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Home Office Sponsor Licence guidance updates – 7 key changes for UK employers

The Home Office has published updated versions of its core Worker and Temporary Worker Sponsor Guidance documents (May 2026), alongside revisions to the Glossary and Appendix D.

Taken together, these changes signal a clear shift towards a more interventionist, risk-based compliance regime. There is a renewed emphasis on the substance of organisations, the integrity of sponsored roles, and the ability of employers to evidence compliance in practice.

Set out below are the key developments and what they mean for employers.

1. Right to work checks – clarification (and partial rollback)

The updated guidance confirms that, before employment or engagement begins, Sponsors must carry out right to work checks for:

Earlier updates in 2026 had expanded this obligation to individuals “directly engaged” by the organisation, creating uncertainty around contractors and contingent workers. The May update restores a clearer position, focusing on employees and sponsored workers, while still emphasising the importance of appropriate oversight across the wider workforce.

Although civil penalty exposure remains focused on employees, sponsors should ensure that their approach to workforce engagement is consistent, proportionate, and capable of withstanding scrutiny.

2. Tightened definition of “operating or trading”

The Home Office has made clear that organisations must demonstrate genuine and active UK operations, rather than relying on formal registration alone. This reflects a continued move towards assessing the commercial reality of a business, rather than its legal structure.

To this effect, the updated Glossary introduces a more detailed definition of “operating or trading”, a concept which underpins sponsor licence eligibility and ongoing compliance. In summary:

The guidance is accompanied by example scenarios where the Home Office is unlikely to accept that a business meets this threshold. These include (listed in full, here, page 39):

3. New ground for refusal and revocation - facilitating UK immigration

A significant development is the introduction of a new mandatory ground for refusing or revoking a sponsor licence. The Home Office may now take action where it has reasonable grounds to believe that an organisation:

"has been established, or exists, primarily to facilitate the entry or residence of an individual who would not otherwise have permission to work in the UK."

This applies both to new licence applications and existing sponsors, and there is no discretion where the Home Office considers the test is met.

The guidance includes an example of a business established by an overseas national, with a UK-based individual appointed to secure a sponsor licence and assign a Certificate of Sponsorship to the founder. In these circumstances, the Home Office is likely to conclude that the entity exists primarily to facilitate immigration, rather than to operate as a genuine business.

The key question for the Home Office will be whether the primary purpose of the organisation is commercial activity, or immigration facilitation.

4. "Eligible role” replaces the genuine vacancy requirement

The guidance continues to build on the introduction of the “eligible role” concept, which replaces the historic “genuine vacancy” requirement.

This shifts the focus from whether a vacancy exists at a single point in time to whether the role is genuinely required, appropriately structured, and sustainable within the organisation. This represents a more holistic and ongoing assessment of sponsored roles.

In practice, this requires sponsors to ensure that job roles align with their business model, are supported by genuine operational need, and remain compliant throughout the sponsorship period.

5. Increased focus on worker welfare and employment rights

A further important development is the strengthening of sponsor obligations in relation to worker welfare. Sponsors are now expected to ensure that all sponsored workers are informed of their UK employment rights, including pay, working time, and statutory protections.  Crucially, sponsors must also retain evidence that this information has been provided, in line with Appendix D record-keeping requirements.

This reflects a shift towards a more proactive expectation that sponsors not only comply with immigration rules, but also demonstrate that sponsored workers are being treated fairly and lawfully in practice. For most Sponsors this will be satisfied by issuing day 1 terms of employment and thus this change will have little to no material impact.

6. Lower threshold for enforcement – “reasonable suspicion”

A key theme across the updated guidance is the lowering of the threshold for Home Office intervention.

Enforcement action may now be taken on the basis of "reasonable suspicion of non-compliance", rather than requiring established or proven breaches. For employers, this materially changes the risk landscape. It is no longer sufficient to be compliant in principle. Instead, organisations must be able to "demonstrate compliance clearly, consistently and at short notice". Even relatively minor gaps or inconsistencies may give rise to scrutiny.

7. Continued transition to eVisas

The updated guidance also reflects the ongoing transition to a digital immigration system, with eVisas replacing physical documents. Sponsors will increasingly be required to rely on online systems to verify immigration status and should ensure that HR processes and record-keeping practices are adapted accordingly.

What should employers do now?

Taken together, these updates demonstrate a continued tightening of the sponsor compliance regime and an increased willingness by the Home Office to scrutinise both operational practices and business purpose.  In this environment, a reactive approach is unlikely to be sufficient. Sponsors should instead focus on ensuring that their systems are robust, consistently applied and well documented, so that compliance can be demonstrated quickly and clearly if challenged.

Thus, to mitigate risk, employers should take proactive steps to align with the updated guidance, including:

A cautious and well-documented approach will be key, particularly given the Home Office’s increasing reliance on “reasonable suspicion” as a basis for enforcement action.

Please contact us for a Sponsor Licence Compliance Checklist and get in touch with our immigration lawyers for further advice and guidance.

Fair Work Agency report: key findings and employer implications

On 11 May 2026, the Fair Work Agency (FWA) published an independent report: Working Lives: the scale and nature of labour market non-compliance and other work-based harms in the UK. In this article, we summarise the report's primary findings, lessons to be learned by employers, and further insight into the FWA.

What the FWA does

April 2026 saw the launch of the FWA, a government body bringing together existing state enforcement functions relating to labour market compliance, including minimum wage enforcement, employment agency standards and protections against labour exploitation. Its remit is expected to expand over time, with future responsibility for areas such as holiday pay enforcement. The FWA is also responsible for developing strategy, assessing labour market risks and balancing employer support with enforcement action against non-compliance.

Primary findings

Between summer 2023 and summer 2025, 14% of UK workers experienced at least one legal violation of core rights that are now within the FWA's remit, namely, the rights to receive a) the National Minimum Wage, b) payslips c) a contract or key information document and the restriction on charging work finding fees to agency workers. The report estimated that this equates to a minimum of 5.4 million workers who have experienced a breach in these rights.

On a broader level, the report found that seven in ten workers experienced unlawful deductions, unpaid extra hours of work, leave-related difficulties, bullying and harassment, physical injuries or mental health impacts due to work. Not all of these practices are necessarily unlawful, suggesting that the FWA’s remit may extend beyond strict legal breaches to encompass wider workplace harms and standards.

A key theme running through the report was the frequency of both non-compliance and wider workplace harms. The findings challenge the assumption that most employers comply and that only a small minority are responsible for breaches. Instead, suggesting that worker rights are breached at scale, whether deliberately, negligently or inadvertently.

The report also highlights notable clustering between certain problems, particularly leave-related issues, negative mental health impacts, physical injuries and bullying and harassment. These interconnected issues point to wider cultural or systemic problems within workplaces rather than isolated compliance failures.

What this means for employers

As the FWA establishes itself as a new body, this report is a helpful insight into how it will proceed operationally. For employers, the key takeaways are:

Looking ahead, employers should anticipate:

Overall, the report clarifies the scale of labour market issues in the UK, marking a clear shift towards more proactive, data-led enforcement. As the FWA establishes itself and expands its remit, employers should review their compliance frameworks and broader working practices.

Case update: clarification of the meaning of "sex" under the Equality Act 2020 and implication for positive action and equality policies – For Women Scotland v The Scottish Ministers

The Supreme Court recently handed down judgment in For Women Scotland v The Scottish Ministers [2025] UKSC 16, providing important clarification on the interpretation of the protected characteristic of “sex” under the Equality Act 2010 and its implications for positive action and equality policies.

Background

The Equality Act 2010 protects individuals from discrimination based on certain protected characteristics, including sex and gender reassignment. It also permits positive action under sections 158–159, where this is a proportionate means of addressing disadvantage or under-representation.

The Scottish Parliament enacted legislation with the aim to increase the number of women on public boards, introducing a target that 50% of non-executive members on public boards should be women. Alongside this legislation, the Scottish Ministers issued statutory guidance on the interpretation of "woman" as being the same as under the Equality Act 2010 – a "female of any age" and it included a person with a gender recognition certificate who had changed their legal sexual orientation to female.

For Woman Scotland challenged the statutory guidance on the basis that the definition of "woman" under the Equality Act 2010 should be interpreted as biological females.

Decision of the Supreme Court

The Supreme Court held that the word "man", "woman" and "sex" under the Equality Act 2010 refer to biological sex. The Supreme Court explained in its judgment that interpreting these any other way than as biological sex would make the Equality Act incoherent, particularly maternity and pregnancy provisions, therefore the terms must be interpreted on a consistent basis.

The Equality Act 2010 was designed to protect distinct categories, including sex and gender reassignment, and these should not be conflated as this would dilute the protections for each characteristic. Therefore, obtaining a gender recognition certificate does not alter a person's legal sex for the purposes of the Equality Act 2010.

Implications for employers

The decision has significant implications for employers designing diversity and inclusion initiatives.

First, it confirms that protected characteristics must be analysed separately. Employers should avoid conflating sex and gender reassignment when developing recruitment, promotion or positive action policies. To do so, they should ensure to interpret "sex" as its biological definition.

The Equality and Human Rights Commission has recently published an updated Code of Practice for services, public functions and associations, providing guidance for how the Equality Act 2010 applies in practice. This was published on 21 May 2026 and Parliament now has 40 days to consider the draft for the updated code before it may come into force.

Service providers and organisations should review their policies and practices to ensure that they are aligned with the clarified legal position, particularly in relation to the protected characteristics and operation of single-sex initiatives following the Supreme Court judgement.

To discuss any of the issues raised in this article, please contact the Michelmores Employment team.

Q: We're a small employer (11 staff and no recognised unions) looking to TUPE transfer two staff to a company which is about to take over running the services we have been providing to a client. Can we consult with our staff directly about the transfer?

A: Yes, the TUPE rules changed in July last year so that employers who do not already have employee representatives in place can consult directly with employees on TUPE transfers: (i) if the organisation has fewer than 50 employees; or (ii) for employers of any size, if fewer than 10 employees are to transfer. As you are a small employer with less than 50 staff and only two of those staff are transferring, you can consult with them directly provided you don't have employee representatives already in place.