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Ignoring Immigration Regulations

It should go without saying that it never pays to ignore immigration regulations.

Costs of immigration non-compliance are far higher than the costs of obtaining immigration permits properly in the first place.

It is true that several companies make a habit of bringing a few employees here and there into a country on business status, when really a work permit is required. It is also true that some companies manage to obtain permits by giving incorrect data (for example, regarding levels of compensation) to immigration authorities.

Violations of the law are not always picked up. In some cases, some companies do manage to get away with this kind of thing. However, many don’t – or many that have in the past are suddenly called up, caught short and asked to explain themselves, even for violations that occurred some years previously.

For companies caught violating immigration law, the consequences (e.g. loss in reputation) and the cost impact are significant.

 

Expamples of penalties paid for non-compliance

France

A French company based in Lyon was fined €42,000 in March 2016 for using illegal foreign workers in 2014. The company did apply for work permits for the foreign workers in question, but allowed them to start working before the paperwork had been completed. In summary, this fine which also involved imprisonment of a senior executive, could have been avoided if they had followed the correct process. Furthermore, the damage to their reputation in the market certainly created additional intangible issues.

Australia

Company may be refused permission to sponsor foreign employees in the future, existing 457 category workers and their dependants may have visas removed.

Canada

For hiring a foreign worker without authorization: the employer is subject to $50,000 fine and/or 2 years of imprisonment. For misrepresentation or counselling of misrepresentation: the employer is subject to $100,000 and/or 5 years’ imprisonment. Employee may be deported and/or barred from future entry.

Germany

According to Law §17 "OWIG’’, the employee may be fined up to €1,000 EUR. According to Law §30 "OWIG”, the employer may be fined up to €500,000 EUR for an offence of negligence, or up to €1million EUR for an offence with intent.

Hong Kong 

Fine for the employer of up to $350,000HKD and three years’ imprisonment.

Japan

For illegal entry, overstaying and hiring foreign workers without authorization:
An employer can be fined up to 3 million yen and/or face incarceration for up to three years. For engaging in activities outside those authorized: an employee is subject to a fine of up to 2 million yen and/or incarceration for up to one year, plus barred from future entry to Japan.

Korea

Fines for the employer of up to 20 million won ($17,000USD) or two years of incarceration.

Spain 

Fines for the employer of up to €60,000. The authorities can order the closure of the company for up to 5 years.

United Kingdom

Fines for the employer of up to ₤10,000GBP per illegal employee. A maximum 2 year prison sentence and/or an unlimited fine if illegal migrant workers are employed knowingly.

United States

The employer is subject to a fine of $110 to $1,100 per employee for technical paperwork violations.The employer may be fined from $375 to $3,200 per employee for an employer's first intentional violation, and up to $16,000 per employee for repeat offenses, in addition to criminal charges and penalties.

Brazil

The penalties vary from a simple fine to deportation. Also, in case of re-incidence cases, fines can from double to quintuple. In some cases, can also be applicable: imprisonment of Brazilian legal representative for a period of 1(one) to 3 (three) years and expulsion, if the infraction is committed by a foreign national. 

 

 

Consequences of non-compliance

Financial penalties

The direct penalties levied by governments on companies caught in non-compliance with immigration law can be tremendous – they range from fines to imprisonment and even the closure of the company.

Loss of contracts

Of course, if your company is caught with non-compliant employees, and those employees are deported, then you will find it very hard to meet contracted obligations.

Damage to reputation

Being caught in non-compliance of immigration regulations will damage your reputation, both with the immigration authorities and with your clients and competitors. Having a bad reputation with the immigration authorities can mean that future applications must be supported by additional documentation, that processing time will be longer, that rejections are more likely, or even, in some cases, that future applications may be prohibited. Having a reputation in the marketplace as a company which does not abide by local laws and regulations will have obvious negative impact on client /supplier relationships.

Repatriation of staff

If employees are found to be working illegally, they will be asked to leave the country. Repatriation costs will fall to the employer – in some cases as a legal obligation imposed by immigration authorities (e.g. in Australia). Air tickets bought at the last minute, temporary accommodation in the home country, unexpired rental contracts in the host country – all this has a clear financial impact. In addition, the personal upheaval and distress that this is likely to cause the employee and their family will be significant.

In short, burying your head in the sand won’t make immigration regulations – or penalties for non-compliance – go away.

 

Bringing Immigration In-house

Having established that it is not a good idea to disregard immigration regulations, it might appear that a good cost cutting measure may be to bring immigration in-house or ask your Relocation Management Company to work out an Immigration Policy.

Indeed, this can be highly effective for many reasons and should not be dismissed. However, cost savings aren’t automatic. To have an effective in-house immigration program, you need to ensure that you have the necessary resources in place first as well as necessary volume to justify it being a cost-effective exercise.

Staff expertise, specifically relating to the locations to where your expatriates are moving, is important, because situations where poor advice or patchy advice is given can expose you to risky non-compliance. Even if it does not come to actually breaking the law, an absence of immigration knowledge can lead to delays, confusion and low uptake of assignments. It can waste time, prove costly and can alienate employees who remain bitter as the result of a negative experience.

In short, bringing immigration in-house may be a good solution if you have significant numbers of expatriates moving to a single country.

 

How you should do

It It isn’t all doom and gloom – it really is possible to establish immigration compliance without spending a fortune. The following ten tips will help you save money while avoiding risk:

  1. Know What You Want
  2. Design Your Own Immigration Program
  3. Consider Whether a Global Vendor Offers Value
  4. Consider the Hidden Costs
  5. Understand Your Options
  6. Plan In Advance
  7. Consider Extended Business Trips
  8. Avoid Unnecessary Renewals
  9. A System for Data Tracking
  10. Stay in Compliance

Tip 1 – Know What You Want
Even if you are not planning to bring immigration management in-house, this doesn’t mean that you shouldn’t have a very good in-house understanding of what immigration requirements are for your expatriates. Ensure that you know what your average immigration volume is, country by country, and then find out exactly what is needed in every country you have employees moving to, including processing times, typical documents required, red flags, and so on. If you outsource, don’t be shy of asking your immigration vendor to provide detailed information, or to organize a training session for you and your colleagues. If you don’t outsource, you can still approach immigration vendors for training and consultancy services. Fundamentally, you can only start to look at cutting costs if you understand what you’re dealing with in the first place.

Tip 2 – Design Your Own Immigration Program
Once you have carried out the analysis recommended above, you can look at which aspects of the immigration process you can handle more cheaply. For example, many companies use an immigration vendor for work permit applications, but have the capability to handle local registrations or EU to EU moves themselves, without the assistance of a vendor. This may be a cost effective solution for you, but you need to ensure first that local offices really do have the expertise and are willing and able to take ownership of this process. You also need to make sure that the vendor handling the work permit part of the process understands where their responsibilities end.

Tip 3 – Consider Whether a Global Vendor Offers Value
Consider whether one global vendor can offer you a more cost effective programme than several different local vendors could. Global vendors will generally charge a surcharge on top of a local vendor fee. This surcharge is, in part, justified by the global vendor’s management of the local suppliers plus the provision of global reporting. Consider whether you feel these services are worth paying for. Also, remember to weigh up which countries you have high volume in and look for a global vendor who can offer cost effective immigration to those countries. Again, this goes back to understanding your specific needs: if you know your average immigration volume by country, you can look at weighted prices for your specific needs rather than trying to find the vendor who is cheapest in every country. For example, a vendor who offers excellent prices in the US but who is expensive in Europe and Asia may look good at first glance, but will not be a sensible solution for you if only 15% of your moves are to the US.

Tip 4 – Consider the Hidden Costs
You can avoid hidden costs more effectively if you understand what you need – this also goes back to point 1. You need to find out exactly what is included in the immigration package offered by the vendor; registrations? Consular assistance? Post arrival residency permit applications? Exit procedures? Government fees? Make sure that what you need is included, but also that you’re not paying for anything unnecessary: This will vary country by country. For example, the immigration process in Hong Kong involves a work permit application followed by a local ID card application post arrival. The work permit application is complex but the local ID card process is relatively simple, and many companies elect to have an immigration vendor handle the work permit application while managing the ID card themselves. However, this does not mean that all local registrations are straightforward – local registration is also a requirement in the Netherlands, but the process does require detailed paperwork and a basic knowledge of Dutch, so many companies opt to use the services of an immigration provider. Understand what you want and what the vendors are offering – make sure you’re comparing apples with apples.

Tip 5 – Understand Your Options
Ensure that you take advantage of immigration solutions available which may be more cost effective, For example, the Canadian Experience Class (CEC), introduced in October 2008, allows foreign workers with at least two years’ experience in Canada to apply for permanent residence. Canny companies will use this route for foreign staff based long term in Canada and will avoid the cost of renewals year after year. Or, in the UK, the Tier 2 Intra Company Transfer (ICT) route is now limited to a maximum duration of five years – for employees wishing to stay in the UK longer than this, even for those who qualify as ICT, it may no longer be the most efficient or cost effective route.

Tip 6 – Plan In Advance
Avoid rushed submission and processing of applications if you can. Both the U.S. and the UK have large “premium processing,” or “fast track” fees for expedited government processing. If you can plan the majority of assignments and renewals far enough in advance, you will be able to avoid paying these additional government fees. This also goes back to Point 1 – if you have a basic advance understanding of how long an immigration process will take, you’re future proofing yourself against last minute costs.

Tip 7 – Consider Extended Business Trips
If you have employees on extended business trips, ensure that they aren’t actually “stealth expats” – i.e. working illegally. Any productive work will trigger the need for a work permit. Equally, look at short term assignments and consider how you could manage these as business trips – could the working element of the assignment be done remotely, via conference calls and video meetings, leaving the in-country activities as simple meetings only?

Tip 8 – Avoid Unnecessary Renewals
One cost that many companies could avoid, with correct management, is the issue of unnecessary renewals. Look at the length of your assignments. Do you have employees who go on initial short term (under one year) assignment but then frequently extend those assignments? If so, it may be worth considering extending original assignments to one year (With a break clause if need be) so that you can apply for immigration documents valid for one year – thus eliminating expensive and unnecessary renewals. This simple measure could halve immigration costs for you. Speak to your HR department about the possibility of preparing assignment contracts like this.

Tip 9 – A System for Data Tracking
This point connects to several of the points mentioned above – ensure that you either have advance in-house data tracking capability or that your Relocation Management provides regular, detailed and accurate reports to you. You need these to ensure that you understand where your immigration volume is (point 1 above), to ensure that renewals are applied for in a timely manner (point 6 above), to allow you to analyse type of assignments and if it may be more cost effective to extend assignment duration or amend assignment activities (points 7 & 8 above)

Tip 10 – Stay in Compliance
Last, but by no means least – in fact, this is the most important point of all – to keep immigration costs down, remember to stay in compliance! As examined in the first section of this article, falling out of immigration compliance can mean significant cost implications. In summary When planning your immigration programme, remember how much non-compliance will cost you and weigh this up against the costs of managing immigration correctly. Purchasing immigration services may seem expensive, but not purchasing them can cost you a lot more. 

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