Non-compliance with immigration laws when sending employees on assignment can have severe consequences fo international businesses. We look at when it makes sense to opt for a good quality service provider.

Whenever the question of outsourcing business processes is presented to clients the question of cost is always a factor that is paramount rather than the question of risk. The viability of corporations outsourcing the administrative process to external service providers seems to always be in question more especially when it comes to issues such as immigration services, the processing of work permits, study permits and visitors permit applications for foreigners in the company’s employ along with their families.

Immigration is often perceived as a laborious, administrative intensive process, which can be handled by junior administrators within the organisation.  The need and additional cost of outsourcing the service is therefore perceived to be unnecessary.

Weighing up risk against cost

In the past three years South Africa has had two changes to its immigration legislation.  The first major change occurred in April 2003 with the promulgation of the Immigration Act No 13 of 2002, which repealed and replaced the Aliens Control Act.  This change was implemented with the intention of simplifying the immigration process thereby attracting the much needed skills and knowledge to the country. 

The legislation was designed to make provisions for various categories of workers.  A common category of work permit was the intra-company transfer work permit in terms of which individuals could be transferred to South Africa from various companies within the same global group for a period of two years. 

This category's requirements were far simpler than the other work permit categories leading it to be the preferred choice amongst most global companies.  The only issue with this permit category was that the maximum duration was two years and the permit could not be extended at the end of the two-year period.

Many companies utilised this category as the sole means of bringing their required foreign employees into the country.  The companies who used internal administrators to manage their immigration compliance were able to easily facilitate the transfers.   Even the companies who outsourced their immigration compliance were advised to use the category due to the simplified requirements. 

Subsequently it emerged that many companies were not aware of the two-year restriction on the intra-company work permit.  These companies now find themselves in the situation where the employees are required in South Africa for a longer period but are unable to extend their work permits.

Now take a look at the following real life example.

Case study

Company A utilised an internal employee to administer their immigration process. The company’s policy was to only appoint foreigners from within the group.  All the company’s work permits were therefore processed as intra-company transfers.  The employee processing the applications did not advise the company that the maximum duration of the permit was two years.  He had even been able to obtain extensions to these permits when required, even though this was not provided for in the legislation. 

When the second change in the legislation was made in July 2005, the employee was unable to obtain extensions to the permits any longer and left the company in a precarious situation with regards to the individuals who were required for more than two years. 

These were some of the practical implications of the situation: The individuals and their families were now required to leave the country to reapply from abroad and the company was now required to place advertisements in the press when there was no intention of appointing anyone from the advertisements.

Another problem was that major projects had to be stopped halfway when a foreign employee needed to leave the country to regularise themselves. 

These factors all contributed to a negative financial impact on the company and the smooth running of a multi-million dollar business.

Company B appointed Deloitte's Immigration Services to administer its process.  At the onset the company was advised on all the different categories of work permits and Deloitte assisted the company to draft its expatriate policy.  The policy was designed to ensure the only individuals being transferred into South Africa for two years would apply for intra-company work permits. 

All other individuals would apply for quota or general work permits. Despite the requirements for these categories of permits being more onerous and taking a longer period of time to prepare, there was no two year limit.  Therefore Company B does not find itself in the situation of Company A, which has subsequently appointed Deloitte to administer its compliance and assist in remedying the current situation.

The above example shows that in this case, appointing a service provider with the requisite skills, expertise and experience is necessary for the proper implementation of legislation and procedures. 

With South Africa being the African base for numerous global conglomerates, and with hundreds of expatriates, it is essential for organisations to recognise that compliance with immigration laws has a huge impact on the successful running of their businesses on the continent. 

Even though the services of good quality service providers undoubtedly come at a premium, the cost is minimal when compared to the risk and consequences of non-compliance.

September 2006

For more information contact Senior Consultant at Deloitte Vandana Dayaram
at vdayaram@deloitte.com or by telephone at +27 (0)11 806-5257.

Subject: HR outsourcing HR, outsourcing immigration services