Government Opens COVID-19 Stimulus Package Benefits to Licensed Sponsors and Overseas Entrepreneurs
April 3, 2020
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At a Glance
- As part of the UK government’s stimulus package for those affected by COVID-19, the government confirmed provisions that would allow Tier 2 and 5 workers to be furloughed. Under the stimulus provisions, the employer may claim up to 80% of the sponsored worker’s normal salary up to a maximum of GBP 2,500 per month to cover ongoing salary costs.
- The government also confirmed that Tier 1 Entrepreneurs (who must create jobs for settled workers as part of their qualification for permanent residence in the United Kingdom) can make use of the stimulus plan to furlough their workers, but will not gain credit for job creation for these periods. The Home Office has advised that affected Tier 1 Entrepreneurs will later be able to extend their visas, to give them time to meet the job creation requirement.
The situation
As part of the UK government’s stimulus package for those affected by COVID-19 – called the Coronavirus Job Retention Scheme (CJRS) – the government has announced provisions which allow employers of overseas workers and Tier 1 Entrepreneurs, to make use of the CJRS scheme.
Impact
- Tier 2 and Tier 5 sponsored workers. Under the scheme, employers of Tier 2 or Tier 5 works can furlough such workers and can claim up to 80% of their salary up to a maximum of GBP 2,500 per month, to cover ongoing salary costs. The worker must not be carrying out productive work. Reductions must be part of a company-wide policy in which all workers are treated the same. The sponsored worker’s pay must return to at least previous levels once these arrangements have ended.
- Tier 1 Entrepreneurs. Tier 1 Entrepreneurs, who must create jobs for settled workers as part of their qualification for permanent residence in the United Kingdom, can also make use of the CJRS to furlough their workers, but will not gain credit for job creation for these periods. The Home Office has advised that these individuals will later be able to extend their visas, to give them time to meet the job creation requirement.
Background
The UK population is subject to a stringent lockdown. Movement outside of the house is only possible for limited reasons. This has meant many people are unable to perform productive work. The UK government has announced a bailout package to limit massive redundancies and mitigate the economic impact.
Under the CJRS scheme, employers may claim from the government a payment for a furloughed worker for up to 80% of their salary, up to a maximum of GBP 2,500 per month, where the worker is at home and not performing productive work. It was previously unclear whether Tier 2 and 5 sponsors may make use of these CJRS provisions, or whether this would interfere with the terms of their sponsorship.
Looking ahead
The next big question for employers from an immigration perspective will be how to manage new hires and visa extensions, given the closure of UK visa application centres globally. Another unresolved issue is how immigration and social security compliance will interact with the mass move to remote working. The Home Office will continue to review guidance over the coming weeks and Fragomen professionals are closely monitoring changes as they occur.
This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to [email protected].
