Wondering if your business requires a sponsor licence? Securing this licence may provide you with the specialized skills necessary to fulfill your workforce needs.
Understanding Sponsor Licences
A sponsor licence, issued by the UK government, empowers businesses to sponsor foreign workers from outside the UK. It’s crucial to note that possessing a sponsor licence is a privilege that comes with specific conditions outlined by the Home Office.
Benefits of a Sponsor Licence for Your Business
Having a sponsorship licence is advantageous for your business as it allows you to tackle skill shortages by drawing talent from overseas. This can significantly facilitate your growth and expansion by providing access to a broader pool of skilled professionals who can drive your business forward.
Moreover, if you currently employ individuals on a graduate or student visa whom you want to retain beyond their visa expiration, a sponsor licence becomes necessary.
Choosing the Right Licence for Your Business
For most small businesses, the skilled worker licence is particularly relevant. However, there are industry-specific licences, including those tailored for the creative sector or for recruiting religious workers. Additionally, if your business is expanding into the UK from abroad, you may need an expansion worker licence.
A recent example of the government’s evolving approach to sponsorship is the ‘Scale-up Visa’, established in 2022. This initiative is designed to simplify the process for rapidly growing UK businesses to recruit global talent, particularly in sectors such as engineering, software development, and scientific research. To qualify as a scale-up sponsor, a business must demonstrate a growth of at least 20% annually in either employment or turnover and maintain a minimum of 10 employees.
Do You Have a ‘Genuine Vacancy’?
Establishing that you have a ‘genuine vacancy’ is vital for a successful sponsor licence application. Key criteria include:
- Specific duties for the job that align with the requirements of the relevant visa route
- Exclusion of dissimilar or predominantly lower-skilled duties
- Relevance and necessity of the role for your business model and scale
Your application will emphasize the need for the role to align with the UK Visa and Immigration’s (UKVI) list of skilled occupations and ensure it meets the government-specified minimum salary thresholds. Most roles must pay at least £38,700, while ‘shortage occupations’ or roles for under-26s may pay £30,980.
UKVI may doubt the genuineness of your vacancy if it appears to replicate existing positions or if it involves duties suitable for lower-skilled workers readily available in the local labour market.
Lastly, it’s crucial to demonstrate that the position is essential for your business growth and objectives, as a lack of necessity may weaken your application.
Pre-Application Requirements for Employers
Before applying, ensure you have the following systems and personnel in place:
HR Systems: Implement robust HR systems to effectively manage your sponsored workers. Your choice may vary based on your business resources; some businesses utilize comprehensive online systems, while others may adopt simpler solutions like Microsoft Excel to track key employee information such as annual leave, sickness, visa expiry dates, and contact details. The Home Office mandates data retention but does not prescribe a specific system for tracking this information.
Key Personnel:
- The Authorising Officer (AO): A senior individual responsible for managing sponsored workers, ideally British or settled.
- The Key Contact: The primary liaison between your business and UKVI.
- The Level 1 User: Responsible for the day-to-day operations of the licence using the Sponsor Management System (SMS).
Required Documentation for the Application
Once you have your systems and personnel in place, you can begin the application process, which includes completing an online form, paying the associated fees, and submitting relevant documents tailored to your business’s type, industry, regulatory status, and date of establishment.
Application Process and Costs
- Complete the online application
- Pay the sponsorship licence fee (small sponsor – £536 / medium or large sponsor – £1,476)
- Submit supporting documents within five working days
- Await UKVI’s decision
An expedited review is available for an additional £500 fee, but note that ‘high-risk’ applications may necessitate an interview with the Authorising Officer. To avoid potential complications, consider conducting a compliance audit with a reputable advisor beforehand.
Legal fees for the sponsor licence application typically amount to around £3,500, including compliance training and auditing. Some immigration law firms may also offer no-win, no-fee arrangements to assist with your application.
Post-Licence Acquisition Steps
Upon receiving your sponsor licence from UKVI, you can proceed to apply for and assign a Certificate of Sponsorship (CoS) to the foreign worker, enabling you to officially hire them.
The cost of assigning a CoS depends on whether the applicant is subject to an Immigration Skills Charge (ISC). For instance, if the worker is exempt (like a student or in certain specified roles), the Home Office fee is just £239. Conversely, if ISC is applicable, fees vary by company size: larger companies face a £3,000 levy for a three-year visa, while small companies pay £1,092.
After securing the CoS, the worker can apply for a skilled worker visa, which allows them to start employment once approved.
Often, businesses transfer the visa application responsibility to the worker, who must cover the Home Office fee and an annual Immigration Health Surcharge of £1,035 for the duration of the visa. Additionally, these costs extend to dependents, potentially increasing your overall expenditure. You may find it beneficial to cover the visa costs (excluding the CoS) and recoup this from the employee’s salary.
Overall Expenses for Licensing, CoS, and Visa
Approximately, you should budget around £10,000 – £12,000 for a small company to cover legal fees and Home Office fees for securing a three-year visa for an employee. While this includes most costs, it does not account for dependents. Alternatively, you may opt for a more extended, five-year visa at a higher rate, after which the employee can apply for indefinite leave to remain, allowing them to work indefinitely without sponsorship.
Common Application Pitfalls
Businesses frequently encounter the same mistakes during the application process, leading to rejections, such as:
- Inadequate documentation and information submitted within strict timeframes
- A misunderstanding of compliance duties, coupled with insufficient systems to meet requirements
Compliance Obligations for Licence Holders
Maintaining a sponsor licence necessitates ongoing compliance. Failure to meet your responsibilities could result in the revocation of your licence.
Key compliance duties include:
- Conducting thorough right-to-work checks
- Maintaining accurate records
- Promptly reporting mandatory changes in the Sponsorship Management System
The Home Office actively audits licence holders to ensure adherence to these obligations, which could involve either a remote interview or an in-person visit to your premises.
How Immigration Lawyers Can Assist
Navigating the application process and subsequent management of a sponsor licence can be complicated, but it doesn’t have to be overwhelming. Engaging an immigration lawyer ensures your business avoids frequent pitfalls and enhances the likelihood of a successful application.
Post-approval, they can support you with Certificates of Sponsorship, visa processes, and compliance efforts, preparing your business for any Home Office inspections.
If you’re in search of talent not readily available locally, obtaining a sponsor licence may be your ideal solution. With the right support, the journey to applying for and managing a sponsor licence can be seamless and manageable.
This article was written by Baya Immigration Legal Services.
Explore More About Employee Recruitment
What’s the right approach to advertising jobs for my small business? – Discover the pros and cons of hiring internally versus externally.
What’s included in the Employment Rights Bill? – A comprehensive breakdown of Labour’s Employment Rights Bill and its implications for the business community.
Is it permissible to require employees to sign an NDA? – Insights from Chris Hadrill, Partner at Redmans Solicitors, regarding NDAs within the employer-employee relationship.
