Why All Businesses Now Need to Understand the UK Sponsor Licence System

Why All Businesses Now Need to Understand the UK Sponsor Licence System

On 18 May 2020, the controversial new Immigration Bill was voted through the House of Commons.  If it receives Royal Assent (and given the Conservative Party enjoy a majority of 80, there can be little doubt it will), the Bill will repeal Freedom of Movement and bring in a new immigration system, the details of which have yet to be finalised.

The Bill has received much criticism, especially concerning the proposed minimum salary threshold of £25,600.  Labour's shadow home secretary Nick Thomas-Symonds stated in The Guardian:

Those who clapped (for carers) on Thursday are only too happy to vote through a bill today that will send a powerful message to those same people - that they are not considered by this government to be skilled workers.

Are shop workers unskilled? Are refuse collectors? Are local government workers? Are NHS staff? Are care workers? Of course, they are not. 

Regardless of the negative comments surrounding the details of the new Immigration Bill, the fact is that employers who have relied on EU/EEA nationals to obtain the talent they need to fill workforce gaps will, from 1 January 2021, most likely have to have a Sponsor Licence to hire a person who does not have Indefinite Leave to Remain or British Citizenship.

This presents many challenges to employers who have never had to think about dealing with the Home Office before.  Not only is a Sponsor Licence expensive to obtain, but the compliance requirements in relation to record-keeping and reporting are also extensive.  Furthermore, the Home Office can descend on a workplace unannounced to ensure the business is complying with its Sponsor Licence duties and responsibilities.  If it discovers gaps in compliance, it can suspend or even revoke the organisation's licence, resulting in the business being unable to recruit further overseas workers and the ones they have needed to return home.

Related Article: 'Controversial immigration bill to end freedom of movement'

But it's not all bad news

The current skills threshold for employing a non-EU/EEA migrant is the Regulated Qualification Framework (RFQ) level 6; essentially graduate-level jobs.  From 1 January 2021, the skills threshold will be lowed to RFQ level 3, equivalent to an A level.  This dramatically widens the pool of migrants an employer can sponsor.

Also making employer's lives a little easier is the dispensing of the Resident Labour Market Test under the new Bill.  This is a time-consuming process that requires extensive record-keeping.  Furthermore, the annual quotas on the number of Tier 2 migrants will be abolished.

However, the costs and bureaucracy involved in obtaining a UK Sponsor Licence cannot be understated.  This is a deliberate move by the government, designed to encourage employers to do everything possible to recruit from the local labour market before looking for talent abroad.  However, it is indisputable that the UK alone cannot provide the skills needed for certain sectors to grow.

As of May 2020, only two percent of British businesses appear on the government's register of licenced sponsors.

Jonathan Beech, managing director at Migrate UK told Personnel Today, a leading UK HR magazine:

This is not only worrying for the future of individual UK organisations having the talent in place to thrive and grow the other side of the current pandemic but for the future of skills in the UK as a whole.

Putting in place plans now to be able to attract and hire the specific skills you need will ensure that your business is Brexit-ready for the radical shake-up to the UK immigration system next year.

How to get a UK Sponsor Licence

Applying for a Tier 2 Sponsor Licence is relatively straightforward.  To be considered eligible for a Tier 2 or 5 Sponsor Licence, you must show your business is:

  • legitimate and lawfully trading within the UK
  • holds suitable planning permission
  • honest, dependable, and reliable, and will not do anything to jeopardise UK immigration control
  • has the HR systems needed to comply with Sponsor Licence duties and responsibilities

Related Article: 'HR Compliance for Tier 2 Visas - Sponsor Responsibilities'

How do I prepare my application?

To succeed in obtaining a Sponsor Licence, it is well worth investing in having one of our team visit your premises to audit your HR systems.  We can advise you on any improvements you will need to make to satisfy the Home Office.

You will need to know the following information before applying:

Our team of immigration solicitors will be happy to answer any questions you have on these issues when they visit.

An application for a Sponsor Licence is made online

Will the Home Office visit my premises?

It is likely the Home Office will make a pre-licence visit to check you can comply with the Sponsor's Licence duties and responsibilities.  However, if you send in a professional and complete application, they may choose to forgo the visit.  But it is always safer to assume a visit will be made.

Common reasons for the Home Office to refuse licences include:

  • incorrect supporting documentation
  • supporting documentation being submitted in the wrong order
  • the wrong fee is paid
  • you do not provide a good enough reason for needing a Sponsor Licence
  • your HR systems are inadequate

There is no right of appeal if a Sponsor Licence is refused; therefore, it is vital to get the application right first time.

The key to success is always being prepared.  This is especially true when it comes to Sponsor Licence applications.

How much does a Sponsor Licence cost?

The current costs attached to a Tier 2 Sponsor Licence are as follows:

Application fee - This is currently set at £536, or £1,476 for large companies.

To be classed as a small company, your business must meet two out of the three below criteria:

  • have a turnover of no more than £10.2 million.
  • have a balance sheet total of no more than £5.1 million.
  • Have no more than 50 employees.

Certificates of sponsorship - £199

Immigration Skills Charge - £1,000 per year of sponsorship for large companies and £364 per year for small ones.  This fee must be paid in full at the beginning of the sponsorship.

Depending on negotiations with your prospective employee, you may also have to pay their visa costs and health care surcharge.

Final words

The message is clear.  If your business cannot fulfill its skills requirements with UK workers, you should be applying for a Sponsor Licence now.  The process takes around two months in normal circumstances.  Given the predicted flood of applications in December/January, businesses who need to recruit specific talent from abroad may find themselves short of skills for many months whilst the Home Office works through the backlog of applications.

 

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