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The Furlough Scheme & Entrepreneur Job Creation Requirement

The coronavirus pandemic has been a major cause of concern for UK businesses. In the case of Tier 1 (Entrepreneur) migrants, there is the added concern of how the current economic climate will affect their own UK immigration status. Failure to satisfy the requirements of the immigration rules can lead to a refusal as well as closing the business and being required to leave the UK. The requirement to create two full time jobs may pose a particular challenge. This post will focus on the latest guidance in how to meet the job creation requirement.

The Job Creation Requirement

One of the key requirements for an extension of a Tier 1 Entrepreneur visa or application for Indefinite Leave to Remain (ILR) as a Tier 1 Entrepreneur is that you have employed two settled workers for 12 months each. The jobs must be full time, with the Home Office defining “full time” as a minimum 30 hour working week. The jobs must also be held by two people who are either British citizens or settled in the UK. 

Job Creation Requirement in the wake of COVID-19

The Home Office has recognised the fact that many businesses are likely to have been adversely affected by the recent pandemic. In particular, it is recognised that meeting the relatively strict job creation might prove difficult. The Home Office Tier 1 (Entrepreneur) Guidance, Version 26.0 Published on 01 December 2020, reads at page 89:

“If an applicant holds leave as a Tier 1 (Entrepreneur) and their business has been disrupted as a result of the Coronavirus pandemic, they do not need to employ at least 2 people for 12 consecutive months. 

The 12 month period they are required to employ someone for can be made up of multiple jobs across different months, providing when combined this is equivalent to 2 full time jobs.”

This is helpful where employees have been made redundant due to a downturn in business before they completed 12 months employment, as it allows you to rely on for example a manager working for 3 months combined with a receptionist working for 9 months to equate to one job.

It is worth noting, however, that there has never been a requirement for 12 consecutive months of employment, as this would be unfair to Tier 1 Entrepreneurs whose employees resigned. For example, Tier 1 Entrepreneurs may rely on the employment of a web developer who works for 3 months and leaves. There may then be a gap whilst a replacement is hired before a new person works as a web developer for 9 months. 

Job Creation Requirement and the Furlough Scheme

Numerous businesses have taken advantage of the government’s Coronavirus Job Retention Scheme, also called ‘furlough’. The government has confirmed that employees who are sponsored migrants or other visa holders can be furloughed and that grants made are not considered as ‘recourse to public funds’. 

The Home Office Guidance also provides updated information for businesses who have had to furlough employees at page 89:

“Time when their employees were furloughed under the UK Government scheme will count towards the 12 month period if they have been paid at least 80% of their normal salary.”

The Home Office accepts that many businesses have been affected by Covid-19. However, it is still advisable where possible to provide evidence of the impact of the pandemic on business.

Extension of Stay as a Tier 1 Entrepreneur

It is now possible to make an application to extend your leave as a Tier 1 Entrepreneur and allow more time to meet the job creation requirement if your business has been affected by COVID-19. If you have not been able to employ staff for 12 months by the time your visa expires, you will be allowed to extend their stay for a further 2 years, providing that:

  • You have evidence that you have created at least 2 jobs for settled workers at the point you make the application;
  • You have evidence that you have been unable to meet the normal requirement due to the impact of the pandemic;
  • You can meet the financial requirements and other requirements excluding job creation; 

In order to qualify for settlement, applicants who benefit from this extension will be required to demonstrate that they have created 2 full time jobs for the 12 month period in addition to the existing job creation requirement for settlement. For example, where they are relying on having created 2 full time jobs for settled workers that existed for 12 months during their most recent grant of leave, they will also be required to show that 2 full time jobs existed for an additional 12 months.

What does this mean for Tier 1 Entrepreneurs?

The most recent updates to the job creation requirement have the advantage of enabling more flexibility. Different roles can be combined and periods of furlough do now count towards meeting the requirement (although it is important to bear in mind that employees must have been paid the equivalent of 80% of their salary). 

Even in the event of being unable to meet the job creation requirement, it is helpful that there is now a possibility to extend your leave, allowing more time to meet the requirement. However, even in the event of an extension being granted it is important to recognise that this will also place pressure on your business over the next two years. In order to keep on track, Tier 1 Entrepreneur migrants should keep records for their employees, including employment contracts, payment records and identity documents. In addition, they should ensure that they have as much evidence as possible in order to demonstrate the genuineness of their business and the impact of COVID-19, if applicable.

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