by Bill Milnes
last updated 09/11/2016
Immigration rules explained
by Bill Milnes
last updated 09/11/2016
June 2015 - Immigration is always a hot topic for franchisors, potential franchisees and existing franchisees looking to employ staff. Bill Milnes summarises the current position
Immigration seems to be in the news more than ever these days, with immigrants and overseas investors receiving the bulk of the blame for Auckland property prices, news stories about poor conditions or illegally low wage rates for immigrant workers, and confusion over what jobs or business opportunities qualify for consideration under various visa categories.
For franchisors and franchisees, then, it’s important to understand the rules and, equally importantly, how they are currently being interpreted by Immigration New Zealand (INZ). As Franchise New Zealand reported last year, a change in interpretation means that some people applying for residency are being declined because they work for franchises or other chains.
There are three basic areas in which franchisors and franchisees need to be aware of Immigration New Zealand (INZ) criteria:
- Work Visas
- Current or potential employees seeking to apply for Residence.
- Migrants seeking to buy a franchise to meet Entrepreneur category instructions.
In the following, I use the term ‘NZers’ as a convenient abbreviation to cover both New Zealand citizens and New Zealand ‘residence class’ visa holders. Citizens will usually have a NZ passport, while resident visa holders will have a foreign passport but with a NZ resident visa label. Where there are links to Government or other websites, we have used TinyURL links for your convenience – these are a lot shorter for you to type in.
1. Work Visas
There are three different possibilities you need to be aware of relating to work visas:
a) Partners of New Zealanders or students holding ‘open’ work visas.
b) Post-study graduates with an open work visa allowing employment.
c) Potential employees available to fill a position – Essential Skills applicants.
Here’s a summary of the key issues relating to each.
a) Open work visa holders: these people may work in any positions for any employer and can be employed without reference to INZ. Open work visas are usually granted to partners of NZers, or partners of students studying for some higher qualifications.
b) Post-study graduates:
A post-study open work visa is valid for 12 months and the purpose is to enable a graduate to find relevant employment. Within the 12 months, they need to apply for an employer-assisted work visa which is valid for 2 years and restricted to the employer. Therefore:
i. A post-study graduate may initially work in any positions for any employer and can be employed without reference to INZ.
ii. When given an offer of employment, the applicant will be seeking to lodge an employer-assisted work visa which will be restricted to that employer. The purpose of this visa is to enable the applicant to get work experience and qualify for residence by holding a position recognised by INZ as ‘skilled’. (See 2 Residence, below)
iii. However, there would be few positions in New Zealand where a graduate, with 1-2 years of experience, could meet skilled criteria. To obtain the required level of experience and skill recognition, many will then need to apply for a work visa under Essential Skills criteria.
c) Essential Skills (ES): ES criteria will need to be met for existing staff needing a new work visa other than for those in category a) and b) above. ES requires that the employer prove there are no NZers available who could, with reasonable training, fill the position. This requirement is known as the Labour Market Test.
It is challenging and must be done carefully and in great detail to avoid the risk of INZ or WINZ deciding, on the basis of a poorly-written job description or advertisement, that there are other people available who could fill the position. For example, at Laurent Law we have a 40 stage process we work through with the employer and applicant when we prepare a successful work visa application.
How to tell if the person may work for you
Ask to see their passport and look for either a resident visa or an open work visa. If a work visa identifies an employer, the applicant may only work for that employer.
In some cases there may be no such visa in the applicant’s passport as INZ is changing to electronic visas and the applicant may only have a letter from INZ. However, that letter should contain the same essential information.
Alternatively, employers may register on VisaView to identify if a migrant worker may be employed by them – go to http://tinyurl.com/88oke4g to check. To register, you will need your RealMe ID to log in and your company ACC number. Verification will take a couple of days. Once verified, to check if a non-NZer may work for you, you will need to enter from the passport his or her name, nationality and passport number.
Do not employ someone who does not have the right to work for you. The penalties can be extreme, with fines of up to $100,000 and potential jail sentences.
In our experience, most work visa applicants have the intention of applying for residence later when they meet the criteria. An application for residence under the skilled migrant category requires that the position being offered to or held by the applicant is ‘skilled’ as identified in the Australian and New Zealand Standard Classification of Occupations (ANZSCO). Only skill level 1, 2 and some skill level 3 positions are recognised as ‘skilled’ for immigration purposes. Find these definitions at http://tinyurl.com/ovos7hr
However, INZ have decreed that in most cases, retail managers, restaurant managers and, critically, managers of franchise or group operations will not be considered ‘skilled’. So whether the applicant is a shift manager in a fast food outlet or the manager of a group store, it is unlikely that the position will include every task in the ANZSCO and an application will probably be declined. Consequently, we have the ridiculous situation where a baker in a supermarket may meet ‘skilled’ criteria, but the supermarket manager who employed him and to whom he reports is unlikely to qualify.
Although the ANZSCO was not intended to be used as an immigration ‘bible’, it is the only tool available which defines roles in a manner INZ can recognise.
‘Skilled’ – Bill’s Rule of Thumb
Aside from the ANZSCO criteria, as a useable guide I’d suggest that if a job could be learned in less than, say, three years, then it would probably not be recognised as ‘skilled’. Salary is also taken into consideration – if the salary offered is less than $40,000, that would also suggest the employer does not see the role as being particularly skilled.
Note: this ‘rule of thumb’ is based on experience and is not official criteria used by INZ.
3. Entrepreneur Pathway to Residence
The Entrepreneur Work Visa (EWV) is the replacement for the Long Term Business Visa (LTBV) which many franchisors will be familiar with. In the past, franchises were popular with many of the successful applicants under this scheme.
The new EWV is a points-based process which allows for a person with business experience and capital to buy or establish a business which will be of benefit to NZ. EWV allows for firstly a two-stage, three year work visa to develop the business; and secondly, an application for residence on the basis of the successful operation of that business.
Points are allocated for business experience, capital invested, the age of the principal applicant and projected benefits to New Zealand. Benefits to New Zealand are identified as creation of new employment, exports, new products and/or services.
Is Export Potential Mandatory?
Currently, INZ is interpreting the wording of Immigration Instructions as identifying that export potential is mandatory for the grant of an EWV. However, in our opinion, export potential is not mandatory; it is just one of the three areas of benefit to NZ. Our interpretation has been accepted by INZ in public seminars, but we wait for confirmation from the relevant branch. As few franchise operations are export-focused, the following assumes that INZ will review their stance and allow export as being a non-mandatory benefit to NZ.
Why INZ has doubts about franchises
Personally, I am a keen advocate of franchises for new NZers because good franchises have the systems, the marketing and the support which are fundamental to business success. These would take time and experience for a new NZer to develop in a new country, so franchising can speed their successful integration into New Zealand’s business community.
However, recognising that the purpose of the EWV programme is to bring people with business skills and expertise as well as funds to NZ, INZ are ambivalent towards franchises because of franchise marketing which advises ‘buy yourself a job’ and ‘no experience necessary’. Such advertising has convinced INZ that those concepts apply to most (all?) franchises, and therefore franchises do not meet the objectives of immigration policy – which are to raise the skills level in NZ and protect our borders.
I’ve had numerous discussions with managers of INZ branches on the pro’s and con’s of franchising, and have received assurance that INZ will process franchise-based applications on the same criteria they apply to other business models.
Entrepreneur Work Visa applications are decided on the basis of points which will be allowed to the principal applicant based on:
i. Relevant self-employment, non-relevant self-employment and/or senior management experience;
ii. The number of new full-time positions being made available to Nzers;
iii. Proposed export turnover (currently considered by INZ to be mandatory);
iv. Unique or new products or services to NZ or to a region;
v. Capital to be invested;
vi. Age of the principal applicant.
Care needs to be taken to ensure that any proposal not only meets EWV criteria in every respect, but that the business plan presented to INZ is accurate, factual and realistic. The business plan is a substantial and serious document. It is critical to the application and should be professionally prepared by someone who understands the challenges specific to an immigration application.
After the applicant has operated the business successfully for two years, he or she may apply for residence. However, if a business fails to meet any one of the commitments made in the business plan, residence may not be granted.
In ‘the real world’, a business plan is exactly that: a plan and projections based on the best information available and the basis on which to develop a business. However for immigration purposes, a business plan is a locked-in-stone commitment by the applicant that he or she will achieve what is promised.
The reason for the hardening of attitude by INZ is the disappointing number of pie-in-the-sky business plans presented by advisors who saw their role as to make the LTBV application look good, but which in reality, had little chance of the business achieving the success dreamed up by the number-crunchers.
Immigration is a complex area, and interpretation of the rules may change even when the rules stay the same. At the moment, my advice for franchisors and franchisees looking to retain good staff and recruit suitable franchisees would be:
Employees: If you have migrant employees on work visas, you may wish to discuss their hopes for residence and consider how/if they can be promoted into a ‘skilled’ position.
Investors/Franchisees: Migrants who are interested in the potential of a franchised business are best referred to an experienced immigration lawyer or licensed adviser for advice on whether or not their investment in the chosen franchise is likely to meet INZ criteria.
It is better to take advice earlier in the process rather than later to avoid wasting time, money and resources and ensure a positive outcome where possible.
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