Labor Market Testing Becoming Common Practice in Some Offices

25 Oct 13

INDIA

IMPACT – Medium

What are the changes? The Foreign Regional Registration Office (FRRO) in Hyderabad is consistently asking employers for proof that they tried to recruit a local worker before hiring a foreign national. Other offices throughout India, particularly in Kochi and Bengaluru, have followed suit, but not consistently.

What does the change mean? The development means that labor market testing is a reality when registering at some offices, and employers should be prepared to show that they have made local recruitment efforts.

  • Implementation timeframe: Ongoing.
  • Visas/permits affected: Employment visa extension; residency registration.
  • Who is affected: Employers hiring certain foreign workers; foreign nationals registering in Hyderabad.
  • Impact on processing times: No change to processing times, but there may be a delay in submitting the registration packet if an employer does not have the labor market evidence readily available. New employees have only 14 days after entering India to submit the registration packet, so this could be problematic if they are only able to get an appointment at the last minute.
  • Business impact: While extremely unlikely, it is possible that the company could lose its foreign employee if he or she is unable to complete or renew his or her registration and obtain a resident permit for the employee to stay in India.
  • Next steps: Employers should be aware that some offices are requesting labor market testing. Employers should be prepared to submit evidence of efforts to hire local workers.

Background: Since the beginning of the year, the Hyderabad FRRO has been asking employers to document efforts to hire locally before registering a foreign national employee. The practice, which has also been reported at other FRROs, particularly in Kochi and Bengaluru, is up to the discretion of the immigration authorities.

In some cases, the practice has put foreign employees in a quandary in which their work visas have been approved but they are not able to register and obtain their resident permits to live in India without this additional evidence by an employer.

The Hyderabad office has routinely asked companies to submit a document certifying that “no similarly-qualified Indian was available” for the position. In addition, employers are being asked to submit supporting documentation that includes:

  • A signed certification on company letterhead stating the foreign worker’s qualifications, education and skills.
  • Proof that the company posted job advertisements in print or online media, and evidence that the recruitment was an open process.

BAL analysis: Employers should be aware of this unofficial practice enforced in Hyderabad, Kochi and Bengaluru. Because the practice is implemented in a highly discretionary fashion, employers may want to perform labor market testing and document it. This will prevent delays if the information is requested when the foreign employee is initially registering or extending the work visa and resident permit.

At this time, companies sponsoring intracompany transferees (ICT) and foreign workers under a joint venture agreement are much less likely to be asked to provide the proof of labor market testing and may be exempt from the requirement. The employer would need to show that the ICT replaced another employee within the company and thus did not displace a local hire, or that a foreign employee possesses specialized knowledge that a local worker would not be likely to fulfill.

There is no indication at this time that labor market testing requirements will spread to other offices.

This alert has been provided by the BAL Global Practice group and our network provider in India. For additional information, please contact GlobalVisaGroup@balglobal.com.

Copyright © 2016 Berry Appleman & Leiden LLP. All rights reserved. Reprinting or digital redistribution to the public is permitted only with the express written permission of Berry Appleman & Leiden LLP. For inquiries please contact copyright@balglobal.com.