Sponsor Licences in the New Immigration System

We have heard a lot about the new immigration system that the UK will be introducing from 1 January 2021, which will treat all applicants equally, regardless of where they come from, streamlining and simplifying the current system.  However, less has been said about how UK employers will participate in this new system.

From January 2021, when recruiting, a UK business will come across two different categories of jobseekers:

• Those who already have the relevant right to work in the UK (British citizens, those with indefinite leave to remain or settled or pre-settled status, those on visas allowing work for any employer)

• Those who will require the employer to sponsor the employee in order for them to be able to enter and/or stay and work in the UK

The new system will not apply to European Economic Area (EEA) or Swiss citizens you already employ in the UK. EEA and Swiss citizens living in the UK by 31 December 2020, and their family members, can apply to the EU Settlement Scheme. They have until 30 June 2021 to apply. Nevertheless, Brexit means that moving forward, more job applicants will fall into the second category and will require sponsorship.

For the employer to be able to sponsor the appropriate visa for a prospective employee, the employer must be vetted by the Home Office and registered as an approved Sponsor.

Main points about the Sponsor Licence

• Currently the licence costs £536 for small and charitable organisations and £1,476 for medium or large companies. Once approved the licence lasts for four years (subject to the sponsor adhering to the rules) at which point it must be extended for the same fee.

• The company must have at least one UK based employee to act as the Authorising Officer for the licence; this role cannot be outsourced to an immigration practitioner or a lawyer.

• There are two main types of Sponsor Licence: 

o Skilled Worker licence (used for new hires); if you’re already a licensed Tier 2 (General) visa sponsor, you’ll be automatically granted a new Skilled Worker licence

o Intra-Company Transfer licence (used for transferring employees from a connected business overseas); if you’re an Intra-Company Transfer sponsor, you’ll automatically be granted a new Intra-Company Transfer licence.

How to obtain a Sponsor Licence?

• You must apply and pay for your licence online; following this process you must print off the submission sheet and post this to the Sponsor Applications team together with all the required supporting documents which must be originals or certified copies

• Most applications (80%) were historically decided within less than eight weeks, but this timeline is expected to be extended as the team expects to deal with an increased number of applications

Your duties and responsibilities

Every registered sponsor is bound by strict duties and responsibilities and in this respect the employers do play a major part in ensuring the integrity of the immigration system. The duties broadly fall into three categories:

• Record keeping duties: you must keep the documents specified in the guidance relating to each sponsored employee and make them available to the UK Visas and Immigration (UKVI) on request

• Reporting duties: you must report any relevant changes within 10 working days, including non-attendance, non-compliance or disappearance by the employee, any significant change in their circumstances such as promotion, pay increase, resignation, dismissal, change in size of the sponsoring organisation etc.

• Complying with the law and the immigration rules

How much does it cost to sponsor an employee?

• Each sponsored employee must be issued with a Certificate of Sponsorship generated through your Sponsorship Management System (SMS); this currently costs £199. Currently we differentiate between unrestricted and restricted certificates, but the new immigration system will remove the capping of available certificates and therefore we expect the restricted certificates to become obsolete from 1 January 2021.

• Any visa to work in the UK for six months or more attracts the Immigration Skills Charge which is payable at the time of issuing the Certificate of Sponsorship. This costs £364 (small and charitable sponsors) / £1,000 (medium or large sponsors) for the first 12 months and £182 / £500 for each additional six months of sponsorship duration.

• The employee will also have to pay Immigration Health Surcharge (IHS) of £400 per year for the entire visa duration, payable in advance; often this cost is picked up by employers and may be treated as a taxable benefit.

If your business does not currently hold a Sponsor Licence and you might need to recruit workers from outside the UK from 1 January 2021, we strongly recommend that you apply for a licence now. This will last for four years and will provide you with a bridge into the new immigration system and ensure you can keep your options open when it comes to meeting your staffing needs.

What next?

If you would like further information on the Sponsor Licences, please contact our HR Consultancy team.