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Sponsor licence: Guidance for employers

A sponsor licence issued by the Home Office authorises a UK business to sponsor the employment of overseas workers. Here’s our guide for employers on applying for a sponsor licence and navigating the complex Home Office rules on sponsor licence management. 

Does your business need a sponsor licence? 

If your business intends to employ non-UK nationals, who are subject to UK immigration controls and who require a work visa and sponsorship, your company needs a Home Office sponsor licence. The successful overseas job applicant can then apply for a work visa, such as a skilled worker visa or senior or specialist worker visa.   

Since the end of the Brexit transition period, increasing numbers of UK employers are applying for sponsor licences because without a licence they are restricted to recruiting EU and non-EEA workers who are:

  • Irish citizens
  • EU nationals who entered the UK before 31 December 2020 and who have settled or pre-settled status under the EU Settlement Scheme
  • Frontier work permit holders
  • Graduate visa holders  
  • Non-work visa holders (such as family visa or British national (overseas) visa holders) where visa conditions permit employment without sponsorship
  • Holders of indefinite leave to remain status 

Some UK businesses think that if they do not have an immediate recruitment crisis, they do not need a licence. Employment lawyers say that approach can be short-sighted and recommend that companies ask themselves: 

  • If any current employees leave the business, can we replace them with skilled workers from within the UK?
  • If staff leave and we cannot recruit new employees with a similar skill set, what is the cost of training new workers to gain the necessary skills and the timescale for them to do so? 
  • Historically, have we relied on recruiting employees from the EU? How will the end of free movement affect the business if EU staff resign or retire?
  • If the business scales up, will we be able to service the extra demands without fast recruitment of additional skilled workers?  
  • Will the reputation of the business suffer if we face recruitment shortages or if we cannot replace existing retiring or resigning workers with employees who have a similar level of skill? 

If your company is unsure about whether a sponsor licence is needed to employ a particular job applicant it is best to play it safe and check with a business immigration solicitor. It is not worth taking the risk of getting it wrong because of the consequences to the company of employing someone in breach of illegal working legislation.

Types of sponsor licence

There are three different types of sponsor licence available: 

  1. To sponsor skilled worker visa applicants. This visa used to be called the Tier 2 (General) visa
  2. To sponsor overseas-based employees transferring to work for the UK branch of an international company. This visa is called the senior or specialist worker visa and forms part of the global business mobility route. The visa was previously called the intra-company transfer visa
  3. To sponsor temporary workers. For example, fruit pickers in the horticultural sector 

Can your business apply for a sponsor licence?

Any UK business can apply for a sponsor licence. Applications are not restricted to industry sectors or to companies with a minimum level of turnover or an established trading history. 

The eligibility criteria for a UK business to apply for a sponsor licence are: 

  • The business is a genuine trading business entity operating within UK law 
  • The employment offered to overseas workers is genuine work that meets visa requirements 
  • The business has appointed appropriate key personnel to operate the sponsor licence
  • The company has appropriate HR procedures and recruitment practices in place to comply with the law on illegal working and with their sponsor licence management duties

If your company is uncertain about whether your HR procedures are sufficiently robust to secure a sponsor licence then business immigration solicitors can conduct a pre-application audit of files and systems and advise on the appointment of key personnel.  Business immigration lawyers also provide a sponsor licence management service to manage the sponsor licence on behalf of the company. 

Applying for a licence to sponsor skilled worker visa applicants

The Home Office has produced guidance for sponsors on applying for a sponsor licence. The licence application is submitted online but your business must send supporting documents by e-mail or post. The paperwork needed depends on the nature of your business. Detailed guidance is contained in Appendix A to the sponsor guidance

In the sponsor licence application, your business immigration solicitor will explain: 

  • Why your business is applying for a sponsor licence
  • The sector your business operates in and the opening hours
  • The jobs your business intends to recruit skilled migrant workers to fill. This information needs to include the job title, occupation code, job description, duties, the minimum salary that would be offered if the business was immediately recruiting to fill the vacancy and the type of skill, experience and qualifications required
  • Current job vacancies where your business is looking to recruit a skilled migrant worker. If a suitable recruit or recruits have already been identified then detailed information needs to be provided including their full name, date of birth, nationality, current immigration status, job title and duties

The process from sponsor licence to recruitment

Whilst there is a lot of information on the licence application process many first-time licence holders struggle to understand how their licence fits into the overseas recruitment process. The process from sponsor licence to new overseas recruit is: 

  1. Obtain your sponsor licence after first checking that your current or anticipated vacancies will meet the minimum salary and skill thresholds for the skilled worker visa and that the available jobs qualify by checking the standard occupational classification code. If the job you are recruiting to fill is on the shortage occupation list the minimum salary threshold will be lower
  2. Advertise the vacancy and carry out the recruitment process
  3. Make a job offer to the successful candidate. If the applicant is from overseas and requires a work visa, ensure the job offer is made conditional on the recruit securing a skilled worker visa
  4. Allocate a certificate of sponsorship (COS) to the recruit. The COS will be a defined certificate if the visa applicant is applying for a skilled worker visa from outside the UK or an undefined COS if the applicant is applying for the visa from within the UK
  5. The recruit applies for the skilled worker visa using the certificate of sponsorship. To secure their visa the applicant needs a minimum of 70 points to secure a visa  
  6. Right-to-work check - once the visa has been obtained a right-to-work check must be completed before the worker commences employment. Additional checks will be necessary as the worker has limited leave to remain 
  7. Ensure employee-related sponsor licence reporting and recording duties and HR file management are complied with. For example, there is a requirement to report if the sponsored employee changes their address

Putting in advance work by assessing the likely nature of your vacancies and ensuring that your management systems adhere to sponsor licence management standards should ensure that your first sponsor licence application proceeds smoothly and enable your business to move to sponsor employees on skilled worker visas. 

For more information on sponsoring employees, read our article on how to sponsor overseas workers as employees.   

Appointing key personnel to manage the sponsor licence

Before submitting a sponsor licence application, you need to appoint key personnel to use the online sponsor management system (SMS) operated by the Home Office. The key personnel are: 

  • Authorising officer responsible for the staff who use the SMS and ensuring that licence duties are met 
  • Key point of contact between the business and the Home Office 
  • Level 1 user who carries out day-to-day administration and management of the sponsor licence. Once your licence has been granted, the level 1 user can appoint a level 2 user to carry out the junior administrative tasks 

Key personnel need to meet the following criteria: 

  • Based in the UK and either company office holders or permanently employed staff (not locums, contractors, or consultants) 
  • Have no unspent convictions for immigration offences or other specified crimes or the subject of a bankruptcy order 
  • Have no prior history of failure to carry out sponsor licence duties 
  • Not been employed as a key person in a company that has had its sponsor licence revoked within the last 12 months 

Sponsor licence applications can run into difficulties because of poor choice of key personnel that either affect the success of the licence application or its smooth running and renewal. As the failure to secure a licence, or its loss, can have a devastating impact on recruitment plans it is best to select your key personnel with care. If you are not using a professional sponsor licence management service, make sure your staff get the sponsor licence management training they require to be effective in their roles.

The role of key personnel

Key personnel manage the sponsor licence by: 

  • Maintaining key personnel and licence details 
  • Creating and assigning certificates of sponsorship to job applicants requiring a work visa 
  • Applying for an increase in the number of undefined certificates of sponsorships the business can assign 
  • Applying for defined certificates of sponsorship 
  • Tracking sponsor licence renewal applications 
  • Viewing the message board and reporting activities. For example, when a sponsored worker changes address or is absent for a reportable period 

For start-ups, SMEs or businesses operating without a dedicated HR team, the key personnel requirements can appear onerous. However, the key personnel roles (save for the authorising officer) can be delegated to a UK-based solicitor qualified to give immigration advice. Alternatively, in small companies, the key personnel roles can be filled by the same person. 

Preparing to submit an online sponsor licence application

Preparing to submit your online licence application is about making sure that: 

  • You can send the supporting paperwork within five days of the online submission of the application 
  • The key personnel and staff are prepared for a compliance visit from the Home Office as this may occur as part of the licence application process. It is sensible to carry out a mock audit of your HR procedures to test if any areas need attention before you submit your online application 

When preparing for an application the best advice for any employer is that they have: 

  • Rigorous but simple office systems in place, such as the use of checklists and easy access to the files you may require during a Home Office audit 
  • Evidence of staff training plans to ensure key personnel are kept up to date with changes in the SMS procedures 
  • Mock audits to test the efficiency of systems and procedures 

Passing a sponsor licence pre-approval Home Office audit

The Home Office can decide to carry out an audit or compliance visit either before the grant of a licence or at any stage during the life of the sponsor licence. The purpose of compliance visits includes: 

  • To check your business has the correct systems in place before the company is granted a sponsor licence 
  • To ensure the business is complying with sponsorship duties 
  • When a change in circumstances is reported on the sponsor management system and the caseworker considers an inspection justified. Changes in circumstances include a change in company address, a merger or takeover of the company or the opening of a new branch office 

The main purpose of a compliance assessment visit prior to the grant of a sponsor licence is to check a business has the organisational systems in place to manage the licence and that the application is genuine and is not a means to recruit illegal workers. 

Home Office inspections can be pre-arranged or unannounced. Therefore, a business should always be ‘audit ready’. If Home Office officials are refused access to business premises, the refusal (without good cause) could result in a licence application being refused or the sponsor licence being revoked. 

During the inspection process the Home Office official can ask for access to files and to interview key personnel. If a sponsor licence has already been granted, they can ask to speak to sponsored employees. 

As the outcome of an audit may result in the refusal of your sponsor licence application, or the downgrading, suspension, or revocation of your licence, it is understandable that compliance visits and audits can create anxiety. That’s why your office procedures must be simple but robust. For more information on compliance visits, read our guide on how to handle a Home Office sponsor compliance visit.  

The sponsor licence application fee

The sponsor licence application fees depend on the size of your business and whether the Home Office categorises your business as a small business or a medium or large business. 

The Home Office will usually class a business as ‘small’ if two of the following apply: 

  • The business annual turnover is £10.2 million or less 
  • The total business assets are worth £5.1 million or less 
  • The business employs fifty employees or fewer 

 The current fees are: 

Type of sponsor licence Fee for small business or charity Fee for medium or large business  
Skilled worker visa sponsor licence £536 £1,476 
Tier 5 sponsor licence £536 £536 
Skilled worker visa and Tier 5 sponsor licence £536 £1,476 
Add a skilled worker sponsor licence to an existing Tier 5 sponsor licence No fee £940 
Add a Tier 5 to an existing skilled worker sponsor licence No fee No fee 

If you want a quick decision on your sponsor licence application then the Home Office offers apremium processing service at an additional fee.

Sponsor licence compliance

Employers can struggle to keep on top of sponsor licence compliance, management, and reporting duties, especially if there is a large turnover of key personnel, other business pressures, a large sponsored workforce or changing immigration rules. 

Failure to comply with sponsor licence duties could result in an audit inspection by a Home Office official and, depending on the outcome of that visit, the downgrading, suspension, or revocation of the sponsor licence.  

A downgrading of a sponsor licence results in a three-month action plan, during which time a business cannot sponsor new skilled migrant workers on work visas or make changes to their licence. At the end of the action plan, there is a second visit from a Home Office official to check compliance with the plan. 

What to do if your sponsor licence is suspended or revoked

 If your sponsor licence is suspended or revoked your business needs to act quickly to minimise the impact of the decision on your company, and your staff and to manage any reputational damage. 

The suspension of a sponsor licence means: 

  • The business cannot sponsor additional skilled worker visa holders although you can continue to employ your existing sponsored workforce  
  • The company will be taken off the public register of sponsor licence holders whilst it is suspended 
  • If the sponsor licence is revoked the company will not be able to continue to employ existing sponsored workers. The employees will have their work visas curtailed and normally only have 60 days to find a new sponsor or leave the UK 

During the period of sponsor licence suspension, your business should: 

  • Continue to comply with all your sponsor licence duties and cooperate with the Home Office 
  • Apply for a new sponsor licence if your licence is due to expire during the period of suspension 
  • Take urgent legal advice on how to respond to the suspension  
  • Plan for all outcomes including looking at your recruitment and training options if the licence is revoked 

If you receive a suspension letter, you need to act quickly with professional advisors to see if revocation can be avoided through a review request. The request must be submitted in writing with supporting paperwork and must address the areas of concern and how your business is addressing them. For example, the allocation of SOC codes and additional training of key personnel or the employment of a specialist sponsor licence management service. 

If the Home Office is satisfied that you have addressed the concerns that led to the suspension of the licence then your licence could be reinstated but, if not, your licence could be downgraded or revoked. 

If the investigation culminates in the revocation of your sponsor licence there is no right of appeal. However, the business can apply to judicially review the decision to suspend or revoke the sponsor licence. To succeed on a judicial review application, you need to be able to show that the decision to suspend or revoke the licence was unreasonable, unlawful, or procedurally improper. 

If your licence has been suspended or revoked it is essential that you take urgent legal advice on your options because of the short-term and long-term implications of not being able to recruit skilled migrant workers. The loss experienced by your company may not just be the immediate financial loss as a result of a downturn in production but also the more nebulous, but just as important, reputational damage to your business. As a result, it is essential that you and your key personnel recognise that a sponsor licence is not just a one-off application, it is an ongoing administrative process that gives you access to recruiting the skilled staff you need. 

About our expert

Fozia Iqbal

Fozia Iqbal

Senior Business Immigration Solicitor
Fozia has been practising in the field of immigration law for over 20 years, specialising in Business Immigration since 2015. Fozia has advised an array of businesses, from start-ups to multinationals, owner-managed businesses through to SMEs, as well as individuals looking for immigration solutions. With a range of experience across the board, it is unusual for her to come across an immigration issue that she cannot tackle. 

Areas of Expertise

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If you are an employer and need advice on applying for a sponsor licence, the management of your sponsor licence or if you are facing the suspension or revocation of your sponsor licence, our business immigration law solicitors can help. Call us on 0800 689 1700 or fill out the short form below.

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