11 Intra-corporate Transfers
| (31802)
12211/10
COM(10) 378
+ ADDs 1-2
| Draft Directive on the conditions of entry and residence of third country nationals in the framework of an intra-corporate transfer
Commission staff working documents: impact assessment and summary of the assessment
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| Legal base | Article 79(2)(a) and (b) TFEU; co-decision; QMV
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| Document originated | 13 July 2010
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| Deposited in Parliament | 16 July 2010
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| Department | Home Office |
| Basis of consideration | EM of 28 July 2010
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| Previous Committee Report | None
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| To be discussed in Council | No date known
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| Committee's assessment | Legally and politically important
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| Committee's decision | Not cleared; further information requested
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Background
11.1 In November 2004, the European Council approved a five-year
programme on freedom, security and justice in the EU (the Hague
Programme) which, among other things, invited the Commission:
"to present a policy plan on legal migration including admission
procedures capable of responding promptly to fluctuating demands
for migrant labour."[30]
The Commission responded by publishing a Policy Plan on Legal
Migration in December 2005 which set out a "road-map"
for the adoption of a general framework Directive establishing
the rights of third country nationals legally resident and employed
in a Member State, and four specific Directives determining the
conditions and procedures for admitting certain categories of
third country economic migrants, including highly skilled personnel
seeking a temporary transfer from a parent company based outside
the EU to a branch or subsidiary in one or more Member States.
The proposals in the Policy Plan supplemented existing EU legislation
on certain categories of third country national, such as students,
researchers, and long-term residents.[31]
11.2 The previous Committee questioned the need
to establish an EU policy on economic migration and stated that
any future legislative proposals on migrants would be subject
to particularly searching scrutiny.[32]
Progress on implementing the Policy Plan since then has been slow.
Only one Directive — on the entry and residence of highly
qualified third country workers — has been adopted and was
the subject of a debate in the European Committee on 17 March
2008.
11.3 In October 2008, the European Council endorsed
the European Pact on Immigration and Asylum which included a commitment
"to implement an immigration policy that is both managed,
particularly with respect to all labour market needs, and concerted,
given the impact it might have on other Member States" and
"to increase the attractiveness of the European Union for
highly qualified workers".[33]
The Stockholm Programme, agreed by the European Council last December
as the successor to the Hague Programme for the period 2010-14,
gave renewed impetus to the Policy Plan on Legal Migration by
calling on the Commission and Council to continue to implement
it.[34]
11.4 Since the entry into force of the Amsterdam
Treaty in May 1999, EU legislation on immigration matters does
not apply to the UK unless the Government expressly opts in. So
far, the UK has not opted in to any of the aforementioned EU legislation
on the legal migration of third country nationals.
11.5 Article 79(1) of the Treaty on the Functioning
of the European Union (TFEU) provides for the development of a
common EU immigration policy to ensure the efficient management
of migration flows, fair treatment of legally resident third country
nationals, and measures to prevent and combat illegal immigration
and trafficking in human beings. The development of the common
EU immigration policy must not, however, affect "the right
of Member States to determine volumes of admission of third country
nationals coming from third countries to their territory in order
to seek work" (Article 79(5) TFEU).
The draft Directive
11.6 The legal base for the draft Directive is
Article 79(2)(a) and (b) TFEU which envisages the adoption of
measures on the conditions of entry and residence of third country
nationals and the definition of rights applicable to those legally
resident in a Member State.
11.7 The purpose of the Directive is to establish
a common EU framework for the admission of third country nationals
resident outside the EU who are seeking a temporary transfer from
a company based in a third country to a branch or subsidiary in
a Member State (referred to in the draft Directive as "intra-corporate
transferees" and hereinafter as "ICTs") for a period
of more than three months and to define the rights of those admitted,
including the possibility of onward transfer from the first (or
host) Member State to another. Only third country nationals who
have a binding contract with a company based outside the EU qualify
for an intra-corporate transfer.
11.8 The main provisions of the draft Directive
are as follows:
- applications for admission,
residence and work on the basis of an intra-corporate transfer
to a branch or subsidiary within a Member State must be dealt
with in a single procedure by the Member State where the intra-corporate
transfer will mainly take place;
- there is provision for Member States to introduce
a simplified admissions procedure for recognised companies which
have a good track record of compliance with the requirements of
the draft Directive and local tax laws;
- criteria for admission include production of
a valid travel document, an "assignment letter" from
the employer stating the place and length of the proposed transfer
and pay, evidence that the ICT will be employed in the branch
or subsidiary of the host Member State as a manager, specialist
or graduate trainee and has the requisite professional or academic
qualifications, and proof of sickness insurance (Article 5);
- the grounds for refusing an application for admission
include a decision by the host Member State to limit the number
of third country nationals admitted (where, for example, there
are national quotas) or where there is evidence of fraud;
- a decision on admission must be taken within
30 days of the lodging of an application (with the possibility
of extension in exceptional cases) and, in the event of refusal,
withdrawal or non-renewal of an intra-corporate transferee permit,
must include written reasons and be susceptible to legal challenge;
- successful applicants must be issued with an
intra-corporate transferee permit valid for up to three years
(one year for graduate trainees), accompanied by an additional
document listing branches, subsidiaries or clients of the parent
company in other Member States in which the holder of the permit
is authorised to work;
- the ICT permit and additional document enable
the holder to seek a further temporary transfer to a second Member
State for up to twelve months, provided that the second Member
State has sight of the documentary evidence establishing that
the holder continues to fulfil the criteria for admission set
out in Article 5 of the draft Directive (Article 16);
- the ICT permit also entitles the holder to certain
employment rights (similar to those applicable to posted workers
within the EU)[35] and
equal treatment with nationals of the host Member State as regards
freedom of association, recognition of professional qualifications,
access to certain goods and services, co-ordination of social
security systems and payment of statutory pensions;
- immediate family members (spouse and minor children)
are entitled to join the holder of the ICT permit in the Member
State issuing the permit; and
- Member States may sanction the EU-based branch
or subsidiary for any breach of the conditions of admission.
11.9 According to the Commission's explanatory
memorandum, the complexity and inflexibility of various national
schemes for intra-corporate transfers of third country nationals,
differences in entry procedures and residency rights, and the
multiple costs if several Member States are involved mean that
the EU is insufficiently responsive to labour market needs and
less likely to attract business and investment from outside the
EU. The introduction of common procedures and conditions for the
admission of ICTs and a more secure legal status which allows
for mobility within the EU would, the Commission suggests, enhance
the competitiveness of the EU while also helping the EU to fulfil
its international trade commitments under GATS.[36]
The draft Directive would also promote fair competition through
the efficient allocation of knowledge and skills between Member
States and guarantee certain social and economic rights.
11.10 The Commission's accompanying impact assessment
identifies support for the economic development of EU business
as the main objective of the draft Directive, citing in particular
the EU's Europe 2020 Strategy and the goal of "smart growth"
based on knowledge and innovation.[37]
Recitals 3 and 4 of the draft Directive establish a broader context
for the Commission's proposal, highlighting the Europe 2020 Strategy,
the Stockholm Programme and the 2005 Policy Plan on Legal Migration.
The Government's view
11.11 The Minister of State at the Home Office
(Damian Green) says that the Government's immigration policy recognises
the need to facilitate the cross-border transfer of skilled personnel
by multinational companies which have a branch in the UK. Tier
2 of the Points Based System has a specific category for intra-company
transfers which specifies the criteria for admitting third country
nationals. In 2009, 22,030 non-EEA nationals were given entry
clearance under this category. Scottish Executive Ministers are
also keen to encourage measures which might facilitate the transfer
of highly skilled employees and their families from overseas to
fill specialist positions in key sectors.
11.12 The Minister explains that there are some
similarities between the scheme set out in the draft Directive
and current arrangements in the UK under Tier 2. For example,
third country nationals admitted on the basis of an intra-corporate
transfer are treated as temporary workers and do not qualify for
permanent residence. Family members are entitled to join them
in the UK and have free access to the labour market. Applications
for entry and residence in the UK are dealt with in a single procedure
and must be submitted while the applicant is outside the UK. The
criteria for admission in Article 5 of the draft Directive and
the grounds for refusal are broadly consistent with UK practice.
11.13 There are also aspects of the draft Directive
which might conflict with UK immigration rules. These include:
- the definition of the terms
"manager" and "specialist" in Article 3 (UK
rules under Tier 2 are less prescriptive but UK requirements relating
to salary and qualifications mean that most qualifying ICTs are
likely to be filling managerial or specialist positions);
- the requirement in Article 5 that the sending
company based outside the EU and the branch or subsidiary within
a Member State "belong to the same undertaking or group of
undertakings" (UK rules may be broader, requiring that the
sending company and the host entity must be linked by common ownership
or control);
- the requirement in Article 5 for an "assignment
letter" (UK rules on admission require a Certificate of Sponsorship
from the host branch or subsidiary in the UK and also require
that the sponsor be licensed by UKBA);
- the obligation in Article 12(2) to notify an
applicant of the additional information required if the evidence
supporting the application is inadequate and to set a reasonable
deadline for providing it (it is standard practice in UKBA to
refuse incomplete applications); and
- the provision in Article 16 for mobility between
Member States (UK rules make no distinction between applicants
resident in another Member State on the basis of an intra-corporate
transfer who seek entry to the UK and those seeking admission
from outside the EU, and the Minister expresses concern that facilitated
entry for those already admitted to another Member State might
limit the UK's freedom to determine who to admit).
11.14 In addition, the Minister indicates that
it will be necessary to clarify whether the existing provision
for administrative review of adverse decisions under the Points
Based System satisfies the requirement in Article 12(3) of the
draft Directive that a refusal, withdrawal or non-renewal of an
ICT permit must be open to legal challenge.
11.15 The Minister also explains that the provisions
of the draft Directive on equal treatment would require the UK
to provide a greater degree of access to social security benefits
(notably income-related social security benefits, such as job-seekers'
allowance, as well as family benefits) than is currently the case
for third country nationals subject to immigration control in
the UK. He expresses concern that there might also be scope for
multinational companies to reduce liability for social security
contributions in respect of ICTs moving within the EU. This would
have financial implications for the UK but these have not yet
been quantified.
11.16 The Minister appears to accept the Commission's
view that the draft Directive complies with the principle of subsidiarity.
He states that the Government must decide by 14 October whether
to exercise its right to opt into the draft Directive and that
the key criteria are likely to be the "implications for control
of immigration, affordability, implications for the balance of
UK and EU competence and issues of ECJ jurisdiction." Moreover,
"the Government will not opt into a measure which is at odds
with its approach to limits on economic migration."
[38] The Minister
notes the Government's commitment to introduce an annual limit
on economic migration from outside the EU and indicates that the
question whether to include intra-company transfers within the
annual limit is currently subject to consultation.[39]
Conclusion
11.17 Article 79(2) TFEU specifies that EU
measures based on this Article must serve the purposes of the
EU's common immigration policy. These are defined in Article 79(1)
as ensuring the efficient management of migration flows, fair
treatment of legally resident third country nationals, and preventing
and combating illegal immigration and trafficking in human beings.
While we accept that the draft Directive serves some of these
purposes, for example by establishing certain employment rights
for holders of an ICT permit and common criteria for admission,
its principal purpose (as indicated in recitals 3 and 4 of the
proposal and in the Commission's explanatory memorandum and impact
assessment) would seem to be to make the EU more commercially
attractive to multinational companies. We should therefore be
grateful for an explanation from the Minister as to why Article
79(2)(a) and (b) is an appropriate legal base for the principal
purpose indicated.
11.18 The Minister expresses particular concern
that Article 16 of the draft Directive, which provides for mobility
between EU Member States once an intra-corporate transferee permit
has been issued in one Member State, might undermine the Government's
freedom to determine who to admit to the UK. While we understand
the Minister's concern, we wonder whether the removal of the principle
of intra-EU mobility in Article 16 would not also significantly
diminish the justification for the draft Directive on the grounds
of subsidiarity, and ask for his views.
11.19 We note that the Government has not
yet reached a view on whether third country nationals moving to
the UK on the basis of an intra-corporate transfer should be subject
to the Government's proposed annual limit on economic migration
from outside the EU. We ask the Minister to inform us of the outcome
of the Government's consultations on this issue as we understand
that this is likely to be a material factor in deciding whether
or not to opt into the draft Directive.
11.20 In the event that the Government does
opt into the draft Directive, we would also be grateful for further
information from the Minister on the cost implications of participation
for the UK, especially as regards social security contributions
and payments.
11.21 Pending the Minister's reply, we shall
retain the draft Directive under scrutiny.
30 European Council 4/5 November 2004, Presidency Conclusions,
Annex 1, paragraph 1.4. Back
31
Directive 2003/86 on the right to family reunification; Directive
2003/109 on the status of third country nationals who qualify
as long-term residents; Directive 2004/114 on the conditions of
admission of third country nationals for the purposes of study,
pupil exchange, unremunerated training or voluntary service; and
Directive 2005/71 on a specific procedure for admitting third
country nationals for the purpose of scientific research. Back
32
(27145) 5052/06: see HC 34-xviii (2005-06), chapter 20 (8 February
2006). Back
33
See Council document 13440/08. Back
34
European Council 10/11 December 2009, see paragraph 6.1.3 of the
Stockholm Programme, Council document 17024/09. Back
35
See Directive 96/71 on workers posted by a company established
in one EU Member State to provide a service in another. Back
36
The General Agreement on Trade in Services, concluded within the
framework of the World Trade Organisation. Back
37
See the Commission's impact assessment, document 12211/10 ADD
1 at page 20. Back
38
Minister's Explanatory Memorandum, page 2, para 14. Back
39
Third country nationals who move to another country on the basis
of an intra-corporate transfer under GATS are not subject to a
numerical limit - see Minister's Explanatory Memorandum, page
4, para 20. Back
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