Who’s Who Legal has brought together Eugene Chow of Chow King & Associates, Katie Malyonof Ernst & Young, George Newmanof Stinson Leonard Street and Caron Pope of Fragomen to discuss the ease of doing business in their jurisdictions, increased levels of enforcement and scrutiny, regulatory developments, and the legal market.
Chow King & Associates
WWL: Those we spoke to across multiple jurisdictions mentioned an increase disparity between government statements and the reality of the ease of doing business in their jurisdictions. Is this the case where you are? How have your processes changed over the past few years?
Eugene Chow: Hong Kong has always prided itself on being a major international financial centre and on the ease with which business can be conducted here.
The Government of Hong Kong has a very user-friendly “one-stop” website (gov.hk.en.nonresident/investinghk/) with a wealth of information to assist foreign investors and companies who are planning to establish their businesses in Hong Kong, including how to register a business, tax obligations of resident and non-resident business operators, and entry arrangements for investment to establish or join in a business in Hong Kong, as well as the Capital Investment Entrant Scheme.
There is no disparity between government statements and the reality of the ease of doing business in Hong Kong. Since July, 2000, the government has set up an entity, “Invest HK”, to offer free, customised services to overseas companies to help them set up and expand their businesses to Hong Kong, as the government is very interested in attracting foreign direct investment which is of strategic importance to the economic development of Hong Kong.
Katie Malyon: There is some disparity between government statements and the reality of the ease of doing business in Australia. By way of example, the government has identified that an advantage of doing business in Australia is the ease of running a business within a well-regulated and transparent commercial environment, making it easy to establish and operate a business: see austrade.gov.au/Invest/Investor-Updates/2012/Ease-of-doing-business-in-Australia-remains-strong. Clearly, Australia offers a strategic location in the world’s fastest-growing region, 22 years of uninterrupted growth and a highly skilled, highly educated, multilingual workforce that is equally at home in both western and Asian cultures.
However, on the World Economic Forum’s index measuring burden of government regulation in 2007/08 Australia ranked at 68. In 2013/2014 we come in at 128. And, on global competitiveness, Australia comes in at 21 out of 148 countries, down from a high of 15 just four years ago. Australia’s standing on the World Bank’s Ease of Doing Business ranking is also down – we currently sit at number 11.
Newly elected prime minister Tony Abbott has consistently stated it is his Coalition government’s intention is to “remove red tape” and scale back regulation. We are already seeing this unfold across many areas of government.
In recent years, processes have shifted to online delivery of immigration services and information. This greater use of technology has assisted with delivery of efficiencies. Another significant change in the bureaucracy has been the increased engagement with stakeholders, including immigration law practitioners, following the Ombudsman’s investigations into the Department of Immigration’s activities in mid-2005.
George Newman: The United States Citizenship and Immigration Services (USCIS) seems to be a textbook demonstration of the old saying that “the more things change, the more things stay the same”. The issues seem to change from year to year, but two problems remain. First, there is absolutely no discipline among the examiner corps, thus resulting in disparate rulings on similar facts. Second, there is no institutional memory within the Service, so that the same issues continue to be rediscussed and reargued over and over again.
The leadership group within the Service does not enforce its policy pronouncements, so that the Central Office will insist that policy on a certain issue has been decided, but the policy itself is not consistently followed throughout the examiner corps. As a result, similar facts result in different rulings, and lawyers are left to explain to their corporate clients why four identical cases filed at the same time generate three identical responses and a fourth that is completely different. This phenomenon happens over and over again, and at the end of the day results in a total lack of confidence in the Service itself. Consistency in policy and rulings, it seems, could be enforced throughout the Service with a heavier hand in leadership from the Central Office, but when confronted with the disparities among different examiners on similar cases, the response is always that the Central Office cannot enforce uniformity by executive direction. It’s a good thing that the Armed Forces take a different approach.
The second ongoing trend is that issues come up, get discussed at all levels, get settled by agreement between the Service at its executive levels and organisations, like the American Immigration Lawyers Association, go along as decided for a while, and then recur in exactly the same format and exactly the same circumstances, and the whole process gets repeated. The Service seems to “rotate” examiners through different product lines, just as law firms do with incoming associates, but the result is that examiners get trained and become expert in one area and at just about that same time, they are then transferred to something about which they know absolutely nothing. Thus, the merry-go-round goes on and on, and no institutional memory or expertise is retained in any one area. As a result, issues that have been thought through to conclusion go back to the starting line, so that the entire process can be repeated and very little developmental progress is made.
Caron Pope: The UK’s immigration rules have changed substantially since the May 2010 general election. We have seen over a dozen consultations suggesting changes to the UK’s business immigration policies and have experienced three complete structural overhauls.
Some routes have been closed (post-study work, tier 1 general) and many have been significantly tightened (tier 2, family). We have also seen the imposition of new policies that slow down the entry of skilled migrants, for instance the cap on skilled non-EU workers.
None of this is to say that the system does not work for business, but it is certainly more restrictive than the points-based system (PBS) inherited by the Coalition three-and-a-half years ago.
WWL: We heard reports of increased enforcement and scrutiny resulting in a high-level of compliance work for practitioners. Is this something you have experienced? Do you see this trend continuing for the foreseeable future?
Eugene Chow: Our firm represents corporate clients in obtaining US and Hong Kong employment visas or permanent resident status for its key managers, executives and professional staff and business investors and entrepreneurs. For these clients, we do not notice increased enforcement and scrutiny resulting in a high level of compliance work for practitioners.
On occasion, however, we do come across cases where the human resources department of a particular company may have hired a new person who already holds a valid employment visa and a Hong Kong Identity Card under another company’s sponsorship, under the mistaken belief that the employee is authorised to work until the expiration date of the resident visa.
In fact, an employment visa only permits the holder of the visa to work for the sponsoring employer, and commencing work for a new employer without first obtaining Change of Employer authorisation from the Hong Kong Immigration Department is a breach of the visa holder’s condition of stay, a criminal offence subjecting the violator to a fine of HK$50,000 upon conviction as well as imprisonment for up to two years under Section 41 of the Immigration Ordinance (CAP 115).
Furthermore, under Section 171 of the Immigration Ordinance (CAP 115), an employer who employs a person not lawfully employable also commits an offence and can be liable to a fine of HK$350,000 and imprisonment for three years.
In practice, however, the Hong Kong Immigration Department will not refer the case for prosecution if it was a genuine good faith mistake, especially if the employer is a reputable and substantial multinational company.
With the economic boom in China, the number of illegal immigrants intercepted trying to enter Hong Kong from China has actually decreased. However, enforcement activities against visitors from Mainland China involved in parallel goods trading and suspected employment of illegal workers have been stepped up. There are special operation teams at control points conducting spot checks on arriving visitors who are suspected of being parallel good traders or visitors engaging in unauthorised work. Vigorous enforcement actions are conducted from time to time at different locations such as factories, construction sites, renovation projects at commercial or residential premises, restaurants, food production factories, shops, markets, foot reflexology centres, refuse collection points, warehouses and other establishments.
Most illegal workers in these categories are prosecuted and are fined or imprisoned before repatriation to their place of domicile, and their employers are also prosecuted for employing illegal workers, creating work for the criminal bar.
Katie Malyon: Compliance and increased enforcement have been very much a focus of a number of Commonwealth Government departments. In the 12 months to 30 June 2013 the immigration department located 15,077 unlawful non-citizens (that is, people who have overstayed their visa), issued notices to 302 employers of illegal workers and removed 13,486 people from Australia.
As part of the focus on increased compliance the government implemented reforms to the employer sanctions regime for businesses that employ or refer non-citizens to work in Australia without appropriate permission. Infringement notices and civil penalties were introduced on 1 June 2013 to supplement the existing criminal sanctions.
July 2013 saw the introduction of a new role for the Fair Work Ombudsman (FWO), the workplace regulator in Australia. The FWO has over 300 inspectors who can now complement the 32 inspectors with the immigration department in monitoring compliance by sponsors of foreign workers to ensure they pay their workers the market salary and ensure that the 457 visa holders are working in the approved nominated occupation. Any suspicious activity can also now be referred by the FWO to the immigration department for investigation. Appointment of the FWO inspectors under the Migration Act has substantially expanded the capacity of the government to monitor compliance with the sponsored employee visa programmes.
Increased compliance activity in the 12 months to 30 June 2013 saw a 38 per cent increase in the issue of infringement notices and a huge 73 per cent increase in formal sanctions for sponsoring employers. Over the past three financial years, less than 1 per cent of sponsors have been sanctioned – indicating that the 457 visa programme is, overall, working well.
With a focus on compliance the immigration department has noted in its 2013 Annual Report that “the additional monitoring capacity and enforcement option brought into effect by the new legislation will bring increased sanction rates over the coming year”.
The FWO has also increasingly been active in ensuring work right entitlements of foreign nationals on student visas as well as working holiday visas are protected and has issued significant fines to errant employers.
Also notable is the increased information-sharing with other Commonwealth government departments and agencies, such as the Australian Taxation Office, to ensure tax compliance by foreign workers and their employers.
George Newman: We in our practice have not noticed a dramatic increase in enforcement or a corresponding increase in compliance work during the previous year. I don’t see any such increases for 2014 because neither major political party wants to antagonise potential sources of votes in key contests, and one would think that dramatic increases in enforcement could result in weaker support for either party among the section of the immigrant community that votes.
Caron Pope: Yes, it is our experience that in the UK the Home Office has increased its focus on compliance through undertaking more audits of employers and educational institutions. This in turn has resulted in a high level of compliance work for practitioners and in our case the creation of a bespoke audit and compliance team. This focus on compliance is the extension of the Home Office’s policy trend of up-front service enhancements combined with increased corporate responsibility which started with the introduction of the PBS, to replace the work permit system, in 2008.
It should be noted that it is not only the number of audits that have increased but also the nature of those audits. At the start of the PBS the visits from the Home Office were more akin to account management visits and were undertaken in a spirit of partnership to help employers and educational institutions understand the new system. Five years on the audits now are much, much more forensic and detailed, and are in essence regulatory in nature. Indeed, an audit of a UK-based university can last three days.
We see no sign this increased focus on compliance will change in the immediate future and indeed at a recent event the Home Office indicated their intention this coming year to undertake in excess of 9,000 audit visits.
We are also seeing signs of this trend in other jurisdictions as well. Recently the authorities in Canada have indicated, as part of their tightening of the work permit rules, that they will be undertaking increased numbers of work-placed visits to employers of overseas workers. Again, a similar trend can be seen in Australia. In the USA this has been happening for a while and the Department of Homeland Securities announced that the number of visits they have undertaken in 2012 had been the most to date.
WWL: Lawyers in multiple countries spoke of recent or proposed regulatory changes to immigration law where they are. Have there been any such changes in your jurisdiction or are there any you are expecting in the near future? How have or will these changes impact on your practice and the legal market?
Eugene Chow: Hong Kong has a very flexible and liberal immigration policy towards international businesses, investors and professionals who wish to invest and work here. The government frequently implements new policies to enhance the provision of more efficient services to non-permanent residents. Most recently, on 19 December 2013, stamping travel documents on arrival or on departure has been replaced by a computer-generated landing slip which bears the holder’s English name, travel document number, date of arrival, condition and limit of stay.
Non-stamping immigration clearance is to simplify the immigration clearance procedures and to facilitate the smooth flow of passengers at immigration control points.
Unlike other jurisdictions, the actual policy and procedures with regard to entry for employment are not addressed in the Immigration Ordinance but are set by government policy, which is subject to changes which are amended and implemented in response to the perceived needs of employers in the business community and the economy of Hong Kong.
In recent years, we have seen a liberalisation of the entry of People’s Republic of China (PRC) nationals under the Mainland Talents and Professionals Scheme, and on 28 June 2006 the Government implemented a Quality Migrant Admission Scheme (QMAS) to attract highly skilled and talented persons to settle in Hong Kong to enhance Hong Kong’s economic competitiveness in the global market without having to secure an offer of local employment.
Between the introduction of the QMAS and 30 November 2013, only 2,646 applicants have been allocated quotas to settle in Hong Kong (80 per cent of which are from Mainland China).
In response to a question raised in the legislative council on 8 January 2014, the Secretary of Security, whose portfolio includes the Hong Kong Immigration Department, stated that the administration will revise this scheme according to Hong Kong’s actual situation and socio-economic development needs and make additional efforts to publicise this scheme to attract more quality talents to Hong Kong from abroad.
However, there is a very limited impact on potential additional legal work even if the scheme is revised as this category is based on a points calculation system, with most applicants acting on their own behalf.
Katie Malyon: Immigration law and policy in Australia is constantly changing – as are our Ministers for immigration. In 2013, we had four ministers for Immigration – three of these were in the first seven months of the year in the lead up to the Federal Election which saw a change of government in September. There is a constant demand from clients for timely updates and alerts on changes to both immigration law as well as policy and an analysis how this impacts their business.
Keen to show some action in relation to alleged “rorts” and abuses in the temporary sponsored employee 457 visa regime the former Labor government, in its last piece of legislation, introduced sweeping changes to the 457 visa programme. Principal among these was the introduction of labour market testing (LMT), the new role of the FWO outlined above in relation to monitoring sponsors’ compliance with their obligations, the need for sponsors to annually meet the training benchmark by spending a prescribed amount of payroll training their Australian staff and, with limited exceptions, English-language requirements for nominees. When the Coalition was elected its commitment to “remove red tape” and make it easier for business saw the winding back of the full import of LMT to a selection of trades as well as the protected occupations of engineering and nursing. Further changes may follow the current Independent Review of the 457 visa programme.
Together with the introduction of new sanctions for the employment of illegal workers outlined above, these changes to the 457 visa programme have meant that clients are focusing more on managing risk and compliance. Employers are keen not to risk the imposition of a sanction such as a bar on sponsoring foreign nationals or, worse, cancellation of their sponsorship. For large corporate clients, immigration practitioners are increasingly being requested to assist with reviewing internal recruitment, engagement and termination processes to ensure compliance with sponsor obligations and minimise the risk of unfair dismissal litigation. It also means immigration practitioners often need to work closely with workplace lawyers to address the interface between these two areas of law.
Impending changes in 2014 could see the introduction of an Offshore Resource Activity visa for foreign nationals working in Australia’s Exclusive Economic Zone – including the area off the north-west coast of Australia where extensive oil and gas resources are being developed. In addition, the Coalition Government announced in early March 2014 that it would review the Significant Investor visa programme with a view to reboot the programme.
Finally, it is worthy of note that the Minister for immigration has signalled a review of arrangements in relation to the migration advice profession. The one-third of migration professionals who are lawyers will keenly await the outcome of this review. While registration for all migration professionals is accepted, many hope that the dual regulation of lawyer migration agents by both their respective State or Territory Law Society as well as the Office of the Migration Agents Registration Authority will come to an end.
George Newman: Virtually everyone in the United States acknowledges that the current immigration system is “broken” and badly in need of repair. Like most other issues, Congress has been deadlocked in what to do about fixing the system.
The Democrats are almost unanimously in favour of changes that would raise the number of H-1B visas and augment the number of permanent residency visas available in each category. They also seem to be solidly behind solving the problem presented by what is thought to be a large number of illegal immigrants in the country, especially individuals who were brought here as children by their parents. The general proposal is for some sort of amnesty, resulting in a lengthy, but defined, path to citizenship.
The Republicans seem to be united behind proposals that begin with strengthening enforcement before any other changes are implemented. From there, any unity in the Republican Party seems to break down entirely. Some factions want no other changes in the immigration laws, some factions feel that relaxation of numerical restrictions in both nonimmigrant and immigrant visas are appropriate, and some factions want to reform the immigration laws with a series of proposals, as opposed to the comprehensive approach that the Democrats want. Most proposals coming from the Republican Party, which are typically voiced in the House of Representatives, seem to be predicated upon generating some appeal to the parts of the “immigrant community” that will be voting in the 2014 elections.
Caron Pope: This constant change does seem to have slowed down for the time being. The home secretary, the immigration minister and their officials accept that businesses need stability. However, all bets are off when we get to the election, if not before.
WWL: There still seems to be a mix of larger full-service firms and smaller specialised firms in the corporate immigration legal market, although we have heard reports in some areas of the rise of the boutique for this area of law. Is this something you have noticed? Have there been any changes to the legal market in your jurisdiction?
Eugene Chow: In Hong Kong, most full-service law firms handle some immigration work as part of their employment law practice. Big-four accounting firms also handle employment visa work for Fortune 500 or large international corporations transferring employees to Hong Kong, sometimes as part of their tax and relocation services, and perhaps as part of a “global” RFP to act as a single service provider globally.
Our boutique firm has built a very successful niche practice by offering individualised and customised personal advice and handling immigration work not only for corporate and individual clients but also by establishing excellent referral or co-counsel relationships with law firms and accounting firms which may require immigration law expertise but either do not maintain an in-house immigration practice or wish us to co-counsel cases with them in a cooperative business framework.
One new trend is that a number of boutique immigration firms around the world have joined the Alliance of Business Immigration Lawyers (ABIL), an international network of 36 law firms that has global coverage with highly regarded local experts in each jurisdiction.
Katie Malyon: There have been no significant changes in the legal market in Australia in relation to immigration law apart from the movement of some key practitioners in Sydney to large international professional service firms. For example, in mid-2013 special counsel Rita Chowhdury left Baker & McKenzie to become a partner at Deloitte. It follows the move by myself and 23 of my professional staff to join the multidisciplinary partnership at Ernst & Young in late 2012. This affords immigration clients the opportunity, if so desired, to access global assignment service specialists as well as expat tax practitioners.
George Newman: The practice of immigration law started primarily in boutique firms that were small in size and narrowly focused with respect to case types; some specialised in labour certifications, some in H-1Bs, some in EB-1s and National Interest Waivers, and so on. Many of these boutiques merged into larger contexts, from mid-sized firms all the way up to firms listed in the Am Law 100. Those larger firms that brought in immigration law practitioners hoped to establish and grow departments in this field of law. Some of these departments have become service organisations, while others have become genuine revenue producers. Many others remained in the boutique configuration.
At this point, some larger firms are continuing with very successful immigration law departments, while most other practitioners remain in boutique-type firms. It is, however, important to note that larger firms seem always to draw their initial immigration law practitioners from the boutique context, and do not typically grow their immigration law practitioners from within.
Caron Pope: There is a school of thought that the one-stop shop full-service law firm has had its day. Clients want the flexibility to choose subject matter experts rather than being tied to one firm. In the UK this is evidenced by the emergence of employment and litigation firms as well as sole-focus immigration law firms.
In the past immigration law has been regarded by some as the poor relation of legal practice – more of an administrative function rather than an area which needed “real” lawyers. Since the launch of the PBS in the UK in November 2008, there has been a marked change in mindset among the legal and business communities. The practice of immigration is now very complex with increased controls on permitted migration and a key focus on compliance. Dabbling in immigration law (perhaps as an ancillary area to employment advice) is becoming less common as businesses demand legal expertise combined with practical and commercially driven solutions. High-volume clients also require a range of additional support including technology which can provide meaningful date reports to support business planning, advisory support, government liaison and strategic support. Full-service law firms can really only compete with the single-focus law firms if they resource the teams appropriately and invest in the bespoke model that the niche firms can offer.