 2 sponsored workers.  “Furlough” essentially means temporary leave of absence. The purpose of the scheme is to incentivise employers to retain employees on paid temporary leave rather than making them redundant. Through HMRC, the Government will subsidise the earnings of furloughed employees (up to 80% of pay, capped at £2,500 gross per month per employee).
 

Our employment team’s FAQs on the Coronavirus Job Retention Scheme (CJRS) and immigration team’s FAQs on coronavirus UK immigration issues cover a range of common queries.  With only thin initial guidance to work with, and no underlying legislation or case law to refer to, it is difficult enough for employers to determine which employees to put on furlough leave, and how to go about this, but the situation is even more complicated where the employee is a sponsored worker.  Tier 2 sponsored workers are required to be paid a certain minimum salary amount at all times in order to maintain their visa.  In normal times, if the salary level drops below the relevant threshold, the sponsor may be required to end their sponsorship.  Unless they have an alternative viable immigration status, their employment then needs to be terminated.

Reduction in salary of sponsored workers

To date, the Home Office’s guidance on coronavirus immigration rule changes has been brief and there is no mention of furlough leave.  Unpaid leave has though been covered.  Normally, where a Tier 2 sponsored worker has more than 4 weeks’ unpaid leave in a calendar year, their sponsorship has to end.  But the Home Office guidance now says that where unpaid leave is related to coronavirus, employers do not need to withdraw sponsorship, even if it goes over 4 weeks.

Ordinarily, a Tier 2 sponsored worker’s gross salary must always be above the minimum expected amount for the particular Tier 2 visa category (£20,800 for ‘new entrant’ Tier 2 (General), £30,000 for ‘experienced hire’ Tier 2 (General) or £41,500 for Tier 2 (Intra Company Transfer)) or the minimum for the type of job, whichever is higher.

Under the CJRS, unless the employer tops-up the employee’s wages, a furloughed sponsored worker’s salary will be reduced to 80% or a maximum of £2,500 gross per month, whichever is lower. That equates to a maximum salary of £30,000 per annum – lower than the required amount for many sponsored workers.  Equally, if a Tier 2 sponsored worker is not furloughed but instead is asked to work reduced hours, then that could also be a problem.  It is possible for the salary to be pro-rated against the expected job type minimum, but it cannot fall below the relevant Tier 2 visa category minimum. 

Home Office guidance is urgently required

We await the Home Office’s detailed guidance on furloughed sponsored workers and indeed all other employees who have a visa.  The Home Office’s concession for unpaid leave does not apply to sponsored workers who are furloughed as they will still receive part of their pay.  However, it would be very surprising and unfair if a similar concession was not made in respect of furlough leave arrangements, and our verbal understanding from the Home Office is that they recognise this and so further guidance is expected to be published.  Another concern is the fact that sponsored workers and the majority of other visa holders are not normally allowed to receive public funds, which you might think HMRC funds from the CJRS would potentially be classed.  Again, we understand that this is not going to be an issue, but clarification would be welcome.

In the meantime, many employers are choosing to top up sponsored workers’ pay, on top of the minimum CJRS amount, in order to meet the minimum salary thresholds.  Leaving aside the immigration issues, this is sometimes the best approach from a morale perspective, and it also minimises the contractual risks on imposition of lower paid furlough leave. However, it is not feasible for all employers, particularly start-ups and those in the worst affected sectors that have been shut down altogether.

Potential for discrimination claims?

HMRC’s guidance on the CJRS notes that when employers make decisions, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.  Some employers could inadvertently put themselves at risk of discrimination claims, if (faced with difficulties reconciling the CJRS and immigration rules) they choose to make sponsored workers redundant or put them on unpaid leave instead of putting them on furlough.  Another potential discrimination risk could arise if, for example, a sponsored worker’s salary is topped up to meet the minimum salary requirements for their visa, but other employees – including for example at risk employees with medical conditions who are “shielding” – do not receive the same treatment.

Further information

If you have any queries in relation to the above or any other matter, please do not hesitate to contact the immigration or employment teams.

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