Deadline looms for sponsorship licences

Moves by the UK Border Agency (UKBA) to remove London Metropolitan University’s licence to sponsor overseas students, plus a raid last month on a Tesco warehouse after allegations that foreign students were working illegally, have reinforced the importance of compliance and monitoring when employing foreign workers.

These events should be a timely reminder for employers who were part of the original tranche granted a licence in 2008 to sponsor migrant workers from outwith the European Economic Area (EEA) and Switzerland. Such licences were issued after the introduction of the tier-two points-based system which followed the abolition of the work permit scheme. Issued for a four-year term, these licences expire on 26 November and businesses that hold sponsorship status with the UKBA must act now.

Failure to comply with this deadline could result in employers which rely on migrant workers to provide specialist skills losing the right to employ such people, with potentially harmful consequences for the business.

The UKBA has indicated it will take a hard line against organisations failing to comply with their obligations relating to the sponsorship and employment of migrants. Hundreds of sponsorship licences have been revoked every year and recent events show they mean business and are paying serious attention to compliance by employers and academic institutions.

Employers should be in no doubt about their obligations, with civil penalties of up to £10,000 for illegally employing migrant workers. In addition, the loss or suspension of a licence to sponsor employees or overseas students will cause disruption to the day-to-day running of the business, as well as incalculable financial and reputational damage.

Sponsors must apply for renewal at least one month before their licence expires. It is, therefore, crucial for employers to take action to comply with the UKBA requirements of sponsorship licence holders.

Failing to promptly advise of any changes to a sponsorship licence could also trigger sanctions, including withdrawal or suspension. Employers are also required to ensure business records provided to the UKBA are accurate and up to date. Businesses can face unannounced visits for audits to be carried out by the UKBA, to ensure compliance, and to check for errors and alleged abuses of the system.

Migrant employees with particular skills play a key role within the UK economy. The sudden, unexpected loss of such an employee could cause major disruption to a business, particularly as sponsorship is only available to fill posts where there is a skills shortage in the UK. Such risks could have a serious impact on sectors such as food and drink, outsourcing, manufacturing, infrastructure, IT, pharmaceuticals and education.

A new system of renewal of sponsorship licences has been introduced, under which the status of sponsorship licence holders’ renewals and requests to update details held will be posted on the UKBA’s sponsorship management system. Previously, licence holders would receive a direct response from the UKBA. Sponsors will no longer be notified by email in these situations, although email notifications will continue to be sent in some other circumstances.

Clear guidelines setting out the various stages involved during the renewal process have been published. Once the application has been made and the appropriate renewal fee paid, the UKBA will check the application. This is a key aspect of the renewal process and, once validated, the existing licence will be extended while the remaining issues are considered.

The renewal process includes a review of the details provided and the sponsorship activity over the past four years. Detailed additional information may be asked for by the UKBA and employers should, therefore, be prepared to provide this, if requested. The outcome of a review will be a four-year extension of the licence or, in the worst-case scenario, the withdrawal of the licence to sponsor migrant workers. Any certificate of sponsorship already issued would automatically become invalid. The worker’s permission to stay in the UK will be reduced to 60 days, to give him or her an opportunity to find a new sponsor. If they fail to find another sponsor, they will have to leave the UK or face enforced removal.

l Alison Weatherhead is an associate in the employment team at Maclay Murray & Spens LLP