Managing Mobility Risk

Meeting Compliance Challenges
In the wake of the sudden economic downturn and as we move in to a synchronised global recession, most businesses are looking to cut costs and simplify internal processes.

Managing Mobility Risk: The Importance of Immigration Compliance for Short-term Business Travellers

Meeting Compliance Challenges
In the wake of the sudden economic downturn and as we move in to a synchronised global recession, most businesses are looking to cut costs and simplify internal processes. This is generally a prudent response to challenging economic circumstances, but there is a real temptation to replace international assignments with increased use of short-term business travel. However, just at the time when this temptation is growing, businesses that have been non-compliant in the use of business visit visas might find governments far less tolerant than when the good economic times were rolling.

In the United States, Canada, Australia, Japan, China, Malaysia, Singapore, United Kingdom, and many other countries, greater clarity around work permit rules has increased the attention on the use of business visits. Business travellers who might have used a business visit visa or visa waiver program in lieu of obtaining the appropriate work permit now can be subject to serious penalties, expulsion, and a ban on re-entry.

There have been concerns in parts of Western Europe and the Asia-Pacific region during the past few years that inadequate controls on the entry of people into an economy jeopardise the economic functioning of that economy and can help to destabilise social relations within a community. In addition, failure to ensure compliance with the rules governing business visits is not only politically dangerous; it potentially undermines public confidence in how effectively the broader immigration program is administered.

In societies where there are advocates questioning aspects of broad immigration policy, the entry of foreigners can be, as it always has been in the past, a political tool that can be particularly harmful to governments that are aiming to facilitate the freer flow of skilled individuals. Immigration is always a hot political issue, and even more so during bleak economic times. One of the most damaging consequences for employers being found with staff working without authority is the sometimes intense media focus on the story, which plays to the broader community concerns regarding foreigners‚ taking jobs. The facts of an incident are quickly blown out of all proportion, resulting in considerable reputational damage for the employer.

The Three Risks
Broadly speaking, there are three risks facing businesses that fail to honor business visitor rules.

The first is that, if there is an overreliance on business visitors, the risk is being borne by the employees of the business. Where individuals arrive at a countrys entry point, and do not satisfy immigration officials that their intention to enter a country is for legitimate business purposes, such as meetings or seminars, they run the risk of being turned around and sent back to their country of origin. This can attract additional attention to the employing company and severely complicate the individuals future travel. It is routinely our experience that people who are turned around regularly have been using business or tourist visas in the past, assuming that they would continue to be allowed to enter countries without question. The more sophisticated tracking systems now can identify frequent travelers who remain in-country for longer than would ordinarily be acceptable to ‚attend business meetings.

Being caught in-country working without authorisation can be even more unpleasant. There was a widely reported case of two Malaysian accountants who were arrested and detained in Indonesia for more than a month awaiting trial for conducting due diligence and audit activities while on tourist visas. In Malaysia, two Germans and two Australians were arrested in Malacca for working for a sailboat-manufacturing company while on tourist visas. They were detained together with their employer. The foreigners faced imprisonment of up to six months and a fine. Their employer faced a fine of RM10,000 or imprisonment of one year for each illegal worker. No employee caught working illegally should think that their employer can save them from these penalties‚indeed, these employers also may be subject to severe sanction.

A second activity by government that is becoming increasingly common is that officials are looking at the number of people who are changing status within the country from business visitor to a work permit holder. In the past, many governments have not welcomed people changing status and they have held the view that a person should obtain the correct visa/permit prior to entry. Singapore has been one jurisdiction where change of status is accepted practice, whereas it is still not permitted in a number of countries.

In the past, governments increasingly have been prepared to allow such a change for genuine business reasons to meet business imperatives. Nonetheless, some countries are now measuring the proportion of applicants who are applying within the country. An increase in the number of people changing from business visa to work permit in a country can signal a trend that business visits may not be genuine for that particular company.

The third aspect of increasing difficulty for business is that at a time of political sensitivity, where employees are concerned about the retention of their jobs, local people will resent foreigners who might be perceived to be taking their positions. It is most commonly the case that compliance activity by immigration officials is triggered by an anonymous tip from members of the local community who believe that a person is working without the appropriate authorisation.

In most jurisdictions, these ‚tips‚ constitute the bulk of investigative activity by immigration officials. In Singapore, Malaysia, and Australia there are government programs and advertised toll-free numbers to assist and encourage people making complaints where immigration breaches are suspected. Often the complaints are vexatious and there are no grounds for alleging a breach of immigration rules. However, the risk remains apparent that where recruitment processes are not satisfactory or where individuals knowingly enter the country on the wrong type of visa with or without the employers knowledge and the employer allows them to work, there is a potential risk to the business and the individual. The larger and more reputable the business, the greater the reputational risk if a salacious visa story makes its way into a local newspaper.

By way of example, in Thailand foreign experts were arrested at a major product launch on a tip from a competitor that they were working without the requisite urgent work permits. The event was stopped and fines were imposed on the foreigners and the employer. In another instance, the Immigration Department in Hong Kong raided the office of a leading international recruitment firm following a tip. Two foreigners were arrested for violating their conditions of stay in Hong Kong and the incident created ongoing tension with officials and a significant public relations embarrassment for the employer.

In some countries, such as China, the major risk is faced by the traveler. In that case, the person may be detained and fined before departure. In other cases, both the business and the individual are penalised. The latter may be expelled from the country and banned from re-entry but the business (and relevant managers) also may be subject to prosecution and imprisonment. This trend to hold both the individual and the employer accountable is evident in recent legislation that has passed in countries such as the United Kingdom, Ireland, Singapore, and Australia. Much of this legislation has passed within the last three years as countries recognise that the scale of international movement has led to increased business visa abuse.

In the United States, 2009 sees the introduction of a three-day notice period for those using the waiver program for short-term entry into the country. This notice period is designed to allow for adequate security checking to occur in advance of travel; however, it may be only a matter of time before it is also used to track an individuals travel and stay history. This could lead to pointed questions regarding the frequency and duration of stay on a visit that is meant to be for attending meetings and seminars‚ or the like.

The biggest risks are faced by those employers that lack any adequate oversight of immigration compliance. If the culture of the business has been not to track the use, regularity, and purpose of business visits, there may be a great deal of immigration non-compliance that remains invisible to leaders of the business. In times of economic gloom, when governments look to protect their labor markets, the risks of poor immigration program management increase significantly.

Taking Responsibility
So, knowing the risk, how do you mitigate and manage the risk? Without doubt responsibility for immigration/visa compliance is a task that must be owned. Some businesses very diligently focus on immigration compliance. In those cases someone always has the responsibility to look out for the interests of the business. It might be the office of general counsel, the HR director, the CFO, or the office manager. Without an owner, no policy will be formulated, no monitoring set up, and no messages heard in the business about the risks of immigration non-compliance. No CEO would have to think twice in their organisation about who takes responsibility for tax-related compliance. Unfortunately, this is not always the case with immigration compliance.

Source: MOBILITY Magazine, January 2009