Crystal Umbrella

The government have formally responded to the Intra Company Transfer petition. Their message is that the scheme does not allow cheap migrant workers to be employed in place in UK workers. The petition aimed to highlight the unfair use of the scheme and called for its abolition by the Prime Minister.

The government’s response was as follows:

“Thank you for your e petition about the Intra Company Transfer scheme and non-EEA workers in the IT industry.

In November 2008, the work permit arrangements were replaced by Tier 2 of the Points-Based System. Tier 2 ensures that those who benefit most directly from migration, such as employers, play their part in ensuring the system is not abused. To employ an overseas worker an employer must be licensed by the UK Border Agency to act as a sponsor. Tier 2, like the work permit arrangements it replaces, is demand-led and not based on numerical targets or quotas. Overseas workers are granted permission to fill a specific skilled vacancy for a specific period of time.

Unless certain exemptions apply, employers must advertise their vacancies to UK workers, and demonstrate that they cannot fill the post with a suitably qualified or skilled settled worker, before they can sponsor a migrant under Tier 2. One exception is if the job is a recognised shortage occupation. The independent Migration Advisory Committee recently recommended that certain posts within visual effects and 2D/3D computer animation for film, television or video games should be added to the shortage occupation list. There are no other IT occupations on the list. Another exception is the intra-company transfer (ICT) route, which is designed to enable employees of multinational companies to transfer to skilled posts in this country and to enhance the UK’s competitiveness in attracting inward investment by overseas companies.

Currently, an ICT post requires that the migrant has had a minimum of six months previous experience working for the sponsor and will fill a genuine vacancy in the UK for an established employee that cannot be filled with a suitably qualified or skilled settled worker.

However, on 7 September 2009, following advice from the Migration Advisory Committee, the Home Secretary announced a number of changes to the ICT rules in Tier 2 of the Points Based System. From the spring of 2010 companies will only be able to transfer staff through the ICT route where they employed the individual for at least 12 months, doubling the existing 6 month threshold and the route will no longer lead to permanent residence in the UK. An additional route will be created to allow graduates on global graduate programmes to transfer to the UK for a period of no more than 12 months where they have three months experience of working for the company.

The off-shoring of IT work is not an immigration issue. The immigration arrangements do not prevent employers from outsourcing work to another company or bringing migrant workers into the UK for either short or lengthy periods of time, provided the relevant criteria are met. These are business decisions for employers to determine. Fair access to migrant labour can help to encourage large multinational firms to invest in the UK. In such cases, access to migrant labour encourages growth in the industry to accommodate both UK and migrant workers. UK workers also benefit from working with the most highly skilled workers from around the world and sharing expertise.

We do not allow migrant workers to be used as a source of cheap labour and undercut UK workers. Employers must pay salaries at that are least equal to those paid to resident workers with similar skills, as specified in the UK Border Agency’s guidance for sponsors. Sponsors must confirm the salaries and allowances of all migrants that they sponsor. This is checked when the migrant makes a Tier 2 application and verified through later compliance checks. If the company does not pay the stated salary, they risk losing their sponsor licence.

Migrant workers benefit from international tax agreements in the same way that UK workers benefit when employed overseas. Further information is available on the Directgov website.

We support employers who ensure their workers are accommodated whilst in the UK, but we have set an upper limit of 30 per cent of the gross salary package for this type of allowance. This limits the amount of tax relief they are entitled to, as well as ensuring that the workers are paid an appropriate rate for the skilled job they are employed to do in the UK.”

Siemens are the only provider of technology services at the BBC. At present they have more than 200 IT contractors working for the broadcaster but yesterday those contractors were asked to vote on a 24 hour strike.

Bectu announced the ballot and stated that they were forced into considering industrial action after 70 contractors were laid off and contractors were subsequently informed that their pay would be frozen. This ballot is due to run until 19^th March. It is the advice of the union that contractors should vote in favour of the strike. Obviously any industrial action at the BBC could cause a great deal of disruption to their services.

Five years ago the BBC sold off its own technology arm and chose instead to outsource their technology requirements. The contractors currently working there are part of a £2 billion contract. Siemens is also considering off-shoring 50 contractor roles in the BBC’s server management department.

Bectu have commented that all BBC permanent workers should expect a pay deal which equals the 3.7% Retail Price Index with a 2% pay deal for the IT contractors. Bectu said it was a “double whammy” that saw pay frozen and contracted staff let go whereas many permanent BBC staff had actually received pay rises.

Suresh Chawla, Bectu national officer: “With the level of redundancies that we’ve already endured, and continue to face, it’s not even as if a pay freeze is safeguarding jobs.”

The Forum of Private Business has urged the government to think about the needs of smaller businesses when developing legislation. They have criticised current legislation for only considering big businesses. They have said that this often results in smaller businesses, with fewer employees, having difficulty competing with their larger counterparts.

Their comments were made in response to a government consultation. The ‘Thinking Business in Policy’ review aims to understand the effect of policy making on business. Amongst their other concerns, the FPB has highlighted the forthcoming Equality Bill as an area of immediate concern. The FPB believe that the government underestimate how much time is needed to fully comprehend new legislation before it can be implemented by firms. For example, the government have assessed that an SME should need only one hour to comprehend the disability discrimination section of the new act. However, the FPB believe that for a company with little experience in interpreting legislation, much more time will be required before the necessary changes can be made.

Matt Goodman, policy representative for FPB commented: “We believe that, through improved understanding of the nature of small businesses and by making much more accurate assessments of the implications of the legislation, decision-makers can make informed judgements about the advantages and disadvantages of policies. Policy-makers should also consider how their policies are going to boost the UK economy.”

He concluded: “It’s not enough simply to consider the social benefits of legislation without giving thought to the bigger picture. Many businesses feel they are often seen as those which should automatically pay for attempts at influencing social change.”

Freelancer group PCG has launched a nationwide campaign aimed at highlighting the talent and skills which exists within the contracting population of this country and the contribution they make to the UK economy.

The campaign has been launched through newspapers and the website – www.britainsbraingain.com – which will be focussing on the effectiveness, imagination and ability of the freelancing workforce. PCG have also been giving interviews on radio and television shows to highlight the campaign and have achieved support from many big names in industry, including Sir Tom Farmer and James Bellini. Richard Lambert, the Director general of the CBI has also voiced his support, stating: “Labour market flexibility will remain the UK’s real competitive advantage.”

Figures actually reveal that the importance of the skilled contractors, freelancers and consultants and their ability to respond quickly to changing needs should not be underestimated. In fact, it is valued at £21 billion.

Managing Director of PCG, John Brazier, commented: “Britain’s Brain Gain campaign is quite simply a statement of fact. The talent pool of freelance workers offers flexibility to companies, groups and organisations; it helps them manage risk and unlock innovation and talent within their business. It’s a no brainer.

He concluded: “Britain’s Brain Gain can bolster expertise and improve speed to the market. I would say to every MD in the UK, while your competitor is thinking about it, you could have a team of freelancers delivering it!”

The Chartered Institute of Taxation (CIOT) has spoken out about their concerns regarding the increasing use of retrospective rules within the tax system in the UK. Following on from the High Court ruling a few weeks ago, the Treasury have since confirmed that retrospection would be applied to amend the tax rules on manufactured dividends. Stephen Timms, financial secretary to the Treasury, confirmed last week that this retrospective rule would be applied to October 2007.

Commenting on this development, tax policy director of CIOT, John Whiting told Contractor UK: “We think it [retrospective legislation] damages the key principle of certainty in the tax system that is so important to its reputation and is inherently unfair.”

The Chartered Institute of Taxation further evidenced their concerns by highlighting the section 58 addition to the Finance Act 2008 just two years ago. Of course, it has always been stated that the purpose of that provision was to tighten a tax loophole but it has resulted in a retrospective rule which can now be applied as far back as 1987.

The Institute stated: “We can understand that at times the government wants to take action to ‘confirm the general understanding of the tax system’ in the light of questions raised. However, this needs to be used with great caution: it must not dislodge the principle that the taxpayer is taxed on the wording of the legislation in place at the time of their actions. We are taxed on what legislation says, not what HMRC thinks it says”.

On behalf of CIOT, Mr Whiting concluded: ““We need a clear statement as to when retrospection will be used and its boundaries – and parliament needs to consider such boundaries with care.”

HMRC have announced that they will extend the consultation period on the proposed ‘deliberate wrongdoing’ legislation. This move has been welcomed by the Chartered Institute of Taxation (CIOT).The consultation period has been extended until the 28^th April which means that this would not become law until the next parliament as it would miss next month’s Budget.

Commenting on this news, President of CIOT, Andrew Hubbard said: “We are pleased to note that HMRC have moved quickly to respond to the concerns which we raised about the draft legislation. We particularly welcome the fact that any applications to the Tribunal for access to working papers of agents who are accused of deliberate wrongdoing must be made at a hearing which the agent has the right to attend. The interest of justice would not have been served had the proposal to deny agents the right to be represented been implemented.

He concluded: “We also welcome the fact that the consultation period is to be extended. We fully support HMRC having a power to deal effectively with the very small number of agents who are involved in what amounts to fraud in relation to a client’s tax liabilities, but the legislation as drafted went far wider than this. In our opinion, it would have been unworkable and would have created a very damaging rift between HMRC and tax advisers. We believe that the extension to the time limit will allow time for mature reflection and result in legislation which is properly targeted, effective and proportionate.”

New data released shows that there are still a lack of job opportunities within investment banking as the sector struggles to regain public confidence.

Powerchex, a pre-employment screening firm, gathered the figures which show that stockbrokers and hedge funds have seen confidence slowly return but since the collapse of the Lehman Brothers, investment banking as a whole has suffered and, as a result, there are very little job opportunities for contract or permanent staff.

To gain this data, Powerchex made comparisons between the work opportunities between January last year and January this year. During this period recruitment for stockbrokers and hedge funds increased by 81% and 109% respectively. Investment Banks are actually planning to hire 60% less staff throughout 2010 than they did in 2009.

Powerchex also saw a decline in hiring between December 2009 and January 2010 with job opportunities for stockbrokers, hedge funds, investment managers and IT contractors slowing over this period. Firms continue their cautious approach as the economy continues to struggle to leave recession. As financial results are due in less than two months, the sector is waiting to learn of the official fall out from the economic downturn of the past twelve months during which time many UK businesses have failed thus having a detrimental effect on the economy.

Director of Powerchex, Alexandra Kelly, commented: “We have seen signs that the economy is on the up but firms are still being very cautious as many believe any recovery we may have seen is very fragile and could easily be knocked off course.”

The latest available figures show that the number of unemployed people in Britain has fallen once again. These figures from the Office for National Statistics (ONS) shows that for the quarter ending in December unemployment stood at 2.46 million which was a decrease of 3,000 from the previous quarter. The rate of unemployment showed no change, staying at 7.8%. However, there was an increase in the number of people claiming Jobseekers Allowance which was up to 1.64 million – a rise of 23,500.

Chief economic adviser of thee Chartered Institute of Personnel and Development, Dr John Philpott said: “Today’s unemployment figures confirm that the UK jobs market is still in an extremely fragile state. New official estimates of ‘underemployment’ also show that the pain of the recession is much deeper than the headline numbers indicate. With a weak economic recovery set to result in further job losses in the coming months it is highly likely that the unemployment situation will get worse before it starts to get significantly better.”

Chief economist from the British Chambers of Commerce (BCC), David Kern, spoke to the Recruiter about these latest figures: “The economy is still very weak, and there is clearly no justification for an immediate tightening in monetary policy. The forthcoming Budget provides the Government with a perfect opportunity to introduce measures that will support businesses’ ability to increase employment – with particular emphasis on full-time jobs. It should start by scrapping the hike in employer National Insurance Contributions, planned for next year, and substitute it for a 1% rise in VAT.”

A new survey of over 700 employers has shown a growing trend for IT companies relocating employment opportunities abroad. India is the most popular destination for relocating jobs abroad, although Eastern Europe is also proving popular.

The survey spoke to employers across all industries but, of those who claimed to have offshore intentions, nearly half were from the IT sector. Co-authors of the survey, The Chartered Institute of Personnel and Development, stated their belief that such offshore intentions represent a “medium-term concern” for the UK economy.

This is not news to the IT sector in India. In fact, at their principal IT conference, which took place just last week, the Indian IT body Basscom stated its belief that 150,000 IT jobs were likely to be created in the country this year. Their core markets are not currently growing as fast as their healthcare, utility and retail sectors therefore it is expected that IT jobs will be created rather quickly. Nasscom are of the belief that, over the next decade, Asia will account for over a quarter of the total IT and business consumption globally.

Jim Champy of Dell Services consultancy department believes that this year will see Indian companies purchasing more computer services than America and Europe. Speaking to the Financial Times he said that the money spent by Asian companies on IT will soon overshadow their Western counterparts.

TechMarketView analysts backed up this view, stating that IT firms in the West are already scrambling to “get a slice of the Asian action”.

The Cabinet Office and key industry figures have joined together to combat ongoing problems faced by IT contractors with regards to security clearance. Contractor group PCG told how many contractors are required to have clearance before they can even be considered for work.

John Brazier, PCG managing director, believes that such practice has a detrimental effect on the recruitment opportunities available to contractors. This sentiment has been echoed by cabinet minister Angela Smith, who said: “National security vetting controls are important, but must be applied proportionately and fairly. Where security clearances are necessary, an existing clearance should not be used as part of the selection criteria or inhibit access to jobs, except in rare cases where a contract is urgent or very short term.”

Director of REC, Tom Hadley, echoed: “Contract jobs in sensitive areas may require a security clearance; however this should not be seen as a pre-requisite for the posting. In many cases clients can wait for a candidate to be cleared and it is important that these jobs are open to as many contractors as possible.”

Speaking to Contractor UK, Mr Brazier concluded: “At the same time the Cabinet Office has written to the biggest 250 agencies in the country to draw their attention to this issue and remind them to observe best practice as well as having the guidelines published on the website of the Office of Government Commerce.”

Any concerns regarding security clearance can be relayed to the Cabinet Office at vettinggroup@cabinet-office.x.gsi.gov.uk.