A guide to the work sponsorship system & compliance duties for small businesses

Aug 13, 2020

The work sponsorship system may seem daunting for small businesses. This guide provides essential information to help you better understand and navigate it.

The new points-based immigration system will be operational from January 2021, requiring employers to hold a sponsor licence if they wish to hire medium or high-skilled workers from EU and non-EU countries for next year.  The Home Office is looking to streamline the current sponsorship system.

According to research carried out by the Federation of Small Businesses (FSB)  in Scotland, one in five small businesses could close or radically change their business model due to difficulties in recruiting EU workers.

Figures show that 26% of the UK’s 5.8 million small businesses employ European Economic Area (EEA) workers, excluding those from the Republic of Ireland.

The report also reveals that there has been a decline in workplace training over the last few decades and that few small firms are able to automate processes to cover lost access to EU skills.

To maintain staffing levels at the end of the transition period, the Home Office and trade bodies are encouraging small businesses to apply for a sponsor licence as soon as possible.

However, 95% of these businesses have no experience of using the immigration system.  They will need time and support to adjust to the new way of accessing skilled labour.

sponsorship system small businesses

written by Judit Adorjan

The following concerns have been raised by them in parliament regarding the sponsorship system:

  • Mid-skilled occupations that fall within the £20,000 to £30,000 bracket, currently do not qualify for sponsorship
  • Whilst the new minimum income threshold of £25,600 which will be introduced from 2021 is more realistic, it is still too high for certain industries, especially the care sector
  • The current system has been designed for larger businesses with reasonably sophisticated HR resources. Large companies with high volume of employees are likely to have in-house HR and legal expertise, whereas that is much less likely the case for small and medium-sized businesses, who will need to pay for external advice to be able to navigate this new system
  • HR professionals are having to evidence, track, and monitor information that small businesses feel is perfectly obvious. For example, if they employ 10 or up to 20 people and one person is missing, that is self-evident; they know if a person is not there
  • The initial sponsor licence application is very document-heavy
  • Certain reporting duties could be streamlined. For instance, an increase in the migrant’s salary should not need to be reported, since they have already cleared the salary threshold
  • The volume of documentation required to be kept on file, including details such as notes from interviewing candidates, is quite onerous
  • Finally, the biggest obstacles to recruiting workforce through this system is the cost and time required to do it.

Migrate UK has extensive experience helping small businesses navigate the sponsorship system. Contact us for free initial advice.


So, which occupations qualify for sponsorship?

At present, only highly skilled occupations qualify for sponsorship under the Tier 2 (General) and Tier 2 Intra-company transfer (ICT) visa routes. To meet the required skill level the role must be at bachelor’s, master’s, or PhD level.  There is no requirement for the migrant to hold a degree, relevant work experience also qualifies.

From January 2021 A-level standard roles will also qualify under the new Skilled Worker route replacing the Tier 2 (General) visa. However, there is no requirement for the applicant to hold an A level standard qualification as the English language requirement can be satisfied via an English language test conducted at an approved centre. Unlike the Skilled Worker route, the Tier 2 (ICT) route will continue to require applicants to be employed in occupations skilled to Regulated Qualifications Framework (RQF) level 6.


sponsorship system small businesses

Karen Kaur and Jonathan Beech

What is the minimum income threshold for sponsorship?

  • From January the minimum salary threshold for the Skilled Worker route will lowered to £25,600 or the going rate for the vacancy being filled
  • New entrants to the Skilled Worker route (i.e. those entering the UK for the first time under this visa route) can take 30% lower salary than the rate of pay for experienced workers in any occupation as long as the minimum salary of £20,480 is met
  • The minimum salary you must pay to sponsor a migrant in the Tier 2 ICT long-term staff category is £41,500/year or the appropriate pay threshold for the job as stated in the codes of practice in Appendix J, whichever is higher.

The latest information for the points-based system revealed that lower-skilled workers, such as care home workers and contractors have not been catered for under the new system.

However, a new Health and Care visa was introduced on 4th August 2020 as part of the Skilled Worker route. This will provide fast-track entry, with reduced application fees and dedicated support to individuals with a confirmed job offer in defined health professions, for a skilled role within the NHS, the social care sector or for those sponsored by the NHS.


What kind of human resource & recruitment system needs to be in place to qualify for a sponsor licence. Why is this needed?

The HR and recruitment systems required will be determined by the size and sector of your organisation.

These systems are required:

  • to meet or to continue to meet and evidence compliance duties in a timeframe and manner set out by the Home Office, and
  • to evidence that those entering the UK to work are eligible to do so and are filling a genuine vacancy (preventing illegal working).

All employers, not only licenced sponsors, must ensure their employees are entitled to work for them. Compliance officers can refer cases of illegal working for prosecution or the issue of a civil penalty.

If you are issued with a civil penalty for employing illegal workers, your licence may be suspended, your certification of sponsorship allocation may be removed, and any new licence application may be refused.

Whilst there is a cost attached to using a legal representative who is qualified to provide immigration advice, there are also undeniable benefits.

Qualified legal representatives:

  • assist with your sponsor licence application or management of your existing licence
  • advise on the eligibility of migrants to work in the UK
  • provide training for HR departments of UK based organisations on required record keeping practices
  • perform time consuming reporting duties on your behalf
  • can do a full review of your HR system in preparation of a Home Office compliance check.

Migrate UK has extensive experience helping small businesses navigate the sponsorship system. Contact us for free initial advice.


Is the initial sponsor licence application document heavy?

Most applications must be supported by a minimum of 4 pieces of evidence to show that the organisation is a genuine employer operating lawfully in the UK.

If you have been operating or trading in the UK for less than 18 months on the date you make your application, the checks the Home Office we will make are different to those they carry out on more established businesses.

Normally, any documents sent to the Home Office must be originals or certified copies. During the pandemic, a concession has been introduced to allow for scanned documents to be submitted as supporting evidence. The Home Office may still write to you to request original or certified documents. Your application will be refused if you do not send the evidence or documents requested or contact the Home Office for an extension within the given time limit.

Migrate UK has extensive experience helping small businesses navigate the sponsorship system. Contact us for free initial advice.


Why is it necessary to track, evidence and monitor information about the sponsored migrant?

Certain documents are required to be kept on file to show the migrant’s entitlement to work and their period of leave to remain in the UK. This includes a copy of their passport including personal details and entry clearance visas and a copy of their biometric residence permit.  Having a copy of the BRP on file also helps HR professionals keep track of visa expiries and ensure that any visa extension applications are submitted before the expiry of the migrant’s current leave to remain.

It is also important to keep a record of the migrant’s absences to show that there were no unauthorised absences of 10 consecutive working days or that there was no unpaid leave other than for short periods, not exceeding 4 weeks in any calendar year.

Evidence of the resident labour market test and notes from interviewing candidates must be kept on file to prove that the migrant is filling a genuine vacancy for which he/she possesses the skills as well as the qualifications and experience required for the post. Also that other candidates have been carefully scrutinised, confirming that none aside from the migrant met the mandatory requirements stated within the job advert.


Why do certain activities or changes in the migrant worker’s circumstances need to be reported?

Significant changes in the migrant worker’s circumstances such as an increase or decrease in their salary from the level stated on the certificate of sponsorship, must be reported if they are due to a promotion, a change in job title or core duties or unpaid absences other than exceptions allowed for unpaid leave or reductions in salary. This is to ensure that the migrant continues to meet the skills and salary thresholds required for sponsorship.

A change of salary due to annual increments or bonuses does not need to be reported.

Sponsors are also required to report any migrant activities which indicate that sponsorship can no longer continue. For instance when the migrant’s contract of employment is terminated earlier than that shown on their certificate of sponsorship. Or the migrant moved to a different immigration category that does not require sponsorship.

Migrate UK has extensive experience helping small businesses navigate the sponsorship system. Contact us for free initial advice.


What is the cost and the timeline for obtaining a sponsor licence?

The Home Office fee for a sponsor licence valid for 4 years is not particularly high at the moment – £536 for small organisations or £1476 for medium / large organisations.

The employer will then pay as they go for each sponsored employee’s certificate of sponsorship, immigration skills charge, immigration health surcharge and visa.

Federation of Small Businesses (FSB) evidence shows that 48% of small businesses cannot meet the Tier 2 visa costs currently estimated at £3,101. Therefore, the UK parliament is considering whether visa costs should be brought in line with other countries. However, they said that a points-based model can work, provided costs are kept down and systems are easy to navigate for small firms.

According to Personnel Today, in March 88.7% of Tier 2 sponsor licence applications were processed in under 4 weeks. Since then processing times have risen due to a surge in applications and the pandemic.

Most applications are processed within 8 weeks.  However, it will take longer if UKVI decides to conduct a pre-licence visit. It is possible to speed up the application process if there are compelling business reasons, but this is not guaranteed.

On-site visits have been suspended during the coronavirus. However, if a visit is needed, the sponsor licence application will not be decided until the Home Office is in receipt of the compliance visit report.

There are also delays with obtaining entry clearance visas due to travel restrictions.

With 4 months left until the new immigration system is introduced, organisations should apply for a sponsor licence as soon as possible to avoid severe personnel shortages.


Migrate UK has extensive experience helping small businesses navigate the sponsorship system. Contact us on 01235 841 568 or email info@migrate-uk.com

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