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Sponsor licence: Guidance for employers

A Home Office issued sponsor licence enables UK employers to recruit and sponsor 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. 

What is a sponsor licence? 

If your business wants to employ overseas nationals who are subject to UK immigration controls your company will need to secure a Home Office issued sponsor licence to enable you to sponsor employees on work visas. The successful overseas job applicant can then apply for a work visa, such as a skilled worker visa or intra company transfer visa.   

Does a UK business need a sponsor licence to hire an EU worker? 

Until Brexit and the end of free movement for EU nationals (including citizens from Iceland, Liechtenstein, Norway, and Switzerland who are referred to a ‘EU nationals’ for ease of reference in this article), UK businesses could hire EU nationals without needing a sponsor licence and without the EU national requiring a work visa.        

Sponsor licence applications are on the rise because of Brexit and the end of free movement for EU citizens. As a consequence of the end of the Brexit transition period on 31 December 2020, many more UK employers require a sponsor licence as they can no longer freely recruit workers from within the EU. 

There are some circumstances where a UK based business can employ an EU national without needing a sponsor licence, namely: 

  • If the job applicant is an Irish citizen. 
  • If the job candidate is an EU national who entered the UK before 31 December 2020 and who has secured settled status or pre-settled status under the EU Settlement Scheme. 
  • The EU national has a frontier work permit. 
  • The job applicant is an EU national who qualifies for a graduate visa

Sometimes an employer can employ a non-EEA national without requiring a sponsor licence. For example, if a non-EEA national has secured indefinite leave to remain the employee doesn’t need a work visa or a sponsoring employer.  

It is best to play it safe and check if your company is in any doubt over whether you will require a sponsor licence to employ a particular job applicant. Speak to a business immigration solicitor if you have any concerns as it isn’t worth taking the risk of getting it wrong because of the consequences of the company employing someone contrary to the immigration rules and who doesn’t have a right to work in the UK. 

The consequences of employing an overseas worker if your company doesn’t have a sponsor licence  

If your company employs any worker without first checking that they have a right to work in the UK they will be in breach of illegal working legislation. This applies whether the job applicant is from the UK, the EU, or a non-EEA country. Right to work checks must be carried out on all new employees and must be repeated on any employees who have limited leave to remain in the UK. 

For more information on the consequences of not complying with illegal working legislation read our article on what to do if your business is prosecuted for illegal working.  

In addition, if your business employs a worker who doesn’t have the right to work in the UK, the business could be committing immigration law offences. This could affect the reputation of your business and the success of any future sponsor licence application. It is therefore crucial that: 

  • Any job offer is made conditional on your company not needing a sponsor licence to recruit the candidate if your business doesn’t want to apply for a Home Office sponsor licence. 
  • Right to work checks are conducted diligently on all new employees and evidenced on HR files. 

What are the available types of sponsor licence? 

There are three different types of sponsor licence available: 

Type of sponsor licence  Suitable for 
Tier 2 – employment of workers under the skilled worker visa or intra company transfer visa (for multinational companies who want to transfer employees to work in the UK) The skilled worker visa route used to be called the Tier 2 (General) visa. If your business already has a sponsor licence to employ Tier 2 (General) visa holders your company doesn’t need to apply for a skilled worker sponsor licence until your existing sponsor licence is due to expire. 
Tier 4 students Sponsorship of students by educational institutions. 
Tier 5 temporary workers  Temporary workers include sub-categories of creative and sporting, charity workers, religious workers, government authorised exchange workers and employees of international organisations.  

Can your business apply for a sponsor licence? 

Any UK business can apply for a sponsor licence provided they meet the Home Office eligibility criteria. That means sponsor licence applications are not restricted to specified 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 Tier 2 sponsor licence are that: 

  • The business is a genuine trading business entity operating within UK law. 
  • The employment offered to overseas workers is genuine work in accordance with visa skill levels and rates of pay. 
  • The key personnel appointed by the business to operate the sponsor licence do not have a history of immigration offences (defined in Appendix B of the sponsor guidance) or immigration non-compliance or civil penalties (defined in Appendix C to the sponsor guidance) or any relevant unspent criminal convictions. 
  • The company has appropriate HR procedures and recruitment practices in place to comply with the law on illegal working and with sponsor licence management duties. (If you do not have the HR resources, you can employ a sponsor licence management service to undertake the management of the sponsor licence for you). 

How to apply for a sponsor licence to sponsor skilled worker visa applicants 

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

In addition to the relevant supporting documents, your sponsor licence application will need to: 

  • Explain why your business is applying for a sponsor licence.
  • Explain the sector your business operates in.
  • Explain the business operating or opening hours.
  • Provide a hierarchy chart setting out the business owners, director, and board members. If the business has fifty employees or less, a list all employees with their names and title must be provided.
  • Provide information about the jobs your business intends to recruit skilled migrant workers to fill. This information needs to include the job title and occupation code, the job description, duties, where the job fits in terms of the hierarchy chart, 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 to secure the employment.
  • Provide information about current job vacancies where your business would be looking to recruit a skilled migrant worker. If a suitable recruit or recruits have already been identified, information needs to be given about the recruitment process (copies of advertisements placed to recruit for the job and details of any applicants and why they were not suitable for the job need to be supplied). If a skilled migrant worker who requires a skilled worker visa to take up the employment has 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 above list, together with navigating the minefield of documents required in Appendix A, leads most sponsor licence applicants to realise the importance of getting professional advice to secure their first sponsor licence.  

The process from sponsor licence to recruitment 

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

Step Action Comment 
Application for a sponsor licence  
Job vacancy and create a job specification for the job Check the standard occupational classification codes to see if the job specification meets the criteria for a skilled worker visa. 
Check if the job is on the shortage occupation list If the job is on the shortage occupation list it will affect minimum salary thresholds for the skilled worker visa. The minimum salary threshold is lower for jobs on the shortage occupation list so it is best to check. 
Assess the skills required and the salary the company is willing to offer Check to see if the salary on offer meets the Home Office issued minimum salary threshold or the going rate for the job. 
Start your recruitment process  Completion of points 1 to 4 means you know if the job vacancy meets the skilled worker visa eligibility criteria and the SOC code to be allocated if an overseas candidate is recruited. 
Make a job offer to the successful candidate If the recruit is from overseas the offer will need to be conditional on them securing a skilled worker visa. 
Allocate a certificate of sponsorship (COS) to the prospective recruit A job candidate subject to immigration controls uses the COS to apply to the Home Office for their skilled worker visa. The COS will be a defined certificate if the visa applicant is applying for the skilled worker visa from outside the UK or an undefined COS if the applicant is applying for a skilled worker visa from within the UK or a different type of visa.   
Candidate applies for a skilled worker visa  The candidate will need a minimum of seventy points on the points-based immigration system to secure a skilled worker visa. 
Right to work checks completed These should be conducted before the employee commences employment and repeat check diarised as the skilled worker visa holder only has limited leave to remain.  
10 Ensure that all sponsor licence reporting and recording duties are complied with. For example, there is a requirement to report a change of sponsored employee’s address or if the visa holder doesn’t commence work on their start date. Make sure the sponsored employee, as part of their induction process, is aware of sponsor licence reporting and recording duties and why it is important that the employee provides requested information.  
11 Conduct regular audits of HR files Internal audits ensure the right information is on employee HR files. For example, a copy of the job advert and specification, job application and right to work documentation. It is best to check compliance through internal audits rather than risk matters coming to light at an unannounced UKVI compliance audit. 

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

Applying for a first sponsor licence  

Many UK employers are applying for their first sponsor licence so they can sponsor overseas employees because the available pool of job applicants who are able to accept an offer of a job without requiring a sponsoring employer has shrunk as EU nationals who entered the UK after 31 December 2020 are subject to UK immigration controls.  

Some UK businesses have thought that as they don’t have an immediate recruitment need, they don’t need to apply for a sponsor licence but ask yourself: 

  • If any of your current employees leave your employment, are you likely to be able to replace them without having to recruit from overseas? 
  • Historically, have your employees come from the EU? In some sectors, thirty percent of a workforce within the industry are from the EU. If you are heavily reliant on EU skills because of the UK skills shortage, how will you replace your existing EU workers if an employee leaves as the UK recruitment pool is now a lot smaller because of the end of free movement.  
  • If you take on additional work or a new contract will your business be able to service the extra demands without speedy recruitment of extra skilled workers?        
  • Even if your company has all its HR and management procedures in place it can take a few weeks to secure a sponsor licence unless you pay the Home Office a premium fee for a faster decision. 
  • Securing your first sponsor licence doesn’t mean that you immediately must recruit from overseas as you can obtain a sponsor licence in anticipation of your sponsor licence needs. 

Applying for a first sponsor licence to sponsor a skilled worker can feel a bit overwhelming so that’s why it is best to get early business immigration legal advice to check whether the types of vacancies you are likely to be advertising fit with: 

  • A standard occupational classification code. The codes are published by the government and a sponsored job must fall within a SOC code to make the job applicant eligible to apply for a skilled worker visa. The codes are regularly updated. 
  • The skill criteria for a skilled worker visa. 
  • The minimum salary threshold or going rate for the job specified in the skilled worker visa criteria.  

Putting in advance work by assessing the likely nature of your vacancies and ensuring that your management systems adhere to required sponsor licence management duties should ensure that a first sponsor licence application proceeds smoothly and that your business can then move straight to sponsoring employees on skilled worker visas. 

Appointing key personnel to manage the sponsor licence  

Prior to submitting a sponsor licence application, you will need to appoint key personnel in your business to use the online sponsor management system (SMS) operated by the Home Office. The business is required to appoint: 

  • An authorising officer responsible for the staff who use the sponsorship management system and the person responsible for the recruitment of skilled migrant workers and ensuring that licence duties are met. 
  • A key point of contact between the business and the Home Office or UKVI. 
  • A level 1 user who is an officer or an employee of the company who will carry out day-to-day administration and management of the sponsor licence. Once your licence has been granted, your level 1 user can appoint a level 2 user. The level 2 user is a person who carries out a more junior administrative role to the level 1 user. 

Key personnel need to meet the following criteria: 

  • Based in the UK with the key staff being company office holders or permanently employed staff (not locums, contractors, or consultants). 
  • No unspent convictions for immigration offences or other specified crimes or the subject of a bankruptcy order. 
  • 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 twelve months. 

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 or by a combination of different people. 

Your key personnel will need to 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 UKVI message board. 
  • Reporting activities relating to your sponsored workers, for example, when a worker changes address or is absent for a reportable period. 

Most business immigration solicitors say that sponsor licence applications can run into difficulties because of a poor choice of key personnel. Those choices can either affect the success of the sponsor licence application or its smooth running and renewal. The failure to secure a sponsor licence or the loss of a sponsor licence can have a devastating impact on recruitment plans or the operation of a business if it is left short staffed as it is unable to recruit from overseas. That’s why it is best to select your key personnel with care and, if you are using your own staff rather than a professional sponsor licence management service, that the staff get the sponsor licence management training they require to ensure any audit or compliance visits don’t raise sponsor licence reporting and recording omissions or errors. 

Preparing to submit an online sponsor licence application 

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

  • You are ready to send all the required supporting paperwork within five days of online submission of the application. 
  • The key personnel and staff are prepared for a compliance visit from UKVI – something that may occur as part of the sponsor 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 use of checklists and with easy access to the paper or electronic files you may require during a UKVI audit. 
  • Evidence of staff training plans to ensure key personnel are kept up to date with changes in the SMS and immigration rules. 
  • Mock audits to test the efficiency of systems and procedures. 

Passing a sponsor licence pre-approval Home Office audit 

A Home Office official can decide to carry out an audit or compliance visit either prior to the grant of a sponsor licence or at any stage during the life of the sponsor licence. The purpose of inspections and sponsor compliance visits include: 

  • To check your business has the correct systems in place before the company is granted a sponsor licence. 
  • After the grant of the sponsor licence to ensure the business is complying with your sponsorship duties. 
  • When a change in circumstances is reported on the sponsor management system and the caseworker considers an inspection is 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 that your business has the organisational systems in place to manage the licence and that your application is genuine and is not a means to recruit illegal workers. 

UKVI inspections can be pre-arranged or unannounced, so a business should always be ‘audit ready’. If you refuse to allow UKVI officials to access your business premises, your refusal (without good cause) could result in your sponsor licence application being refused or in the revocation of your sponsor licence. 

During the inspection process UKVI staff can ask for access to files and to interview key personnel and, if a sponsor licence has already been granted, speak to some of your sponsored employees. 

As the outcome of a UKVI visit 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 it is essential that your office procedures are simple but robust. 

For more information, read our guide on how to handle a Home Office sponsor compliance visit.  

How much is the Home Office 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 

Sponsor licence application processing times 

Most sponsor licence applications are determined in less than eight weeks of submission of the application. With a professionally prepared sponsor licence application and the right supporting paperwork an application can be processed within a matter of days. If your business wants to guarantee a quick application processing time it can pay extra for a premium processing service by the Home Office. 

Allocating certificates of sponsorship 

A business must assign a certificate of sponsorship (COS) to a successful job applicant who requires a skilled worker visa. Although a COS sounds like a document, it’s a reference number which the successful recruit uses to apply for entry to the UK or leave to remain. 

Once the HR department has allocated the COS the skilled worker visa applicant must apply for their work visa within three months of allocation. However, the recruit can't use the COS more than three months before the start date of their employment. The start date is included on the certificate of sponsorship. 

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 UKVI and, depending on the outcome of that visit, the downgrading, suspension, or revocation of your sponsor licence.  

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

What to do if your sponsor licence is suspended or revoked 

The suspension or revocation of a sponsor licence is a serious blow to a business and its skilled migrant workers reliant on their sponsoring employer for their ability to continue to live and work in the UK. If your sponsor licence is suspended or revoked your business needs to act quickly to minimise the impact of the decision on your company, your staff and to manage any reputational damage. 

The suspension of a sponsor licence means: 

  • The business can’t sponsor new skilled migrant workers 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 sixty days to find a new sponsor. If they cannot then they will have to leave the UK. 

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

  • Continue to comply with all your sponsor licence duties. 
  • 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 letter. 
  • Plan for all outcomes including looking at your recruitment and training options if the sponsor licence is revoked. 

If you receive a suspension letter, you need to act quickly with professional advisors to see if revocation can be avoided. You have twenty working days to ask for a review of the suspension.  

A review request must be submitted in writing with all your supporting paperwork. Your response 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 suspension of the sponsor licence then your licence could be reinstated. If UKVI are not satisfied with the reply, your sponsor licence could be downgraded or revoked. 

If the UKVI 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 sponsor 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 task or hurdle, depending on your perspective of the sponsor management system. 

What next?

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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