Intra-company transfer pay rules ‘already being abused’

Salary levels now in force on the UK’s intra-company transfer (ICT) regime might “disadvantage” British IT contractors if employers can bypass the thresholds due to lax enforcement, an agency staffing body says.

Since Wednesday April 6^th 2011, employers wanting to import non-EU staff into the UK must adhere to do both an annual migration cap and, although excluded from the cap, two new pay thresholds on ICTs.

But in issuing the reminder, the Recruitment and Employment Confederation said that unless the minimum salary on a one-year ICT of £24,000 (and £40,000 for a five-year ICT) is properly enforced, IT contractors could still be undercut.

REC’s member firms, among them IT recruiters, say employers are already trying to use accommodation allowances to falsely inflate salary or, with the same intention, have offered to pay the employee’s tax contribution as a ‘benefit’ of the job.

“If the [ICT] exemption is not properly policed and implemented there is the potential for abuse, particularly in the IT sector,” the confederation’s IT unit said in a statement.

“The minimum salary of £40,000 must be rigorously enforced by the UK Borders Agency, to ensure companies do not use allowances and benefits to create a falsified salary that allows them to bring in an overseas worker to do a job for less money.”

According to Migration Watch, future work permit numbers now depend on the extent that employers turn to the ICT route which, at present, is more appealing to employers than hiring a British worker due to the lower tax liability.

“An ICT [worker] on £40,000 a year costs an employer about 10% less, he [the worker] is also tied to the employer by his work permit,” the group said.

“The ‘short’ ICT route of up to 12 months at £24,000 is a further incentive to employ immigrants (even though they will not appear in the official immigration figures). If this route is to remain uncapped there must, at the very least, be a level playing field.”

REC Technology Chair Jeff Brooks agreed: “The UK has a very strong base of skilled IT contractors. As long as they are given a level playing field they can compete for these jobs, but the government must ensure that they are not disadvantaged by the ICT system.”

In fact, he wants the government to adopt a “no tolerance” approach to employers who try to bend the ICT salary rules – the impact of which REC said it would monitor in order to tell officials if reforms are required.

Editor's note: Further reading:  Intra-Company Transfers & Work Permit updates