ARTICLE
14 January 2025

Important Updates To Home Office Guidance For Sponsor Licence Holders

L
Latitude Law

Contributor

Founded in 2007, Latitude Law has steadily grown to be one of the largest specialist UK-inbound immigration law firms. With offices in Manchester, London and Brussels, Latitude Law are experts in business immigration and work with multi-national corporations relocating global talent to the UK, entrepreneur-led businesses looking to invest in the UK and companies seeking to employ overseas workers in a variety of capacities. Their experienced solicitors can guide you and your business through the complex UK immigration rules, advising across all available visa routes. Latitude Law has particular expertise in working with high-net-worth individuals and partnering with HR teams to ensure ongoing sponsor licence compliance, particularly in the context of business mergers and acquisitions
The Home Office updated sponsor licence guidance, emphasizing compliance on fees, personnel, and genuine employment practices. Key changes include prohibiting fee transfer to sponsored workers, restrictions on personal sponsorship, and new personnel requirements, including stricter controls over sponsor conduct and compliance.
United Kingdom Immigration

At the turn of the New Year, the Home Office made a number of changes to its primary guidance for holders of sponsor licences. Here we summarise key changes, and would encourage you to review your processes to ensure you remain compliant. Our team at Latitude Law is happy to answer any questions arising; just contact your solicitor or get in touch at info@latitudelaw.com or on 0300 131 6767.

Prohibition on passing fees to sponsored staff

Aimed at stopping perceived exploitation of workers, particularly in the private care sector, guidance now explicitly prevents an employer from passing all or part of sponsor licence fees, including associated administrative costs, to sponsored staff. Doing so is a presumptive ground for revocation of a licence.

We can be sure this covers the following:

  • Sponsor licence application fee
  • Certificate of Sponsorship (CoS) fee
  • Premium service fees, eg the additional £500 for a licence application
  • (as was already the case) Immigration Skills Charge

What we can be sure is not covered:

  • In our view, although not explicitly stated, an employer may still pass on (or claw back under the terms of an employment contract, for example where a worker leaves early):
  • Visa or permission to stay fees
  • Immigration health surcharge
  • Premium fees associated with a visa or permission to stay application
  • Legal fees for the worker's visa or permission application

What we are not sure about:

  • Legal fees associated with a licence application or CoS request

This uncertainty is something on which we are seeking clarification from the Home Office; an update will be provided as soon as we have definite information. For now, caution is advised with licence and CoS-related legal fees.

Prohibition of sponsoring workers in a personal capacity

Guidance gives two examples of this:

  • where the sponsor is an individual or household and is not otherwise conducting business or providing a service in the UK; and
  • where the worker would be employed by or engaged for the personal benefit of an individual who works for the organisation, or a close relative or partner of that individual, and the role is unrelated to the organisation's wider activities.

The target here is personal staff members; nannies and au pairs were already incapable of being sponsored, as the relevant occupation codes were removed from the Immigration Rules in April 2024. Where an employer already has such staff on the books, the employment can continue but they cannot assign more CoS to them. Private servants in a diplomatic household remain an exception to this rule.

This change does not, in our view, alter the position with sponsoring family members to work for your business, subject to the disclosure rules already in place for such hires, so long as they are engaged in work for your core business.

Key personnel changes

  • For licence applications from 1 January 2025, at least 1 Level 1 User (now known as a 'primary Level 1 User') must be both an employee, director or partner in the business and a 'settled worker'. Previously an 'office holder' could also be the settled Level 1 User, which included a non-executive company secretary. They would no longer be able to act in this role alone. Existing licences can continue as before, but our advice is that you change things to meet the new rules at your earliest convenience.
  • 'Settled worker' is confirmed as including those with certain types of limited permission to stay in the UK: representatives of overseas businesses, innovator founders, Tier 1 entrepreneurs and expansion workers.
  • Those recorded as persons with significant control (PSC) of your business with Companies House are now included as personnel whose past or current conduct could lead to sponsor licence compliance action.
  • No key personnel on a licence can be legally prohibited from being a company director unless a court has given permission for this.

Other changes

  • Sponsors must demonstrate that they are able to and intend to offer genuine employment meeting salary and skill level criteria across all sponsored work routes; essentially a beefing-up of the assessment the Home Office will conduct for new licence applications, and CoS requests.
  • A new 'Sponsor UK' online system is being introduced to replace the Sponsor Management System (SMS). It will not contain provision for Level 2 Users, so everyone with access to the system must meet Level 1 User criteria.
  • A new mandatory refusal ground where the Home Office considers a sponsor is acting as employment agency and will supply a worker to a third party. The current permissibility of sponsoring staff who remain under your direction while contracted to work for third party businesses remains.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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