Hiring from overseas is a business decision that is rarely taken lightly. UK immigration rules are complex and demanding on employers of foreign workers. Non-compliance will result in harsh penalties, designed to impact business operations. Yet shortages in the UK talent market mean international recruitment is often a commercial necessity.
To employ skilled workers from overseas under certain sponsored work routes, UK employers must hold a valid sponsor licence. The UK’s sponsor licence system, introduced in November 2008, was designed to regulate which employers in the UK can employ non-UK resident workers. Any organisation who wishes to sponsor a foreign national under specific work visas must first become a registered sponsor by applying for, and being granted a sponsor licence. Once this licence is granted employers must meet compliance duties which, if not complied with, can make them liable for penalties. These can include fines as well as limitation or removal of their sponsor status.
If your organisation is preparing to make a licence application, read on for our sponsor licence guidance for employers for help and advice on licence eligibility, costs and processing times.
What does the sponsor licence application process involve?
The Home Office uses the sponsor licence application process to ensure your organisation is genuine in its need to hire from overseas, and that it has the systems and processes in place to comply with specific sponsor duties.
The application process itself involves completing an online licence application and submitting supporting documentation to meet the necessary evidentiary requirements. The supporting documentation must be as prescribed by the Home Office under Appendix A of the Immigration Rules, and will be determined by a number of factors.
The three most important things you must address, and satisfy in full, in your licence application are:
- Supporting documents – under the Appendix A requirements.
- Business case – evidence the reasons why you need a sponsor licence.
- Ongoing licence compliance – proof that your HR systems, processes and procedures meet the required standards
Following the receipt of the documents, your organisation may then be subject to a digital compliance check or a compliance visit from the Home Office to assess whether or not to grant the licence.
During the process, your HR and recruitment processes will be scrutinised, and officials will expect to see proof of how you intend to meet your compliance duties. You will also be required to comply with the UK’s illegal working requirements that state that all employees must provide documentation that proves their right to work before being employed by a UK company. You must retain copies of this information.
Given what is at stake, employers should take early advice to support in compiling a thorough and comprehensive submission and ensure the organisation is geared to meeting the duties of a sponsor licence holder on a continued basis.
It is also important to remember that the Home Office has powers to investigate sponsor licence holders at any stage during the validity of their licence – with or without notice. This means that, at any one time, all records and processes should be in order to avoid punitive action such as a licence suspension.
Sponsor licence eligibility guidance
The Home Office will be looking at a number of key criteria when determining your suitability and eligibility for a UK sponsorship licence.
As an initial phase in your licence application, you will have to satisfy certain informational requirements. These are necessary to verify that you meet the eligibility criteria for:
- Being a genuine organisation that is based, and is operating lawfully, in the UK.
- Having HR systems effective in managing all the sponsorship duties, with appropriate human resources and recruitment systems and practices in place.
- Recruiting for genuine roles that are eligible and meet the relevant skill level and appropriate rates of pay.
- Having nominated key personnel that meet the suitability requirements of being honest, dependable and reliable.
There is no minimum or maximum size of organisation that can apply, but in all cases, you must satisfy the Home Office criteria.
Proof of lawful trading
The Home Office will require proof that your organisation is based in the UK and is operating and trading lawfully. The Home Office will also want full details about the premises where the sponsored worker will be working. There are a number of company-related documents which will need to be collated and submitted to evidence that you are a genuine organisation.
Does our organisation have appropriate processes and systems in place?
In your business case, you must provide information about your current HR processes and procedures, as well as any developing systems which you will be implementing to ensure compliant practices are in place within your organisation, and that training has been delivered to all relevant internal personnel, so that they have the required knowledge and skill.
Genuine, qualifying vacancy
The vacant role(s) must meet the relevant skill level of the visa route, and be assigned a SOC code. You should review the job description for the vacant role against the SOC codes, to ascertain where the role sits, as sometimes it can fit into two SOC codes but generally it can match one SOC code more appropriately than the other.
The correct salary for the vacant role must also meet the relevant minimum salary or going rate under the visa rules. The salary you propose to pay must be the same or higher than that relevant threshold.
The Home Office will also look to determine if the role is genuine and requires the jobholder to perform the specific duties and responsibilities for the job and does not include dissimilar and/or lower-skilled duties. Examples of improper vacancies include those which are:
- Exaggerated or feature incorrect job descriptions that deliberately make it seem that the job meets the category requirements, when it does not.
- For a role that does not exist, in order to enable a sponsored employee to enter or reside in the UK.
Remember also that UKVI may well require the sponsor to produce work records or other evidence that prove that the staff in question are wholly engaged with the work detailed on the certificate of sponsorship, and not helping out in more ‘mundane’, less skilled activities.
You must appoint certain key personnel, such as the Authorising Officer, Key Contact, Level 1 user. Key personnel will have specific responsibilities and these roles must be filled by qualifying individuals for the duration for the licence validity, ie if someone leaves the organisation or goes on an extended period of leave, they should be replaced as key personnel.
Your organisation’s HR systems, processes and procedures must be in full compliance with the sponsor duties.
The application must address questions around the suitability of your organisation’s immigration policies and procedures, and whether internal knowledge gaps exist as a result of the new and stringent compliance duties your organisation will be operating under.
The Home Office can carry out an inspection by using digital compliance checks, as referenced in the August 2022 update to Appendix A, or during a pre-licence site visit.
During a site inspection, the officers have authority to interview your personnel.
You may not necessarily be given notice of an onsite inspection, which makes it important to be prepared for a visit when you make your application.
It is advisable to conduct a mock audit in advance of submitting your application to identify areas of weakness and non-compliance (such as employment contract terms), providing recommendations to ensure you meet your duties as a sponsor licence holder throughout the life of the licence.
Co-operating with the Home Office
Throughout the application process and the duration of the licence, the sponsor must be responsive and cooperative with any requests from the Home Office. This could include requests to provide certain information or documentation, or to gain access to carry out a site inspection. Sponsors have to act honestly and with full disclosure.
Sponsor licence supporting documentation
When compiling your application, you will need to refer to the latest version of Appendix A to determine which supporting documents will be needed to accompany your submission. The required documents will depend on the type of organisation that is applying, such as a start up, LSE-listed company or public body.
In most cases, you will need to provide at least four pieces of evidence in original form, or as a certified copy. Importantly, these must be supplied within five days of the initial application. Failure to submit all required documents may result in an application being delayed or rejected and further costs being incurred.
You will also need to present information concerning your business activities in the UK, the number of existing employees and details of how your organisation intends to comply with the licence requirements.
In practice, it can quickly become onerous and time-consuming on applicants to gather the required documents. If your organisation is large or complex, it can be challenging to source documents and information from different parts and departments of the business.
Given each organisation is different, we provide specialist advice as to the full extent of documentation requirements specific to your application to help avoid delays or issues.
Sponsor licence business case
In addition to the company information, you will be required to present a robust business case to UKVI illustrating why you are seeking to secure a sponsor licence. It is always recommended that you provide evidence to support your business case.
You will need to include details of your company, the sector you occupy and why you need to apply for a sponsor licence.
It is critical to your application that you present a compelling case, and cover areas which will support the genuine nature of your application.
Importantly, decisions about sponsor licence applications and the criteria used to assess them are not black and white. There is a strong element of subjectivity applied to your case using the ‘genuineness test’.
Under the genuineness test, UKVI will look at the role(s) you are looking to recruit foreign nationals for, and how these roles fit with your organisation as a whole.
Applications commonly fall foul of the genuineness test, resulting in a refused licence application.
You must convince the Home Office:
- That the role meets the requirements of the category.
- That the role ‘fits’ with your organisation. In other words that it seems reasonable that a business or organisation of your type, operating in your sector, should need that ‘kind’ of role.
- If you have already identified an individual who you wish to appoint to the role, that their previous employment or training ‘fits’ with this new role – i.e that you won’t be paying an individual an extra £10k a year to deliver the same role simply to meet the requirements of the category.
If you do not have a specific role in mind but want to apply for a sponsor licence because you know that having one might and will be useful in the future, you can do this.
However, the Home Office will still have many of the same questions about the type of role you plan to recruit for in the future. And then they will make the same assessment as to whether this role ‘fits’ with the organisation as a whole.
If you can present convincing business reasons as to why you need a licence and a particular role, the application will meet the ‘genuineness test’ and most likely be granted.
Sponsor licence guidance: employment law considerations
In your licence application you will also need to evidence that your organisation is compliant with its employment law obligations. One common area of risk for employers is compliance is to ensure all new workers have a written statement of employment from their first day of employment.
To verify compliance, UKVI can request to inspect documents which you intend to issue to your sponsored workers, such as the contract of employment, the employee handbook and GDPR privacy notices.
The sponsor must also ensure its policies do not to discriminate against individuals or specific groups within their workforce and must be mindful of the Equalities Act 2010, and behave in a manner that is honest, respectful, trusted and fair.
Reviewing the employment documentation in advance of the application will ensure any issues are addressed and you are fully compliant.
Sponsor licence application costs
Before your application will be considered, you will need to pay the relevant application fee. There are two levels of fee:
- For smaller companies and charities: £536
- For larger companies: £1,476
The definition of ‘smaller’ company is taken from the Companies Act 2006, whereby at least two of the following must be met:
- The company must have a turnover of no more than £10.2 million.
- The company must have a balance sheet total of no more than £5.1 million.
- There must be no more than 50 employees.
It is important to pay the correct fee, as your application can otherwise be refused.
In addition to the application fee, the organisation will also have to pay the Immigration Skills Charge per year per sponsored worker (currently £1000, or £364 for smaller companies) and also pay each time it issues a CoS, which is currently £199.
Sponsor licence processing times
Sponsor licence applications are typically processed within 8 weeks, although applicants should take advice on processing times when making their application to understand how this will impact their recruitment and onboarding schedule.
Applicants may also pay an additional £500 to use the Sponsor Licence Application Priority Service for fast-tracked processing. However, since only a limited number of slots are made available each working day, applicants are advised to take guidance on the best approach for their circumstances.
Sponsor licence guidance: ongoing compliance
While a sponsorship licence brings employers the ability to hire skilled foreign nationals, it also carries onerous compliance duties. Organisations have to meet their sponsor licence compliance duties to avoid Home Office enforcement action.
The key objectives of the sponsor duties are to:
- Prevent abuse of assessment procedures
- Capture early patterns of sponsored employees’ behaviour of concern
- Address possible weaknesses in processes
- Monitor compliance with the Immigration Rules
The sponsor’s duties begin from the time the licence is granted and ends upon its surrender or revocation, from assigning Certificates of Sponsorship when you are recruiting and renewing the licence after four years.
Should you wish to renew your licence after the four years, in addition to the renewal application documentation, you should also expect to be visited and audited by UKVI who will be looking to ensure you have operated in line with your duties.
The following duties commonly present risk for sponsors:
- Only employing sponsored employees appropriately qualified, registered or experienced for the job, or will be by the time they commence work
- Keeping registration documents, certificates and references confirming this, and providing this on request
- Not employing sponsored employees where they lack experience or permission (including where they no longer have permission) to do the job in question
- Not assigning certificates of sponsorship where there is no genuine vacancy meeting the sponsorship criteria
- Only employing sponsored employees where they intend and are able to fulfil the role in question
- Only assigning a certificate of sponsorship for a role at or above the appropriate skill level identified in the Guidance
- Only allowing the sponsored employee to undertake the specific role identified in their certificate of sponsorship and only assigning a certificate of sponsorship where the sponsored employee is likely to comply with all relevant conditions
- Complying with employment law: e.g. National Minimum Wage and paid holiday entitlement
It is helpful to consider sponsor licence compliance as an ongoing, day-to-day concern to avoid breaches. This involves training your sponsor licence key personnel on their responsibilities, as well as other personnel involved in recruiting and onboarding foreign workers, such as HR managers and site managers. The procedures should be in place to support consistent and compliant licence management and migrant worker recruitment and sponsorship.
Sponsors must keep records for each migrant worker which include up-to-date and current residential address and contact telephone numbers. Ywill need to have HR systems and procedures in place to monitor their sponsored workers’ attendance and absence, and generally ensure they are complying with the terms and conditions of their visa. Issues such as non-attendance, non-compliance or disappearance must be reported to the Home Office.
Sponsor licence holders are required to inform the Home Office of certain developments, updates and changes relating to their sponsored workers and also to the organisation itself. This information should be updated on the organisation’s Sponsorship Management System (SMS).
Changes to the organisation which have to be reported include change of address, change of key personnel, change of organisational ownership, entering administration, change in organisational size from small/medium to large company. These must be made within 20 days of the change.
In relation to sponsored workers, the sponsor has to update the SMS, usually within ten days, in the event the sponsored worker:
- Does not turn up for their first day of work without notifying your organisation
- Has their contract of employment for services terminated before the date provided in the certificate of sponsorship, e.g. due to resignation or dismissal
- No longer requires sponsorship because they move to an immigration route that does not require one such as Indefinite Leave to Remain
- Is absent from work without pay for 4 weeks plus (subject to the reduction in salary provisions)
- Is affected by TUPE or similar protection, as in the case of a merger or demerger
- Is a person to whom information comes to light suggesting they may be breaching the conditions of their leave?
- Is absent from work for more than 10 consecutive days without permission (which must be reported within 10 working days of the 10th day of absence)
- Undergoes a significant change of circumstances: as to job title, core duties, salary, or location of employment
These reporting requirements are taken seriously by UKVI and the courts: in one leading case, a sponsor’s failure to report the fact that several workers had moved on was treated by the Court as “a serious breach of [the Sponsor’s] sponsor duties and severely hinders UKVI in its duty to maintain effective immigration control.” This issue also highlights how the sponsors failure to perform its duty properly can impact the sponsored employee’s future in the UK.
A sponsored employee who gives reason to suspect them of criminality or terrorism must be reported to the police.
Record keeping duties
Sponsors must follow the guidance on retaining records as per Appendix D. This involves keeping specific information and documents relating to your sponsored workers, including (but not limited to):
- A copy each sponsored worker’s current passport
- Proof of the worker’s date of entry to the UK, where relevant
- Each sponsored worker’s National Insurance number
- Copy of the worker’s DBS check, if required
- History of the worker’s contact details including UK residential address, personal email address & contact telephone number
Specific documents may be required depending on the type of licence being applied for. For example:
- Global Business Mobility – Service Supplier route – copy of the contract the organisation was awarded for the supply of service as well as either the relevant tender document for that contract or evidence of how the contract was awarded if not formally tendered
- Global Business Mobility – Secondment Worker route – copy of any relevant agreement or contract for goods or investment to which both the UK and the overseas businesses are parties. For each agreement or contract, you must also keep one of the following:
- evidence of how you were awarded the contract or investment, such as a tender application or investment application
- a tender document for a contract for goods
- evidence of how the contract for goods was awarded if it was not formally
These must be retained and made available to the Home Office for the longer of either:
- One year from the date you end your sponsorship of the migrant; or
- The date the documents have been examined and approved by a compliance officer, if it has been less than one year since end of your sponsorship of the migrant.
In addition, you must also retain the supporting documents that were submitted with your licence application for the duration of your licence’s validity.
Assigning Certificates of Sponsorship
A Certificate of Sponsorship acts your organisation’s confirmation to the Home Office that the individual you intend to recruit is suitable for visa sponsorship. The worker then uses the CoS – which is a unique reference number, rather than a document – to apply for their visa.
There are two types of CoS – Defined and Undefined. Defined CoS are for Skilled Worker visa applicants applying from overseas, while the undefined CoS is for Skilled Worker visa applicants already in the UK and applicants for other visa categories.
There are rules to follow when using CoS; they are not transferrable between workers, they are valid for only 3 months from the date of issue although the worker cannot apply for their visa more than three months before the start date listed on the CoS.
You will also have to request an allocation of CoS with your application, and then every 12 months. You should be able to justify the number you request, based on your planned recruitment activity.
Certificates of Sponsorship are managed on your SMS. To allocate a CoS, your nominated Level 1 or Level 2 user would log onto the SMS and submit the requested information about the role being recruited for. A unique reference number will then be generated, which you should provide to the worker to make their visa application to the Home Office.
Right to work compliance
In addition to sponsor licence compliance, organisations must continue to comply with the prevention of illegal working regulations. Under these, you must continue to ensure that you conduct right to work checks on all workers, requesting documentation or evidence that proves their right to work before being employed. Records of the checks and copies of the documentation must also be retained as per the regulations.
One particular area of right to work risk for sponsors is unlawful discrimination against foreign workers. You must ensure that right to work checks are carried out in accordance with the Home Office’s employer guidance on all workers in the UK, not just migrant workers. This means even British nationals must also provide evidence of their working status.
How to avoid a refused sponsor licence application
Sponsor licence applications can be refused for many reasons. Given the eligibility criteria are so stringent, and the information and documentation are so extensive, there is considerable margin for error and misinterpretation of the guidance for sponsors. Often, employers are unaware of the extent of the Home Office checks and evaluation of the organisation, or of the commitment and resource needed on an ongoing basis to manage the licence and ensure continued compliance.
Applicants commonly risk a refused application where:
- they fail to pass the genuineness test
- they fail to pass a UKVI compliance audit
- they fail to comply with UKVI security standards, or
- they fail to engage with the Home Office or to respond to enquiries in a timely manner
Before applying, it will be important to ensure all of these areas are in full compliance, or you risk a refused application and losing the application fee. Taking professional advice can provide you with guidance and insight critical to a securing a successful sponsor licence application and proceeding with your recruitment plans.
DavidsonMorris’ business immigration lawyers specialise in sponsorship licences for employers. With extensive experience of the Home Office application process, eligibility criteria and evidentiary requirements, we are on hand to advise and guide you in securing your licence to hire foreign workers. We are highly experienced in managing the sponsor licence process on behalf of UK employers looking to hire foreign personnel. We can help ensure your personnel have a thorough understanding of their compliance duties under the sponsor licence and that your organisation has the required internal HR and recruitment infrastructure and skills in place to comply with the rules on an ongoing basis.
If you have a query about a sponsor licence application or require any form of sponsor licence guidance, please contact us.
Sponsor licence guidance FAQs
What documents will I need to apply for a sponsor licence?
You will have to provide the documents relevant to your type of organisation, as stated within Appendix A. These could include recent bank statements, VAT registration certificate and evidence of HMRC registration.
What are the requirements of a sponsor licence UK?
Sponsors have to prove they are a legally operating business in the UK with compliant HR systems in place and nominated key personnel, and that the role being recruited for qualifies under the visa criteria.
How can I get sponsorship license in UK?
Employers have to make an application the Home Office for a sponsor licence, evidencing their eligibility and paying the relevant fees.
How long does it take to get sponsorship licence UK?
Sponsor licence applications can typically take 8-10 weeks for the Home Office to process. The decision may take longer if you are subject to a compliance visit.
Last updated: 31 August 2022