Lynsey Blyth
Posted on 3 Nov 2020

Brexit Immigration Law Update: An Introductory Guide to Tier 2 Sponsor Licences

As we come to the end of the current Brexit transition period, the UK immigration system is getting a long-overdue revamp. Although EEA free-movement rights do not cease until 11pm on 31 December 2020, many of the planned changes to the UK's immigration system (rather confusingly) will take effect from 9am on 1 December 2020. This means that businesses need to be familiar with the new rules by the end of November 2020 and ready to sponsor new EEA citizen workers from January 2020. 

For more information on the rights of EEA and Swiss citizens' to live and work in the UK from 1 January 2021, please read our article here. For more information on the announced changes to the UK immigration rules, please see our article here.

The Sponsor Licence application process, the immigration monitoring requirements and, indeed, the associated sponsorship costs, have often proved to be unconquerable obstacles for businesses. Consequently, many have simply chosen not to touch the sponsorship process with a proverbial barge-pole. Alas, with the forthcoming immigration changes, many businesses will no longer have that luxury and, hastily, they will need to become familiar with the Sponsor Licence requirements and associated duties.

What is a Sponsor Licence?

As the name suggests, a Sponsor Licence is a licence that permits you to sponsor a person to come to the UK to work or study. There are a number of different types of Sponsor Licences available and these reflect the different categories of visa that can be sponsored.  Commercial businesses are most likely to sponsor workers via the following Tier 2 visa routes:

  1. Tier 2 (Skilled Worker) Visa

This route replaces the existing Tier 2 (General) route and can be used by employers to sponsor new and sufficiently skilled workers that do not otherwise have a lawful and (unrestricted) right to live and work in the UK. This route significantly lowers the salary and skill threshold for skilled workers and therefore it should be easier for employers to sponsor workers under this route. 

  1. Intra-Company Transfer (ICT)

This visa route allows multinational companies to transfer existing workers from their overseas operations to a UK branch of their company. This includes: existing and established employees to transfer to their UK branch to undertake a skilled role and graduate trainees to transfer to the UK as part in a structured graduate training programme.

Accordingly, commercial businesses will need a Tier 2 Sponsor Licence to sponsor these Tier 2 visa routes. 

Sponsor Licence Requirements

To successfully obtain a Sponsor Licence there is certain criteria that must be met. You will have to establish that your company:

  1. Is a genuine organisation operating lawfully in the UK;
  2. Is honest, dependable and reliable. The history of the company and key personnel named on the application will be reviewed by the Home Office. The purpose of this review is to ensure that there is no evidence of previous non-compliance by the Sponsor and that none of the key personnel have unspent criminal convictions for relevant offences. Further details about the key roles can be found below;
  3. Can facilitate an immediate or unannounced Compliance Visit from the Home Office. The purpose of the visit is to ensure that the Sponsor is complying with all of their duties. The Home Office can undertake these visits during the application process and/or after the Sponsor Licence is issued;
  4. Is capable of carrying out the duties of a Sponsor. This includes ensuring that you have the HR recruitment and management systems in place to meet your Sponsor duties. Duties of a Sponsor are outlined below; and
  5. Can offer genuine employment that meets the skill level and appropriate rates of pay.

Key roles

People within the business will need to be appointed to manage the Sponsor Licence and their names and details must be included within the Sponsor Licence application. In order to ensure that the business can adequately maintain a valid Sponsor Licence, it is essential that all 3 of the roles outlined below are filled. It is, however, possible to appoint a single person within a company to fulfil all of these roles.

The 'key roles' include:

  1. Level 1 User

The Level 1 User will usually be the person/people who is/are undertaking the company’s day-to-day immigration work. Level 1 Users have full access to the Sponsor Management System (SMS). The SMS is the online system that Sponsors are given access to when a Sponsor Licence is granted and should be used to:

  1. Undertake routine sponsorship activities, including assigning Certificates of Sponsorship (CoS), reporting migrant activity and changes of circumstance, request CoS, apply for and assign restricted CoS;
  2. View information about the licence, notify UKVI of changes to your organisation; and
  3. Apply to renew the licence and track the progress of your application.
  1. Authorising Officer

The Authorising Officer is a senior and competent person within the business that will be responsible for the actions of staff and representatives who use the SMS.It is also their responsibility to decide how many staff need to have access to the SMS and what level of permission they can have.The Authorising Officer, however, will not have automatic access to the SMS to carry out any of the practical functions relating to sponsoring migrant workers, unless they are also named as a Level 1 User.

  1. Key Contact

The Key Contact is the main point of contact between the company and the Home Office. The Home Office will contact the Key Contact in the event that they have queries about your Sponsor Licence application, the documents submitted or the payment. The Key Contact also does not have automatic access to the SMS. In order to have access to the SMS, the Key Contact must also be a Level User.

How to Apply

There is an online application form available on the Government website (here). As part of the application process, you must provide specific pieces of mandatory documentation. These differ depending on the type of Sponsor Licence you are applying for and the nature of your business. Further information on the documentation required for your business can be found here.

In our experience, the average private limited company tends to find the following documents easiest to source:

  1. Proof of ownership/lease of business premises;
  2. Evidence of employer’s liability insurance up to £5 million;
  3. Certificate of VAT registration;
  4. Evidence of registration as an employer with HMRC; and
  5. Recent bank statements or a letter from the bank setting out dealings with the organisation.

Whilst this doesn’t seem an onerous task at first glance, gathering evidence can take a surprisingly long time, particularly for larger businesses. It is therefore important to start sourcing and collating the necessary evidence well in advance of submitting the online application.

Costs

The fees for each application will depend on the size of the business. Current licence fees for Tier 2 Sponsors are £536 for small businesses or £1,476 for medium or large businesses. Usually, a small business will have an annual turnover of £10.2 million or less and will have 50 or less employees. The government has indicated that the current costs for sponsorship will remain the same despite the forthcoming changes to the rules.

Timing

How quickly an application is processed, depends on the complexity of the Sponsor's organisational structure and its size. Whilst the Home Office website advises that the processing times for the majority of Tier 2 Sponsor Licences is less than 8 weeks, it is our experience that the majority of applications take between 8 and 12 weeks. Of course, Brexit and good old Covid have taken their toll on the Home Office's resources and we understand that they are currently battling a backlog of applications. Inevitably, this will cause further processing delays.

If it all goes wrong…

If your application is unsuccessful, it will either be rejected or refused. Whilst these terms are often interchangeable in normal discourse, the Home Office plays by a different set of rules and the implications of each of these terms in UK immigration law is very different.

Your application will be rejected where 'minor' errors have been made in your application, e.g. you have paid the wrong fee or your Level 1 User does not meet the eligibility criteria. In such circumstances, your application fee will be refunded and you will be able to make an immediate, fresh application without any further repercussions.

Unfortunately, the refusal of a Sponsor Licence application has far wider reaching implications. Applications are refused where substantial or fundamental errors have been made in the application process, e.g. if you have previously failed to comply with your Sponsor duties or you have failed to provide documents requested by the Home Office as part of the assessment of your application. If our application is refused, then, I'm afraid, you will be forced to wait at least 6 months before reapplying. However, it could be longer depending on the reason for the refusal. Best to get it right first time!

If it all goes right!

If you are successful, you will be granted an A-rated licence. This lets you start assigning CoS, which is what your prospective/existing employees will need in order to make an application for their Tier 2 visas.

Sponsor Duties

The responsibilities of a Sponsor start on the day the licence is granted and these include:

  1. Complying with UK Immigration law by undertaking appropriate right to work checks and complying with the further 4 duties below;
  2. Maintaining accurate and up-to-date records for any migrant worker you sponsor. This should include their contact details and copies of the documents confirming the worker's right to work;
  3. Monitoring compliance with immigration rules by tracking and recording employee attendance to ensure migrant workers are complying with the terms of their Tier 2 visas;
  4. Reporting certain migrant worker activity such as non-compliance, non-attendance and disappearance; and
  5. Cooperating with the Home Office throughout the sponsorship process, including facilitating Compliance Visits.

Existing Tier 2 Sponsor License Holders from 1 December 2020

For those who currently hold Sponsor Licences, it is likely these licences will continue as normal until the end of their current term; the licence will also continue to be have an appropriate allocation of Certificates of Sponsorship. After the expiry date, it is likely that Sponsors will have to apply under the new system to continue holding a Sponsor Licence.

What should Employers be doing now?

If you currently hold a Sponsor Licence, ensure that your key personnel are still in post and that you are adhering to all of your Sponsor duties. 

If you do not currently hold a Sponsor Licence but think you might want to sponsor migrant workers in the near future, you need to ensure that you have the necessary HR/immigration documents and processes in place to comply with the Sponsor Licence requirements. Once this is done, ensure that you complete the application form accurately (we can help with that!) and then get the application submitted as soon as possible so as to minimise the impact of the forthcoming immigration changes.

This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact Lynsey Blyth to discuss any issues you are facing.