Sponsor licence holders are legally required to meet certain compliance duties. Where there has been a failure to discharge those duties, the Home Office can take enforcement action against the organisation, including downgrading the sponsor licence from an A to B rating.
In this guide, we explain what a sponsor licence downgrade means, the steps to take if your licence rating has been lowered, and best practice advice on how to avoid a licence downgrade altogether.
What is a sponsor licence rating?
Having been approved for a sponsor licence, that licence will be granted with an A-rating.
The only exception to this rule is in relation to a licence to sponsor migrant workers on the UK Expansion Worker route under the Global Business Mobility umbrella. In this context, where the person named in the application as the Authorising Officer (AO) is overseas, the sponsor will be given a provisional licence rating and assigned just one Certificate of Sponsorship (CoS), which must be issued in the AO’s name so they can apply for a visa to enter the UK. Having been granted entry clearance, the AO can upgrade the licence to an A-rating and request additional CoS using the Sponsorship Management System (SMS).
In all other cases, the applicant must be able to achieve an A-rating to be licence-approved. An A-rated licence means that the sponsoring organisation has the necessary systems and people in place to meet its sponsor duties, and is trusted to act in a way appropriate to those approved by the Home Office for licensing. On approval of its licence, an organisation will be added to the register of licensed sponsors, together with its A-rating, and will be allowed to assign CoS to migrant workers that the organisation is looking to recruit.
Why are sponsor licences downgraded?
Sponsoring migrant workers comes with significant responsibility where, throughout the validity period of a sponsor licence, the Home Office will categorise an organisation as either A- or B-rated. This will be based on its assessment of the sponsor’s ability to continue to comply with its sponsor duties and behave in a way that is compatible with being licensed. This essentially means that for any sponsor licence holder who fails to discharge its sponsorship duties, the Home Office can take action for non-compliance with the rules, including downgrading the sponsor licence rating from an A-rating to a B-rating.
There are a number of scenarios in which a licence may be downgraded. This could be, for example, if the Home Office believes that a sponsor no longer has the necessary processes in place to comply with its sponsor duties, typically following a post-licence compliance visit. A downgrade decision can also be made where the Home Office has asked for information held by the organisation but the sponsor has failed to comply with that request.
Sponsor action plans
In circumstances where the Home Office has reason to believe that the sponsor is failing to discharge its duties, including where a licensed organisation has failed to provide any information requested of it, this could potentially result in a sponsor licence being downgraded from an A- to B-rating. This also means that the Home Office will put in place a time-limited action plan with steps to be taken by the sponsor to restore that rating.
A sponsorship action plan is designed to address any non-compliance as a licensed sponsor, where the plan will set out the steps that need to be taken to help reinstate an A-rating. These steps could include, for example, making improvements to record-keeping, improving control over staff who assign CoS, or improving communication between different branches so it is clear when a sponsored worker has not turned up for work.
The sponsor has to pay the Home Office £1,476 for the action plan, which must be paid within 10 working days of the downgrade notification. Failure to pay on time can result in licence revocation.
Generally speaking, a sponsorship action plan will only be put in place by the Home Office to address relatively minor breaches of duty. The sponsor licence holder must also be willing and able to correct the issues in question by following an action plan within the prescribed timeframe. For more serious breaches, or where there is any reluctance or inability on the part of the sponsor to rectify the conduct that led to the Home Office action plan in the first place, this may instead result in revocation of the licence.
For a provisional sponsor on the UK Expansion Worker (GBM) route, their licence cannot be downgraded to a B-rating. This means that an action plan will not be issued if a provisional sponsor fails to meet their sponsor duties or otherwise fails to meet the requirements of the sponsor guidance. However, the Home Office will consider revoking the licence.
What are the implications of a sponsor licence downgrade?
There are a number of implications that can arise from a sponsor licence downgrade, including for both the sponsoring organisation and for its sponsored workers.
For the sponsoring organisation
If a sponsoring organisation is downgraded to a B-rating, it must meet a time-limited action plan for which it is liable to pay a fee. This plan will set out the steps that need to be taken to regain an A-rating, where the Home Office can revoke the licence if the sponsor fails to comply with the action plan or make the necessary improvements in the time provided.
If the sponsor was rated either A (Premium) or A (SME+) before being downgraded, its customer services benefits package will be brought to an end. The provision to replace the Authorising Officer or Key Contact and add new Level 1 users automatically will also be removed, if these provisions had previously been granted on the licence.
For the sponsored workers
The sponsor can continue to employ any existing sponsored workers, and will be able to issue CoS to those looking to extend their permission to stay in the UK. However, the sponsor will not be able sponsor new migrant workers until improvements have been made and its licence rating reinstated, where overseas recruitment must be put on hold until then.
Additionally, in the event that the licence is subsequently revoked for failure to comply with an action plan, this will put the livelihoods of any existing workers at risk, where, unless they can find an alternative and suitable sponsor, their leave will be curtailed.
Sponsor licence downgraded: what are your options?
When a licence rating is being downgraded, the Home Office will write to the sponsor to explain what action is proposed and why, giving the sponsor 20 working days from the date of that letter to respond in writing. The sponsor may make submit written representations, including sending evidence, although the Home Office will not hold an oral hearing.
Where the Home Office decides to go ahead with sponsor licence downgrade, it will request payment of £1,476 from the sponsor. This fee covers the cost of preparing and supervising the action plan. The sponsor will then have the following three options:
- Accept the action plan: to continue to be a licensed sponsor, the fee must be paid within 10 working days using the ‘Action plan details’ function in the sponsor’s SMS account.
- Decline to pay the fee: if no workers are currently being sponsored, the sponsor can choose to surrender its licence by selecting the ‘decline’ option in the ‘Action plan payments’ function in its SMS account. The sponsor must also sign the declaration attached to the downgrade decision letter and return this within 10 working days. If the sponsor selects ‘decline’ in the SMS but does not return the signed declaration to surrender its licence within 10 working days, the Home Office will revoke its licence.
- Do nothing: if the sponsor simply ignores the notification sent from the Home Office of its sponsor licence downgrade and/or does not pay the action plan fee within the 10 working days allowed for payment, the Home Office will again revoke its licence.
What happens after a sponsor licence downgrade?
If the sponsor accepts the action plan and makes payment within 10 working days, it will then have a period of 3 months to put right any issues that resulted in its failing to meet its sponsorship duties. As a downgraded sponsor, an organisation must therefore respond to the Home Office recommendations contained within the plan as soon as possible.
After the end of the 3-month period, the Home Office will carry out further compliance checks to establish whether the sponsoring organisation has met all of the action plan measures, at which stage there are three possible outcomes:
- The sponsor licence is revoked: this is where the sponsor has not satisfactorily met the requirements of its action plan or more serious areas of non-compliance have arisen that justify immediate revocation of the licence.
- A second action plan is needed: this is where the Home Office discovers other areas of non-compliance which were not addressed by the current action plan, but do not warrant immediate revocation, where a second action plan and additional fee will be required.
- The sponsor’s A-rating is restored: this is where the sponsor has met all the requirements of its action plan and the Home Office has no other concerns. In addition to restoring the sponsor’s A-rating, the sponsor’s allocation of CoS will also be reviewed, where necessary, so that the organisation is able to sponsor new migrant workers again if needed.
How many times can a sponsor licence be downgraded?
A sponsor can only be B-rated and subject to an action plan for a maximum of:
- 3 months at any one time in respect of any single sponsorship action plan
- twice during the validity period of its licence, ie; the 4-year period for which the licence was first granted and each subsequent 4-year period after a successful renewal.
If a sponsor needs to renew its licence while subject to an action plan, it will be treated as having been B-rated for the new licence period, where this will count towards the number of times a sponsor is allowed to be B-rated during the validity of its renewed licence.
Where a sponsor has been B-rated and subject to an action plan twice within the validity of its licence, and the Home Office discovers that the sponsor again meets the criteria to be downgraded, the licence will be revoked. In serious cases, a sponsor may not even be given the opportunity to rectify any initial areas of concern, where the Home Office reserves the right to suspend or immediately revoke a licence without first downgrading it. This could be where, for example, where there has been a significant or systematic failing, and the sponsor is deemed by the Home office to pose a serious threat to immigration control.
If the licence is immediately revoked, or revoked following either a first or second action plan, there is no right of appeal, although the sponsoring organisation can re-apply for a licence. However, there will be at least a 12-month wait before being able to re-apply, and without any guarantee that any new application will be approved. On re-applying, the sponsor must be able to show that it is capable of discharging its sponsorship duties.
How to avoid a sponsor licence downgrade
There are various duties associated with sponsoring migrant workers, where it is essential that employers, and those within the business responsible for managing the sponsorship process, understand what is required of them to avoid a sponsor licence downgrade.
The sponsor’s duties include reporting any change in circumstances of a sponsored worker and reporting any changes relating to the business itself; ensuring that job roles and candidates are suitable for sponsorship, including conducting right to work checks; maintaining accurate records for all sponsored workers; and co-operating with the Home Office, such as responding to any requests for further information or documentation.
Being a sponsor comes with significant responsibility, where the rules can be complex, often resulting in confusion or shortcomings, and exposing employers to serious compliance risks. To avoid any enforcement action being taken by the Home Office in the event of any uncertainty, seeking expert advice from an immigration specialist is strongly recommended.
DavidsonMorris are specialists in UK sponsorship licences. We provide expert advice on issues such as sponsor licence downgrades, suspensions and revocations, as well as all other aspects of UK sponsorship duties. We can also support you through the Home Office action plan process — from the written representations that can be made on notification of the action to be taken against the sponsor, to exploring ways to help put in place the necessary systems and people that will help you to restore your licence rating.
If you have received notification that your sensor licence is being downgraded, speak to us about your next steps.
Sponsor licence downgrade FAQs
What is a sponsor licence rating?
A sponsor licence rating is the rating given by the Home Office to sponsor licence holders. A licence will usually be granted with an A-rating, although this can be downgraded to a B-rating where there is clear evidence of non-compliance.
Can I hire foreign workers with a B rated sponsor licence?
If a sponsor licence has been downgraded from an A- to B-rating, the sponsor cannot hire new migrant workers, although they can issue new certificates of sponsorship to extend the permission to stay of their existing migrant workforce.
Last updated: 20 September 2023