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How to apply for a Tier 2 sponsor licence
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How to apply for a Tier 2 sponsor licence

For all the bold talk of Australian-style points based systems, the government’s recent policy statement confirmed what had been known for some time: the post January 2021 immigration system will be centred around the well worn Tier 2 sponsorship route.

The existing Tier 2 set-up will be given a makeover, but there is no getting away from the fact that it is much more restrictive than the free movement on offer to EU citizens today. It is a sponsorship system: a foreign worker cannot simply decide to apply for a Tier 2 visa in order to come and work in the UK. They need a job offer from a UK-based employer.

This organisation must also hold a Tier 2 sponsor licence which allows them to sponsor workers from overseas.

Inevitably, then, more employers are going to need a Tier 2 sponsor licence if they want to maintain staffing levels — and they will need it fast if they are to be ready to employ EU nationals arriving from 2021. The government is alive to this, saying that

Employers not currently approved by the Home Office to be a sponsor should consider doing so now if they think they will want to sponsor skilled migrants, including from the EU, from early 2021.

With this in mind, if you are a legal representative who has thus far avoided sponsor licence applications like the plague but now need to get a handle on them, here is a short guide to the process.

What kind of sponsor licences are there?

There’s actually a plethora of possible sponsor licences that a non-educational organisation can apply for, reflecting the different types of sponsored work visas:

Some of these licences can be applied for in conjunction with each other, using the same form and a similar bundle of supporting documents (for example, a Tier 2 General and Tier 2 Intra Company Transfer licence). Others, such as the sporting categories, have their own separate application process with bespoke criteria.

This note will focus on the process for applying for a Tier 2 (General) licence. It is the most common application you are likely to see. Tier 2 (General) is the visa route which skilled workers from beyond the EU currently have to rely on to find work in the UK, and which EU nationals will have to use as well once free movement ends, as we expect, on 31 December 2020.

OK, where do I start?

With the Holy Bible of sponsorship, the Home Office’s Tiers 2 and 5: guidance for sponsors. Sections 1 to 10 of the guidance set out the process for applying for a sponsor licence.

These sections state that a sponsor has to fulfil certain eligibility and suitability criteria to get their licence.

Eligibility criteria

The eligibility criteria are pretty straightforward. The would-be sponsor has to submit evidence to show that it is a genuine employer with a lawful trading presence in the UK. I’ll give some examples in the next section.

Suitability criteria

The suitability criteria is a much broader assessment. The Home Office will look at whether the organisation is “honest, dependable and reliable”, and capable of meeting the responsibilities that it expects from sponsors. The department will check the following (adapted from paragraph 7.4 of the guidance):

  • That the sponsor has the human resource and recruitment systems in place to meet, or continue to meet their sponsor duties — the Home Office will judge this by either visiting the sponsor before or after the licence is granted
  • That the Home Office are able to visit and conduct checks to ensure that the sponsor duties are being complied with on an immediate, unannounced basis; this includes checks at any physical addresses where the sponsored employees would carry out their employment duties 
  • That the sponsor can offer a genuine vacancy which meets the criteria of the category the sponsor is applying to be licensed for
  • If any of the key personnel within the business have an unspent criminal convictions for a relevant offence 
  • Any evidence of previous non-compliance by the sponsor

This is vitally important, as sponsorship is a two-way street. In the paternalistic eyes of the Home Office, a sponsor is benefitting from employing migrant workers, and so must shoulder some of the burden in ensuring the system is not abused. The Home Office wants to be reassured that sponsors can live up to the “significant trust” that the department places in them.

It is important that your client understands this. Failure to do so has serious consequences (more on this below).

What documents do I need to send in?

To meet the general eligibility criteria

The answer lies within Appendix A. That is, if you are able to decipher it. In a closely fought contest for the most confusing and badly written Home Office immigration document, Appendix A to the sponsor guidance wins by a nose.  

To be fair, the Home Office has set itself a tough task. Instead of stepping back and assessing a sponsor’s credentials in the round, it expects employers of all different shapes and sizes to provide documents from a defined list to demonstrate their eligibility. Sponsors will need to accumulate at least four pieces of evidence from the Appendix A list to support their application.

Four pieces of evidence doesn’t sound like much, but when this requires businesses to dig out VAT and employer’s liability insurance certificates, gathering evidence can take a surprisingly long time. So it’s wise to have the documents ready before you tackle the submit the online application (see below)

Appendix A is split into four tables. It is easiest to go through them in turn to see if you can find the documents which fit your client.

For instance, table 1 confirms that a public authority or a company listed on the London Stock Exchange does not have to submit documents other than those specific to the licence they are applying for. Table 2 covers starts-ups (organisations that have been trading for less than 18 months), as well as franchises and charities. Table 3 lists the specific evidence that needs to be sent for a particular tier.

Table 4 then lists all the other possible documents you could provide, one of which must be the latest set of audited accounts if the organisation is legally obliged to submit them.

In my experience, the average private limited company tends to find the following easiest to find, although this is very much case by case:

  • Evidence that the sponsor has coverage for employer’s liability insurance up to £5 million
  • Certificate of VAT registration
  • Evidence of registration as an employer with HM Revenue and Custom
  • Recent bank statement or a letter from the bank setting out dealings with the organisation
  • Proof of ownership or lease of the business premises

Until very recently, documents for a sponsor licence application had to be either originals or certified copies. With the vast majority of us now home working, the Home Office has relaxed this rule. According to correspondence shared with the Immigration Law Practitioners Association (members-only link), documents in support of a sponsor licence application can now be emailed to the Home Office as pdf files. Let’s hope that this long overdue change to the application process is made permanent.

Specific evidence required for Tier 2 (General)

Most of the visa-specific documents are covered in table 3 of Appendix A. But for reasons which remain mysterious, the specific documents required for Tier 2 (General) are listed on page 6 of Appendix A instead.

Alongside some basic information about the organisation, the role they want to fill and the candidate they have in mind, the organisation must also tell the Home Office why they are applying for a licence. This usually involves providing evidence of the skill shortage they need to fill. 

Although this is not explicitly spelt out, if the role is not on the Shortage Occupation List or has a salary above £159,600, the most straightforward way to demonstrate that the skill shortage is by advertising the role in line with the Resident Labour Market Test. This evidence can be re-used as part of an individual Tier 2 (General) visa application.

Key personnel for the licence

The Home Office also requires the organisation to nominate certain individuals to take on roles in respect of the sponsor licence.  The people nominated must be primarily based in the UK. The main roles are:

  • authorising officer –  perhaps the most important of all the roles, this should be given to someone senior. Ideally it should be someone who has some involvement with recruitment and/or HR as they will be ultimately responsible for the licence and to ensure that the sponsor licence duties are met.
  • key contact –  this person is the main point of contact with the Home Office.  A legal representative can undertake this role, and it is recommended you do so, as this will enable you to chase the application on your client’s behalf if needs be.
  • level 1 user –  responsible for all day-to-day management of the licence via access to an online portal, the sponsorship management system (SMS). At the application stage this has to be an employee but once the licence is secured, others, including representatives, can be set up as level 1 users, or level 2 users who are able to undertake certain limited tasks on the SMS.

It is important to carefully consider whether anyone nominated has skeletons in the closet, particularly any criminal conduct or previous adverse involvement with the Home Office. Applications for sponsor licences can be refused due to the character and past behaviour of the key personnel. The Home Office can and will run its own checks on nominees.

What about the suitability criteria?

This is more complex I am afraid. Essentially the Home Office will want to be sure that the organisation and the key personnel are bona fide.

Specifically, they will want to know that the organisation has the HR or recruitment systems in place to meet the myriad sponsorship duties that an employer effectively signs up to when they become a sponsor.

Sponsorship duties

Sponsorship duties include reporting certain information about sponsored workers via the sponsorship management system. The report must be made within ten working days of the event occurring. Reportable events include a delay in a start date or change in work location for a Tier 2 worker.

They also include keeping detailed records on sponsored workers, such as contracts of employment, payment details and most importantly evidence where applicable of running the Resident Labour Market Test before hiring the person.

The duties are certainly burdensome, and in some cases entirely pointless. One particularly irksome duty is to report when a worker has changed their immigration category — for instance, when they have been granted indefinite leave to remain after five years in Tier 2 (General). It is maddening to be required to report something the Home Office already knows.

But a sponsor will need to be prepped on what the duties are, what they entail and the consequences if they fail to adhere to them.

Compliance visits

In particular, sponsors should be warned that the Home Office can visit them as part of the sponsor licence application process to check their systems are robust enough. This is the principal method by which the Home Office can assess the suitability criteria.

These compliance visits were pretty common a few years ago, particularly for start-ups, but have become rarer of late. They will usually occur if the application is deemed high risk in some way.

Even if they avoid a visit during the application process, a sponsor can be inspected by the Home Office at any point while they remain a sponsor licence holder.

During a visit the inspector will want to check the sponsor’s HR systems and speak to the authorising officer. They can also request to interview Tier 2 employees to ensure that the vacancy they have filled is a genuine one.

If the Home Office finds evidence that the employer is not meeting their duties, their licence can be suspended or even revoked — meaning their sponsored workers will have their visas curtailed. In 2019, almost 600 Tier 2 and Tier 5 licences were suspended, and over 400 revoked

This puts the worker at risk of losing their job and their right to remain in the UK, not to mention operational and reputational damage for the employer.

Spending some time with your client during the application process, checking their policies and systems to see if they can meet the standards that are expected of them, is a useful exercise. You can then spot and iron out any deficiencies which could come back to haunt them in the future.

How do I actually submit the application?

Not on a nice user-friendly Access UK form, unfortunately. You will instead have to grapple with an online application form specific to sponsor licensing, which crashes regularly and is badly in need of an update. 

The form is pretty straightforward, if a little awkward to use. You will need to choose which categories you want the license to cover (as shown below).

It then asks for the key personnel on the licence and which supporting documents you are going to provide to meet the eligibility criteria, as discussed above.

A legal representative can help a sponsor to complete the form but the Home Office guidance is clear that it must ultimately be submitted by the sponsor. If you can’t be with the client when they submit it, you can prepare the form and pass on the login details for them to press submit themselves.

Once the online form is submitted, a fee is paid depending on the size of the organisation: £536 for a small company or a charity and £1,476 for a medium or large company.

Then a submission sheet is generated which previously had to be printed off and signed by the authorising officer. Due to the COVID-19 lockdown, the Home Office will now accept a pdf and a digital signature. 

The normal rule is that you have five working days from the point of submission to send your bundle of supporting evidence to the Home Office. This has also been relaxed in light of current circumstances.

When do I get a decision?

Decisions take around four to six weeks. The sponsor will be emailed with the result of the application.

If successful they will be granted a licence valid for four years from the date of decision. This will usually be an A-rated licence which means they will be granted access to the sponsor management system via login details for the nominated user. The organisation will then have the ability to start sponsoring workers.

Bear in mind that there are no second chances. If the application is refused, there is no right of appeal against this decision and a six month cooling off period will kick in preventing the sponsor from making another application during this time period.

How soon should I apply to be ready for January 2021?

As we mentioned earlier, the new system due to be in place from January 2021 will see significant changes to Tier 2.

The minimum skill level for sponsorship will be dropped from RQF level 6 to RQF level 3. This means that jobs which are considered to be A-level standard can be sponsored, instead of the Bachelor’s degree qualifications which are required now. We are also going to be saying a long overdue goodbye to the Resident Labour Market Test.

Organisations that think they are likely to be sponsoring individuals at this lower skill level can apply now for a sponsor licence. The Home Office recently added a new Annex 9 to the sponsor guidance aimed at businesses that want to get their applications in ahead of time. It states that:

You must meet all of the requirements set out in this guidance, except the current requirement to offer employment at RQF6 or above.

Otherwise, the application process will be largely the same. The organisation will still need to meet the eligibility and suitability criteria, apply on the same online form and rely on Appendix A for the supportive documents. The employer will, however, need to show they can offer “genuine employment skilled to level RQF3 or above” .

Appendix A has been largely unchanged so sheds little light on what exactly proving this entails. The guidance says that “further information on this will be provided later in the year”.

Organisations given a licence on the basis that they don’t need it yet, but might next year, will not be able to sponsor migrants straight away as they will not be allocated any Certificates of Sponsorship. The Home Office intends to start accepting Tier 2 visa applications under the new rules from the autumn, so such licences should be operational by then.

Seems like a pain. Will things get easier in future?

As well as changes to the substance of Tier 2, there are also changes to the licensing process in the works. The government says that it wants to overhaul the sponsorship system and reduce the duties on sponsors.

Improvements are long overdue but with the amount of work the Home Office currently has on its plate, this is likely to be on the back burner for the next year or two at least. 

This article was originally published on 3 April 2020 and has been updated in light of the revisions to the sponsor guidance issued on 6 April 2020.

Joanna Hunt

Joanna Hunt is a Managing Associate at Lewis Silkin LLP. She advises individuals and businesses on all aspects of the UK immigration system. To find more out about Lewis Silkin's immigration services visit their website; http://www.lewissilkin.com/EIR/Services/Immigration-And-Global-Mobility

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