Immigration challenges are a growing concern for multinational companies competing for the foreign talent needed today to provide strategic thinking, advanced new skills and the ability to deliver services internationally.
Emerging geopolitical volatility and today's global trend toward protectionism, anti-foreign-worker sentiment and national sovereignty are adversely impacting the movement of skilled talent across international borders. From an immigration perspective, employers relying on foreign talent today are facing tighter eligibility requirements for work authorizations, more intense scrutiny and inspections at border crossings, and increased compliance enforcement.
In this challenging new environment, global companies failing to establish appropriate strategies face the threat of lost business opportunities as well as emerging legal and financial risks. The potential for brand damage and loss of reputation resulting from immigration violations is also very real amid today's heightened media attention surrounding the movement and use of foreign workers.
Multinationals grappling with today's immigration landscape are striving to develop new mobility strategies that will reduce overall program costs and expedite global movement of the critical skills they need to remain competitive. Organizations are, in fact, disrupting their traditional global-mobility structures - which have relied heavily on long-term international assignments - in favor of modern alternatives featuring increased use of short-term assignments, extended business trips and overseas training assignments. These alternative global-staffing models, however, have created a new wave of mobile workers facing increased interactions with border authorities during their international travels.
The intensification of vetting globally has, in turn, increased the risk of immigration and tax exposure both for individuals and corporations. It's no longer uncommon for business travelers to experience rigorous scrutiny upon entry from authorities around the world, possibly resulting in, among other things:
Given today's volatile and unpredictable climate surrounding immigration and cross-border travel for workers, it is important to develop an effective strategy to navigate these challenges.
US immigration policies have undergone extensive review during the past two years resulting in a direct impact on employment-related immigration.
Soon after assuming office, President Donald Trump focused on employment-based immigration in the US, proposing that new merit-based eligibility criteria would allow the country to attract and retain the best and brightest foreign talent. The 2017 “Buy American and Hire American” executive order requires federal agencies to rigorously enforce and administer laws governing entry of foreign workers into the US.
US Citizenship and Immigration Services (USCIS) began working on a combination of rulemaking, policy memoranda, and operational changes to implement the executive order. The stated objectives associated with USCIS efforts are to protect the economic interests of US workers and prevent fraud and abuse within the US immigration system. It also obligates immigration agencies to propose new rules and issue guidance to protect the interests of US workers, including reforms to help ensure that H-1B visas are awarded to the most skilled and highest-paid beneficiaries. As an example, in January 2019, the Department of Homeland Security (DHS) reversed the order by which petitions are selected in the H-1B visa lottery, such that advanced degree holders will enter the regular pool first. This change resulted in a 12 percent increase in the overall number of advanced degree holders awarded in the FY 2019 cap.
This rigorous new environment has created new challenges for US employers and their foreign national employees. Businesses are facing longer processing times for work authorizations, more onerous documentary requirements, more frequent requests for evidence (RFEs), and a higher percentage of denials. As an illustration, the denial rate for initial H1B applications has increased from 10 percent in FY 2016 to 38 percent in FY 2019. Similarly, 38 percent of completed H1B visas received an RFE in FY 2018 compared to 60 percent in FY 2019.
Employers can anticipate further tightening by USCIS including the right to issue a Notice to Appear (“NTA”) to any foreign national unlawfully present in the US following denial of an immigration benefit. A foreign worker who is issued an NTA must appear before an immigration judge to defend against removal from the US. One cannot simply depart after receiving an NTA. In such a case, a non-justifiable departure would trigger an order of deportation in absentia which will have a serious consequence on one's ability to return to the United States in the future.
Clearly, employers need to rethink their strategy in how they select foreign workers in the current environment. It is critical to anticipate challenges and rapidly changing immigration policies while developing contingency plans to ensure business needs can be met.
The Canadian government has undertaken a new approach to support the foreign talent needs of Canadian employers by facilitating the expedited entry of in-demand skilled workers. Specifically, the Canadian government introduced the Global Skills Strategy in June 2017 to foster innovation and help Canadian employers enhance their global competitiveness. The policy is also intended to encourage development of new jobs, skills development and investment in the local labor market.
Canada's Global Skills Strategy can benefit employers in multiple ways, including:
A new Global Talent Stream pilot was also introduced in 2017, facilitating the entry of unique or highly specialized foreign workers to assist high-growth companies (Category A) or companies requiring foreign workers for occupations on the skills-shortage list, specifically within IT, certain engineering and math industries (Category B). Both categories are exempt from the usual local recruitment requirements and require employers to submit a Labor Market Benefits Plan (LMBP) - a written commitment to invest in new skills training and job creation for Canadians. These commitments are typically reviewed by officials administering the program annually. The government has proposed in the March 2019 Federal Budget to make the Global Talent Stream a permanent program. It was noted in the Budget that the pilot has generated commitments from employers to create over 40,000 new jobs for Canadians and permanent residents, develop more than 10,000 co-op placements and commit to investment in excess of $90 million in skills development and training.
Given its progressive immigration policies, there are advantages in considering the development of a corporate talent strategy which includes Canada. Several large technology, consulting and high-growth companies have begun establishing their talent hubs or development centers in Canada in order to source and predictably access world-class foreign talent.
In keeping with a general global trend toward more-restrictive immigration policies, Australia in 2018, introduced reforms to many elements of its skilled-migration program, thereby tightening eligibility requirements for many commonly used visas.
The commonly used 457 visa, Australia's equivalent of a work visa, was abolished and replaced with the Temporary Skills Shortage (TSS) visa program. Corresponding changes to the eligible occupation lists that underpin both temporary and permanent skilled-migration visa options were also enacted, along with corresponding changes to the two commonly used permanent work visa options.
At the same time, to help those employers seeking needed talent globally, Australia is currently piloting a 12-month Global Talent Scheme that ends 1 July, 2019. The program gives employers the flexibility to recruit global talent in circumstances where businesses are struggling to lawfully employ international talent via the country's mainstream skilled-migration visa options. Australia's new Global Talent Scheme resembles the approach being adopted in Canada and may be Australia's answer to remaining internationally competitive in the race to attract highly skilled foreign labor.
On 12 June, 2016, the United Kingdom (UK) voted in a national referendum to leave the membership of the European Union (EU). The initial deadline for the UK to formally exit the EU (i.e.”Brexit”) was 29 March, 2019. However, due to the current deadlock in agreeing to a deal on the UK's withdrawal, the EU has offered an extension to the Brexit deadline, to 31 October 2019.
It is thought that the ability to control free access to the UK from Europe was one of the key reasons for the outcome of the referendum and has so far remained one of the UK government's red lines throughout the Brexit negotiations.
Since the referendum, there has been significant uncertainty among businesses over the future relationship with the EU and how Brexit will impact the “four freedoms” of EU membership: free movement of goods, services, capital and people between the UK and EU/EEA countries.
From a people perspective, business have long benefited from free movement of UK and EU nationals and reliable access to labor without significant immigration control. As a result of Brexit, free movement between the UK and remaining EU/EEA member states is expected to end and existing migrants will need to apply to stay. This has created an unsettling environment for employees and uncertainty for businesses both in recruiting future talent and understanding the level of support needed by those requiring immigration assistance.
The original Draft Withdrawal Agreement (DWA) negotiated by Theresa May and the EU, states that EU and UK nationals would be able to stay and the free movement of people would not end until at least 31 December, 2020. However, the terms of the DWA have been rejected by the UK parliament and politicians are currently undertaking cross-party talks to come up with an amended deal to bring to the EU. The UK government still hopes to strike a deal that will pass through the UK parliament and also be accepted by the EU, however the possibility of a “no deal” scenario by default remains.
A potential “no deal” scenario leaves businesses finding it harder to plan ahead and to clearly understand who has permission to travel and work in the Europe. There are also potential new right-to-work requirements to consider. In the absence of EU countries applying special rules to UK nationals and vice versa, a patchwork of work-permit requirements relating to third country nationals may come to apply.
The result? Business need to carefully consider their recruitment and on-boarding strategies and decide how they are going to engage with existing employees to offer support. Proactive communication is key to retention, in addition to ensuring that impacted employees obtain the correct documents within the deadlines stipulated by the UK and EU.
Given the complexity of today's global immigration landscape, today's multinationals have much to gain by developing forward-thinking talent and human resource planning strategies that are designed to support their ongoing business needs.
In the business traveler context, as the concept of the “future worker” continues to evolve in both form and substance, resulting in more frequent international travel, it is important for organizations to develop appropriate policies and processes to address both immigration and tax consequences. This should include regularly reviewing their current short-term business-travel approach to ensure regulatory requirements are met wherever business is conducted.
It is also critical for organizations doing business in regions facing economic and trade volatility to assess the impact on their current and future foreign talent pool. Amid significant and ongoing changes to immigration policies in nations such as the UK and the US, it is paramount to create awareness of possible implications for all stakeholders. Moreover, companies may need to develop contingency plans or advanced strategies to address circumstances posing a higher risk for refusal of entry or status.
Lastly, there may be significant benefit in considering regional strategies in deploying foreign talent, in order to capitalize on the immigration policies of jurisdictions adopting employer-centric approaches toward foreign skills employment. This approach involves proactive planning and innovative thinking aimed at creating alternative delivery models that enable businesses to consistently meet their ongoing skill needs.
Partner, KPMG Law LLP
KPMG in Canada