Tips for UK Sponsor Licence Holders

Breytenbachs have a team of consultants dealing with UK Sponsors and Sponsor Licences. Every month, they provide UK Sponsor Licence Holders with more tips to ensure compliance with Home Office rules and regulations.

National Minimum Wage Increase

As we approach the end of 2023, many employers will be looking to plan ahead for the new year. In doing so, it is important to take note of the government’s recent announcement regarding the National Minimum Wage increases set to come into effect as of 1 April 2024. Sponsoring organisations will need to prepare to meet the higher rates of pay for all sponsored workers who are not already meeting or exceeding the new figures to ensure their continued compliance with sponsorship and general employment law requirements. 

In addition to increasing the National Minimum Wage (NWM) rates, it is also essential to note that the Home Office is also lowering the age threshold for the maximum NMW rates (the “National Living Wage”) to be paid, meaning that those aged 21 and above must now be paid at the highest rate (currently only required for those ages 23 and above).

As of April 2024, the NMW rates will be as follows:

• National Living Wage (21 and over): £11.44 per hour (9.8% increase)
• 18 – 20 years: £8.60 per hour (14.8% increase)
• 16 – 17 years old: £6.40 per hour (21.2% increase)
• Apprentice rate: £6.40 per hour (21.2% increase)
• Accommodation Offset: £9.99 (9.8% increase)

The Immigration Skills Charge (ISC)

For companies to sponsor a migrant worker successfully, a myriad of fees must be paid to the Home Office. The fees are to
obtain the Sponsor Licence, assign a Certificate of Sponsorship, and apply for the Skilled Worker visa itself.  One of the more recently introduced fees payable is the Immigration Skills Charge or ISC, which the Home Office implemented in April 2017. 

The ISC is usually payable for each Certificate of Sponsorship (CoS) assigned under either the Skilled Worker or Senior/Specialist Worker category. It is not payable for alternative sponsorship categories, nor is any ISC fee payable for dependent family members attached to the worker’s visa application. 

Where the ISC fee applies, small or charitable companies would be charged £364 per year of employment covered by the CoS, with medium or large companies being charged £1,000 per year. 

There are, however, some circumstances in which companies are exempted from paying the ISC. Including if the migrant they seek to sponsor is switching to the Skilled Worker route while on a Student visa in the UK. Other notable exceptions include:

• If a company sponsors a worker for an Entry Clearance application for less than six months.
• Where a company sponsors a worker under one of the following SOC Codes: 2111; 2112; 2113; 2114; 2119; 2150; or 2311.  
• Where a company is sponsoring a worker under a previously assigned CoS, and the new CoS being assigned covers a work period that would not exceed the current period of permission.

Please note that other exemptions may apply. For further information, please don’t hesitate to contact your BIC consultant, who will happily advise on your particular circumstances.

Can a Sponsor Recoup the ISC from an employee?

As Sponsors will likely be aware, in most circumstances, when assigning a Certificate of Sponsorship (CoS) to a Skilled Worker or Senior/Specialist Worker, the sponsoring company will be required to make payment of the Home Office’s Immigration Skills Charge (ISC). The level of ISC payable depends on the size of the company looking to Sponsor the Skilled Worker migrant. Small or charitable companies are charged a rate of £364 per year of employment, with medium/large companies being charged £1,000 per year of employment.

As this cost can be considerable, some sponsors wish to know if they are able to recoup some or all of the ISC from the workers they are seeking to sponsor. It is very important, however, for sponsoring companies to understand that the Home Office guidance expressly prohibits them from passing on any of the ISC cost to the migrant worker who is being sponsored, whether directly or indirectly. Failure to apply this guidance can result in the Sponsor Licence being revoked and, as such, sponsors must be prepared to cover this cost for all Skilled Workers or Senior/Specialist Workers requiring to be issued, unless a permitted exemption applies.

Please contact your Breytenbachs consultant for further information, including which candidates are exempted from the ISC requirements.

Students Switching to the Skilled Worker Visa

As of July 2023, the Home Office has made some changes to the Immigration Rules, which included some changes to the requirements for a UK Student visa holder to switch to a Skilled Worker visa from within the UK. Prior to these changes taking effect, it was possible for a Student Visa holder to switch into the Skilled Worker visa category from within the UK at any stage of their visa’s validity (i.e., whether the course had been completed or otherwise).

The Home Office has now amended the rules relating to these circumstances. It is important for sponsoring organisations and UK Student visa holders to understand the new requirements to ensure a successful outcome.

Under the new rules, a UK Student visa holder can only switch to the Skilled Worker visa category if one of the following conditions is met:

(i) The applicant has completed the course of study for which his visa was issued; or

(ii) The applicant is studying a full-time course of study with a higher education provider which has a track record of compliance, and the start date of sponsored employment stated on the Certificate of Sponsorship issued is no earlier than the course completion date or

(iii) The applicant is studying a full-time course of study leading to a PhD with a higher education provider which has a track record of compliance, and the start date of sponsored employment stated on the Certificate of Sponsorship issued is no earlier than 24 months after the start date of that course.

Changes to Salary Rates for Skilled Workers

The Home Office released a new Statement of Changes to the Immigration Rules on 9 March 2023, outlining the upcoming changes to the Rules, which are due to be implemented over the coming months, with many of the changes set to take place on 12 April 2023. As usual, the Statement of Changes makes a lot of amendments to the current Immigration Rules, but, in particular, it is important for UK Skilled Worker Sponsor Licence holders to be aware of the pending changes to the minimum salary requirements required to offer sponsored work to Skilled Workers. 

Under the new rules, the Home Office is altering the basic salary rates that must be met in order to sponsor a Skilled Worker. Once the changes take effect, these minimum salary rates will vary as follows:

• For positions that fall into Category A, the minimum salary threshold is being increased from £25,600 to £26,200p.a..
• For positions that fall into Category B the minimum salary threshold is increasing from £23,040 to £23,580p.a..
• For positions that fall under Categories C – F the minimum salary threshold is increasing from £20,480 to £20,960p.a..
• Additionally to the above the general minimum hourly rate is increasing from £10.10 to £10.75 per hour.

The Home Office is also making changes to the salary rates (and associated working hours) attached to each Occupation Code (SOC Code) so, in addition to taking note of the above, UK Skilled Worker Sponsor Licence holders must also take account of the altered rates attached to the relevant Occupation Code for each position they wish to sponsor.

Further changes are also outlined in the Statement of Changes released, both to the Skilled Worker visa category and to many other visa routes. Should you require any assistance in understanding the new rules and their impact on your business or personal circumstances, please feel free to contact your BIC consultant, who will be happy to assist.

Sponsor duties when a Sponsored Worker’s Employment ends early

When a company sponsors a migrant worker, the hope is always that the worker will remain employed for the full term of their visa. In reality, however, there are times when employment comes to an end earlier than expected. Whether this is due to the migrant worker deciding to leave the employment or having their employment ended by the sponsoring employer. In these circumstances, it is important that the sponsoring company understands their obligations to the Home Office.

Where a sponsored worker’s contract of employment/contract for services ends earlier than the end date that was specified on the migrant’s CoS, the Home Office requires this to be reported to them via the Sponsor Management System (SMS). The report is only required to be made after the sponsored worker has completed their last day of employment. At this point, the report must be made within 10 working days. As part of the report, the sponsoring company must provide the Home Office with the migrant’s most recent contact details. This will enable the Home Office to contact the worker and curtail their Leave to Remain in the UK. As such, it is also essential for sponsoring companies to ensure that they always keep an up-to-date record of employee contact details.

TUPE Transfers

What happens if my company has Skilled Workers TUPE transferred to it?

When a company sponsors a migrant worker, the hope is always that the worker will remain employed for the full term of their visa. In reality, however, there are times when employment comes to an end earlier than expected. Whether this is due to the migrant worker deciding to leave the employment or having their employment ended by the sponsoring employer. In these circumstances, it is important that the sponsoring company understands their obligations to the Home Office.

Where a sponsored worker’s contract of employment/contract for services ends earlier than the end date that was specified on the migrant’s CoS, the Home Office requires this to be reported to them via the Sponsor Management System (SMS). The report is only required to be made after the sponsored worker has completed their last day of employment. At this point, the report must be made within 10 working days. As part of the report, the sponsoring company must provide the Home Office with the migrant’s most recent contact details. This will enable the Home Office to contact the worker and curtail their Leave to Remain in the UK. As such, it is also essential for sponsoring companies to ensure that they always keep an up-to-date record of employee contact details.

Validity of a Certificate of Sponsorship (CoS)

UK companies that sponsor migrant workers must understand how long a Certificate of Sponsorship (CoS) is valid. This will ensure that the associated Skilled Worker visa application is processed smoothly. 

Once the Home Office has issued a Certificate of Sponsorship (CoS), it will remain available on the Sponsor Management System (SMS) for assignment for either twelve months if it is an Undefined CoS or three months if it is a Defined CoS. Any CoS not assigned within these timeframes will be removed from the SMS. 

Once a CoS (of either category) has been assigned to a migrant worker, it then remains valid for use for a further period of 3 months. During this time, the migrant must lodge their application for the Skilled Worker visa to be issued. It is useful to note, however, that the migrant worker is permitted to apply for their Skilled Worker visa up to three months before they are due to
commence work in the position for which the CoS has been assigned. As such, there is still some flexibility as regards timeframes. 

Start-Up Companies / New Companies

Clients often ask Breytenbachs whether it is possible for a company that has only recently started trading in the UK to obtain a Sponsor Licence.

We are happy to confirm that the Home Office have no provisions that specifically prohibit a newly formed company from applying successfully for a Licence.

However, the Home Office has slightly different documentary requirements for companies deemed to be “Start-Ups”. There needs to be certain personnel in place to be able to mount a viable application. Accordingly, whilst it is permitted, most newly registered companies may still find that they need to lay some initial groundwork before being able to apply for a Sponsor Licence with confidence.

The Home Office considers companies trading for less than 18 months to be a Start-Up.

How does the Shortage Occupation List impact Sponsorship?

The Shortage Occupation List (SOL) is a list of various occupations for which the Home Office is aware that the UK lacks a sufficient level of workers. The list includes a number of IT and engineering-related positions, some healthcare positions (including nurses and carers), and a variety of other occupations across multiple sectors. Companies holding UK Sponsor Licences must be aware of the provisions of the Shortage Occupation List and how this impacts the sponsorship requirements if they will be sponsoring any workers under one of the eligible SOL positions. Where a position falls under the SOL, the sponsoring company benefits from being able to pay the worker sponsored to undertake the role at lower salary rates than are usually required under the Skilled Worker system. As a general rule of thumb, if a position falls under the SOL, then, in place of the usual £25,600p.a. minimum salary requirement, sponsors are required to pay a minimum salary of £20,480p.a. In addition, positions that fall under the SOL may also be paid up to 20% less than the salary rate required under the Occupational Code that the position falls under. Furthermore, applicants (and their dependents) applying for a Skilled Worker visa to undertake an SOL position benefit from paying reduced application fees to the Home Office to process their applications.

Undefined vs Defined Certificates of Sponsorship

It is very important for companies sponsoring or seeking to sponsor workers under the Skilled Worker visa category to understand the difference between Undefined and Defined Certificates of Sponsorship (CoS). Especially as the Home Office may refuse Skilled Worker visa applications if the applicant applies with the wrong kind of CoS for their circumstances. 

Fortunately, the distinction between when each kind of CoS should be used is relatively straightforward – if the migrant will be lodging their Skilled Worker visa application from overseas, then a Defined CoS would be needed. If they are making their application from within the UK, an Undefined CoS is required. 

Following Brexit, the Home Office also relaxed the rules relating to which migrants are permitted to lodge their applications for a Skilled Worker visa from within the UK, so it is now possible for most migrants who reside in the UK on an alternative visa to apply for a Skilled Worker without having to leave the UK. It should be noted, however, that it is not possible for migrants who are present in the UK in any of the following visa categories to apply for a Skilled Worker visa from inside the UK: 

• Visitors; 
• Short-term Students; 
• Parents of a Child Student;
• Seasonal Workers;
• Domestic Workers in Private Households or
• Migrants who are in the UK outside of the Immigration Rules.

Accordingly, migrants in the UK under one of the above visa categories would need to depart the UK and apply for Entry Clearance to obtain a Skilled Worker visa, utilising a Defined CoS in that respect.

Sponsor Licence Validity

UK sponsoring companies need to know that once issued, a Sponsor Licence will be valid for four years, after which it will need to be renewed. The Home Office requires all companies employing migrants on a Skilled Worker visa or other sponsored work route to maintain an active Sponsor Licence throughout the period the migrants are employed. As most Skilled Worker migrants must complete five years of residence in the UK in that capacity, many sponsoring companies will be required to renew their Licence at least once if the migrant will be working with them for the entirety of their qualifying period. 

Retaining Records of the Period of Recruitment

Since the UK left the EEA, the Home Office no longer requires companies to complete a formal Resident Labour Market Test (RLMT) for a company to sponsor a worker under a Skilled Worker visa (previously known as Tier 2 (General) visa). Many sponsors do not realise, however, that even though there is no formal requirement to advertise a position, companies must still be able to explain how they have identified the migrant worker in question and if the migrant has been identified as part of a formal recruitment process, then the sponsoring company must still retain records of the period of recruitment undertaken, including (but not limited to): a screenshot, printout or photocopy of the advert, or a record of the text of the advert together with information about where the job was advertised and information about the people who applied for the position, including a record of the number of people who applied for the job, and the number of people shortlisted for interview or other stages of the recruitment process. It is also recommended to retain details of the questions asked of candidates at the interview and a summary of why the successful candidate (i.e. migrant worker) was selected. 

Logging into the Sponsor Management System (SMS)

UK companies that hold sponsor licences must ensure that their Level 1 User registered on the account logs into the Sponsor Management System (SMS) once a month. Sponsors must do this to check the notifications that appear on the landing page.

Breytenbachs are aware that the Home Office is actively monitoring this sponsorship responsibility. They also contact sponsors where they can see nobody has accessed the SMS for months. Breytenbachs thus recommend that clients holding sponsor licences ensure they access the Sponsorship Management System regularly.

How Breytenbachs can help Sponsor Licence Holders

Breytenbachs Immigration Consultants have a dedicated team of consultants dealing with Sponsorship Licences and Skilled Worker Visas. Contact us today to find out more or to arrange a consultation.

Email us at [email protected] or phone your closest Breytenbachs office at the following contact details: Durban – 031 880 2777 Cape Town – 021 879 0969 or Pretoria – 012 460 9959. You can also contact our London office at +44 207 442 2160.