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A guide to sponsor licence duties: compliance, record keeping and reporting

Becoming a sponsor and holding a sponsor licence comes with a number of duties and responsibilities. In this article, our business immigration solicitors highlight some of the key licence compliance and reporting duties you need to be aware of, the consequences of non-compliance and tips on how to get compliance right.

What is sponsor licence compliance?

The Home Office emphasises the need for sponsor licence compliance but what is it? In essence, it involves your organisation following the Home Office guidance issued to sponsor licence holders on sponsor licence management. The full guidance can be found here.

Sponsor licence compliance can be broken down into four aspects:

  1. Record keeping duties – maintaining records for each sponsored worker
  1. Reporting duties – and the requirement to submit specified information to the Home Office through the sponsor management system within Home Office required time frames
  2. Compliance with the immigration rules and the sponsor guidance
  3. Compliance with UK laws and acting in the public good – the rules say sponsors must abide by UK laws and act in the public good. That means your company must behave in a way that is compatible with core values. Your business also must not harm the greater benefit of society by refraining from behaviour or actions that are not beneficial to society

Your sponsor licence permits you access to global talent but your duties as a sponsor licence holder require you to act as a gatekeeper for the Home Office to ensure their rules are adhered to. Sponsor licence compliance is important because if you fail to meet the required standards, you could face a Home Office compliance visit and sanction. Ultimately, your sponsor licence could be downgraded, suspended or even revoked.

Record keeping requirements for sponsored workers

As a sponsor employer, you have strict record keeping duties as part of your sponsor licence compliance. The records can be kept electronically or on physical files, however, you need to retain the documents that formed part of your sponsor licence application and documents regarding your sponsored workers and other employees as specified in Sponsor Guidance Appendix D.

Appendix D sets out how long you need to keep different types of documents but these timeframes may be shorter than other requirements, such as retention of evidence of right-to-work checks under the illegal working legislation.

Essentially, you need to keep a copy of the sponsored employees’:

  • Passport pages, including those with personal identity details, immigration status, the period of leave to remain and leave stamps
  • Evidence of entry to the UK where you have sponsored the individual from abroad
  • Biometric residence permit 
  • National Insurance number
  • Contract of employment and pay rates
  • Absences from employment
  • Current and historic contact details
  • The documents required for their visa

There are additional documentary requirements for different types of sponsored workers. For a specific list, we would advise you to consult with one of our business immigration solicitors.

The guidance says you should keep the records until a Home Office official has examined them or for at least one year after the termination of the sponsorship if they have not been examined.

These requirements are in addition to Right to Work checks required for all employees.

Reporting requirements on sponsored employees and timeframes

Sponsor licence holders are under a duty to report certain events concerning individual sponsored employees. Reporting is undertaken through the sponsorship management system (SMS) by key personnel.

A report needs to be submitted within ten working days if a sponsored employee:

  • Does not attend work on their first day of employment
  • Has their contract of employment terminated early
  • Has a significant change in their contract of employment, eg change to hours, job title and/or salary
  • Is absent from work without permission for ten or more days

If your business suspects a sponsored employee is breaching their visa conditions, you must also report this to the Home Office.

Reporting requirements on organisational changes and deadlines

Organisational changes also need to be reported through the SMS by key personnel. The timeframe to report to the Home Office on changes to your business depends on the nature of the change.

The deadline is ten working days if there is a change to the size of the organisation or a change impacting charitable status.

For other organisational changes, the timeframe to report is within 20 working days. The 20-day duty to report covers:

  • Change of business name
  • The sale or takeover of the business or part of it
  • Ceasing to trade

A sponsor licence holder is also under a duty to report if there is:

  • A change of company address
  • A change in Authorising Officer
  • Opening a new UK branch or premises
  • Closing a UK branch or premises
  • Changes to a linked entity namely the establishment or closure of an overseas branch of the business or subsidiary company or linked business 

If your business is taking over, acquiring or merging with another company, there is a duty to report the change within 20 working days. This type of organisational change requires careful planning as in addition to TUPE considerations, you may need to apply for a new sponsor licence. It is therefore essential if one or both companies hold a sponsor licence to get business immigration input into your takeover or merger planning.

The consequences of non-compliance with reporting and recording duties

Complying with sponsor licence reporting and recording duties takes time and money. As well as appointing key personnel to manage your sponsor licence, you need to ensure that they have the training needed to understand their reporting and recording duties and keep on top of any changes to the Home Office guidance.

Business immigration solicitors advise that it is worth investing in sponsor licence compliance because the consequences of not doing so range from:

  • Home Office audit
  • Announced or unannounced Home Office compliance visits
  • The downgrading of your sponsor licence from A rating
  • Sponsor licence suspension
  • The requirement to pay for a sponsor licence action plan and comply with it to reinstate your sponsor licence to A rating
  • Sponsor licence revocation. The revocation of the sponsor licence normally prevents you from applying for a new sponsor licence for six to 12 months. The cooling-off timeframe can be longer, depending on why the licence was revoked

On a practical basis, if your sponsor licence is suspended, you cannot recruit additional overseas workers. If the licence is revoked, you are unable to continue to employ your sponsored staff. Their work visas will be curtailed, requiring them to leave the UK early unless they can secure a job with a new sponsoring employer. The consequences of losing a sponsor licence should not be underestimated as the adverse effect on recruitment, staff morale and your ability to meet contracts can all flow from non-compliance with sponsor licence reporting and recording duties.

Tips on sponsor licence compliance   

Whilst it is tempting to assume that once you have secured your sponsor licence it will operate itself, it does need to be managed, monitored and reviewed in much the same way as you appraise your workforce or engage in the lifecycle management of your commercial contracts.

The consequences of non-compliance with reporting and recording duties depend on the extent of the breach or breaches, and your response. The consequences are unlikely to be severe where they are caught and remedied before any official Home Office audit or visit, which is why it is helpful to consider arranging a mock compliance audit, which is something our business immigration solicitors can assist with.

It is essential to encourage openness and acknowledgement of breaches as early as possible. Where an error is spotted, acted on, eg with a remedial plan of additional training, appointment of additional level two users or implementation of a new HR policy, this is unlikely to impact your sponsor licence in a later official audit as you will be able to demonstrate commitment to compliance and change.  

Our sponsor licence compliance tips are:

  1. Adopt a conscientious and active approach to compliance, record keeping and staying informed of changes to the sponsorship regime. Our business immigration solicitors publish regular updates and aim to keep clients informed of changes that will affect their duties and responsibilities.
  2. It may seem counterintuitive to be open about your compliance errors and mistakes but encouraging that attitude in your key personnel will help you address minor compliance issues before they become ingrained breaches affecting your licence and all your sponsored employees.
  3. Be ready for a Home Office compliance visit as it could happen at any time. As key personnel will go off on holiday or maternity leave, we recommend that you ensure your systems and procedures are simple enough to be followed in their absence. For more information on audits, please see our legal guide on Home Office sponsor compliance visits.
  4. Get business immigration advice when a compliance issue crops up. A business immigration solicitor may be able to stop a compliance issue from escalating into a licence problem.  

Staying compliant with the duties and responsibilities that come with holding a sponsor licence can be challenging. Should you have any queries or require any support this, our business immigration team is here to help.

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. 

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