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In this issue

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Sponsor Licence revocation at a record level high

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Kalina v Digitas LBI Ltd: Employment Tribunal confirms employers may consider "office harmony" when making recruiting decisions

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Recent client question: We're looking to employ someone from a competitor, but they are subject to restrictive covenants. What should we do?

 

Welcome to Employment Today

 

Here's our latest Employment newsletter, we hope you will find it useful. If you have any feedback, please send it through by replying to this email.

 

Happening now: react now

 

Sponsor Licence revocation at a record level high

 
 

While headlines have largely centred on border security, legal business migration has quietly re-entered the spotlight as Madni Chaudhary first reported at the start of September. Between July 2024 and June 2025, the Home Office revoked 1,948 Sponsor Licences, more than doubling the number from the previous year. In addition, 2,068 Skilled Worker Sponsor Licences were suspended, pending compliance with rigorous action plans.

 

The sectors most impacted include adult social care, hospitality, retail, and construction — industries that rely heavily on international talent to meet workforce demands. This renewed enforcement signals a shift in government priorities and serves as a timely reminder for businesses to ensure their sponsorship practices are fully compliant.

 

The rise in Sponsor Licence revocation and suspension is indicative of a change in the Home Office's approach, not only from the perspective of government policy and the stricter application of compliance checks, but the way in which such checks are now being carried out. We have seen a significant shift in a relatively short period in the Home Office's approach on compliance to a more data analytics led process. There is now an emphasis on enhanced data and intelligence sharing across key government departments and agencies, such as HMRC, DWP and Companies House.

 

Impact on businesses

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Operational disruption: projects and business continuity may be jeopardised if key staff are removed from the organisation.

 

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Reputational harm: revocation can damage public, client or stakeholder trust.

 

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Financial penalties: fines and legal costs can be significant, especially if breaches are found to be deliberate or systemic. For the latter, a fine of £60k per illegal worker is payable.

Steps to ensure compliance and mitigate risk

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Review HR systems and processes to ensure that all duties are being met – this includes not just UK immigration, but also tax, employment and company law. As above, the Home Office's use of intelligence sharing to identify high risk sponsors is becoming more prevalent.

 

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Ensure all staff responsible for immigration compliance are fully trained, equipped and aware of their obligations.

 

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Maintain accurate records for each sponsored employee. Ensure to routinely check details including contact information, job description, salary and work hours are current. This should help with the organisation's reporting obligations in the event of a change.

 

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Test your organisation's processes and infrastructure by conducting regular audits.

Once a Sponsor Licence is revoked, the decision is final — there is no right of appeal. In most cases, businesses will also face a 12-month ‘cooling off’ period, during which they are unable to sponsor international workers. This can have a significant impact on workforce planning, particularly for sectors that rely on overseas talent.

 

If you are unsure about your current sponsorship obligations or want to strengthen your compliance framework, our team is here to help.

 
 

If you found this article helpful, please let us know to help shape future editions. 

 

Vote here.

 

Case study

 

Kalina v Digitas LBI Ltd: Employment Tribunal confirms employers may consider "office harmony" when making recruiting decisions

 
 

The case of Kalina (the Claimant) v Digitas LBI Ltd (the Respondent) was recently heard at London South Employment Tribunal. Among other grounds, the Claimant alleged that she had been the subject of race discrimination in the recruitment process.

 

In finding that there had been no such discrimination, the Tribunal provides useful guidance for employers on what can lawfully be taken into account when making recruitment decisions.

 

Background

 

The Claimant had applied for a role at the Respondent. She attended two interviews and was one of the final two candidates but was ultimately unsuccessful.

 

The Claimant asserted that, in deciding not to appoint her to the role, the Respondent had discriminated against her. She strongly considered herself to be the better candidate and alleged that the Respondent had chosen not to appoint her because she did not swear or enjoy going to the pub, in contrast to the rest of the team whom she would work with. She argued that these activities reflected the "British stereotype" and that, as a Russian national and therefore due to her cultural background, she was more reserved and did not indulge in such activities. In the Claimant's view, the Respondent's decision amounted to race discrimination.

 

The Respondent had used competency-based interviews to assess the candidates' technical ability. However, the individual who had carried out the interviews, providing witness evidence at the Final Hearing on behalf of the Respondent, also accepted that while both candidates were suitably appointable to the role, she "vibed" more with the other candidate, and that the decision on who to appoint ultimately came down to who was the better fit within the team.

 

The decision

 

Judge Wright could not make a finding of race discrimination because the Claimant had failed to provide evidence of any such "British stereotype".

 

Judge Wright went on to say that, even if the Claimant had adequately demonstrated this stereotype to exist, the Respondent's decision would not have amounted to race discrimination. Where candidates are evenly matched, and the employer needs to find some way of distinguishing between them, it is acceptable for an employer to consider how a prospective candidate may fit within the wider team from a social perspective. Judge Wright highlighted that employers must exercise caution when doing so to ensure decisions are legitimate and non-discriminatory.

 

Judge Wright gave the example of an employer who chooses a candidate who supports the same football team as those within the company, over a candidate who supports a rival team. Where the two candidates are similarly qualified, Judge Wright explains that such decision making would be perfectly lawful.

 

The takeaway

 

Whether a prospective employee is a good fit for an existing team can be a reasonable consideration for employers trying to decide between similar candidates. However, Judge Wright's assertion that the football team a prospective employee supports could influence decision-making appears an extreme example, and employers should continue to exercise caution throughout the recruitment process to ensure decisions are lawful. This is particularly the case where an employer uses the social behaviours of candidates to inform decision making, and these behaviours can be linked to a protected characteristic. Clear and regular training on unconscious bias for those making recruitment decisions is imperative.

 

Employers should ensure the focus remains on legitimate business need, considering which candidate would, for example, best contribute to an efficient, amicable and stable workforce. In determining this, employers make take into account all relevant characteristics. They should ensure they keep detailed notes of all recruitment decisions that they can refer back to in the event that decisions need to be justified.

 

If you would like advice on your recruitment practices or policies, please contact a member of the Employment team at Michelmores LLP.

 
 

If you found this article helpful, please let us know to help shape future editions. 

 

Vote here.

 

Recent client question

 

Q: We're looking to employ someone from a competitor, but they are subject to restrictive covenants. What should we do?

A: Employing someone subject to post-termination restrictions can be complex, and it will depend on the broad circumstances of the employment, the duties undertaken by the employee, what duties they are to undertake for your business and the type of restrictive covenants (and terms of such) contained within their employment contract. There are a number of other factors that may also materially impact on whether the covenants are enforceable, such as the basis on which they are departing from their current employer, whether the contract was signed by the employee, and whether the employee's role with their current employer changed materially since they signed any restrictive covenants. Our latest article – available here – looks at some of the issues which might crop up and the options available to you.

 

This week's authors

 

Heidi Brown

Associate

 

Contact

+44 (0) 793 636 1651

heidi.brown@michelmores.com

 

Nicole Hambleton

Associate

 

Contact

+44 (0)139 268 7727

nicole.hambleton@michelmores.com

 
Michelmores

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