Ten key points about the sponsor licence system

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Businesses have little choice but to become wedded to the sponsor regime if they want continue employing overseas talent from 2021, when the new points-based immigration system kicks in, writes Chetal Patel.

The process of gaining a licence is not a mere tick box exercise; businesses need to have the correct systems in place to comply with their sponsor duties and need to have key people within the UK organisation to administer the sponsorship process. It would be easy to imagine smaller businesses with tight purse strings and less infrastructure struggling to meet the system’s demands.

Before we look 10 factors to consider when navigating the sponsor system it’s worth taking on board new sponsorship transparency data released on 27 February 2020 by UK Visas and Immigration (UKVI).

This showed that the number of sponsors registered with UKVI under Tier 2 (this is for skilled workers) remains under 29,000. For the fourth quarter of 2019, there were 28,734 sponsors – the highest number of sponsors since 2014 Q1.

This upward trend is likely to continue in the run up to 2021. In the past, UKVI has had concerns over the growing number of sponsors and looked to remove those who hadn’t used their licences in months to make it easier to administer the regime. It will be interesting to see UKVI’s response to the expected hike in applications; it may, for example, consider in the longer term reducing the onerous administrative obligations on sponsors.

It’s encouraging to see that 88.7% of Tier 2 sponsor licence applications were processed in under four weeks. But it may be the case that processing times will rise in the coming months because of the expected surge in applications.

The 10 areas for consideration, that will help organisations get a handle on the sponsor licence system are as follows:

Business case

What’s your justification for applying for a licence? Mandatory information needs to be included as part of an application, including (not exhaustive) why you are applying and what sector you operate in. Failing to cover the required information will lead to your application being rejected. It’s unlikely that stating words to the effect of “dealing with the aftermath of Brexit” will be sufficient.

Sponsorship categories

An organisation can apply to sponsor workers under either Tier 2 (for skilled work) or Tier 5 (for temporary work or an exchange scheme). There are a number of subcategories under these routes and businesses should consider what’s relevant to them in particular.

For example, if you have an international presence, do you anticipate transferring workers from your overseas entity? If yes, can you show evidence of the common ownership and control as per UKVI’s definition? If you apply to add a subcategory at a later date, you could find yourself waiting 18 weeks for a decision.

Structure of licence

If you have more than one office in the UK, you can apply for a licence which covers all of your branches. You should consider this approach carefully because if there is a failing by one of the branches and UKVI take action, this will apply to all branches.

Key personnel

Three key roles with the titles of authorising officer, key contact and level 1 user need to be allocated to people within the UK entity. In essence these people manage the licence on behalf of the organisation. Companies must ask themselves whether they have people who are permanently based in the UK that can undertake these roles? New organisations setting up in the UK may find it difficult to appoint people to these roles without a workforce already in place – they may need to consider hiring someone on a part-time basis.

Sponsorship duties

You need to consider at the outset of the process whether you have the systems in place to comply with your sponsor duties. For instance, there are record-keeping and reporting duties and failure to comply can lead to action being taken against the organisation. Complying with the law and cooperating with UKVI form part of the duties and if any sponsored workers are working at third-party sites, UKVI will also expect full cooperation from the third party. Consider putting in place some process charts which will help you manage your licence. These will show UKVI that you are aware of what needs to be done and when.

Online application dangers

Although the online application process may seem straightforward, care needs to be taken because there are many reasons UKVI can cite for refusing or rejecting an application. These include: paying the incorrect fee; documentation being sent in the wrong format; knowingly sending false documents with the application; and having a licence that had been revoked by UKVI within 12-months before the date of the new application.

Criteria

All applications need to meet UKVI’s eligibility and suitability criteria. To meet the eligibility criteria, supporting documents must be submitted. When assessing suitability criteria, UKVI will look at your HR and recruitment systems, whether you can offer a genuine vacancy, if you have had previous non-compliance issues and whether there are any mandatory reasons to refuse the application. Remember that checks may be made as part of a pre-licence or post-licence visit so you need to be prepared.

Supporting evidence

A minimum of four documents (in the correct format) need to be sent to UKVI within five working days of the online application submission. There are mandatory documents subject to your organisation type. For example, if you’ve been operating or trading in the UK for fewer than 18 months, you’ll be considered a start-up and must send evidence of a current, corporate bank account with a bank registered by the Financial Conduct Authority. It can take time to open bank accounts, so this needs to be factored into the timeline. It’s advisable that additional documents are sent in case there are issues with the documents you submit.

Fees

The fee payable for the application depends upon the size of the organisation. It is £536 if it’s a charity or is subject to the small companies’ regime as set out in the Companies Act 2006, otherwise it is £1,476 for medium or large sponsors. If the incorrect fee is paid, the application will be refused.

Timing

Most applications are processed within eight weeks; however, additional it will take longer if UKVI decides to conduct a pre-licence visit. It is possible to speed up the application if there are compelling business reasons but it’s not guaranteed.

With 10 months to go until the new immigration regime is in place, I would recommend that organisations prepare now and get their house in order.

Businesses will have to carefully consider their talent pipeline and plan for the future. A failure to plan is planning to fail. Preparation, preparation, preparation will be the key to unlocking the sponsor licence regime.

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Chetal Patel

About Chetal Patel

Chetal Patel is a partner at Bates Wells. She has a particular interest and expertise in sponsor-related matters. She regularly advises organisations on Tiers 2 and 5, assisting with immigration audits and providing guidance on HR processes
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