The greatest number of workers from outside the European Economic Area enter the United Kingdom to work because their employers are licensed as “sponsors” by the UK Border Agency. These employers issue certificates of sponsorship for their sponsored workers, and the workers use the certificates as part of the process for obtaining UK immigration authorisation to enter and work in the United Kingdom. In this publication we look at what it means for an employer to become a sponsor. We also highlight the effects this new system has on business practices and employment relationships and the potential civil and criminal liabilities that are part of this system.
Who needs to be a sponsor?
Sponsorship is the most common route by which workers from outside the European Economic Area enter the United Kingdom to work. For example, intra-company transferees come under the sponsorship system.
What is the Border Agency looking for in a sponsor?
The Border Agency will register a British employer as a sponsor if
- The employer is a bona fide organisation operating lawfully in the UK;
- The employer is trustworthy;
- The employer is adjudged to be capable of carrying out its duties as a sponsor.
What information is required to demonstrate that an employer is bona fide?
The Border Agency wants to ensure that the employer is based in the UK, operating lawfully and able to offer the proposed job. Evidence the Border Agency will require to prove these qualifications includes the audited financial statements of the sponsor applicant, its registration with UK tax and other applicable regulatory authorities, the lease or similar document showing its entitlement to use its business premises, and a certificate of employer’s liability insurance for its business.
Employers applying to be licensed to transfer employees from other parts of their multinational group to the UK also must provide evidence of the relevant intercompany ownership links.
What information is required to prove trustworthiness?
The Border Agency will consider the immigration track record of the employer to date and the personal details of the people who will be licensed by the employer as having various levels of responsibility for operating the sponsorship system for the employer. The sponsorship application also calls for disclosure of transgressions of UK immigration law—both by the designated persons and by any director or other person involved in management of the employer’s business.
What are the duties of a sponsor under this system?
Broadly, every sponsor must be able to track and monitor its sponsored workers to the extent necessary to be able to report certain events to the Border Agency.
Sponsors have an obligation to report to the Border Agency the occurrence of any of a number of events involving any of its sponsored workers. Events include the sponsored worker’s unauthorised non-attendance at work for more than 10 days, non-compliance with immigration requirements or disappearance, and significant changes in the sponsored worker’s or the sponsor’s circumstances. These circumstances include material changes in the worker’s salary package, job, and the location of the place of work.
Sponsors have an obligation to comply with UK immigration laws and to co-operate with the Border Agency. The latter duties include allowing Border Agency staff access to its premises on demand, whether the visit has been pre-arranged or is unannounced.
Every UK employer has certain record-keeping duties, whether or not they intend to register as a sponsor. All employers must check an employee’s immigration documents prior to employment and retain copies of them. Employers must verify at least annually that those of its workers who have limited leave to remain and work in the United Kingdom are still in status. Sponsors also have to ensure the personal contact information of their sponsored workers is kept up-to-date.
How does the Border Agency assess that a sponsor-applicant is capable of complying with these duties?
The Border Agency will review any history of non-compliance with immigration laws and grade the employer’s human resource systems. A Border Agency account manager or compliance officer may ask to speak to migrant workers, other workers and managers involved in the recruitment of migrant workers. In reviewing human resource systems, the Border Agency will look at five areas and ask questions such as the following:
Monitoring immigration status of workers
- What steps are taken to check a potential employee’s immigration status?
- Are the required immigration status documents being collected and kept?
- How are work authorisation expiry dates monitored?
Maintaining contact details of employees subject to immigration restrictions
- Is a system in place for storing and accessing the required information?
- Does the employer conduct a regular audit to update this information?
- Do employees know that they should notify HR of any change in their contact details and how to do that?
- Is there a comprehensive personnel file for each employee subject to immigration restrictions, kept in accordance with HR good practice?
- Can this information be quickly accessed so that copies of document can be readily provided to the Border Agency when requested?
Migrant tracking and reporting
- Are those workers subject to immigration control monitored sufficiently so that the employer will know when a reportable event occurs?
- Is there an established procedure to ensure that the sponsor’s designated responsible person is informed when a reportable event occurs and then acts on that information?
Recruitment practices and accreditation
- Does the employer check and keep copies of the registration and professional accreditations of personnel before they start work?
- Are the expiry dates of those registrations monitored and checks made to ensure that the registrations are renewed before they expire?
Who operates the sponsorship system for an employer?
Four positions must be filled by individuals identified in the sponsorship application. Each of these individuals will be an integral part of operating the online Sponsor Management System for a sponsor. The Border Agency will look to these individuals to exercise the sponsor’s rights responsibly and to ensure that the sponsor’s duties are fulfilled properly.
Authorising Officer. The Border Agency requires that this person be a senior, competent officer within the organisation and be based in the UK. The Authorising Officer is responsible for the activities of users of the Sponsor Management System—the web-based interface with the Border Agency through which the sponsor exercises its sponsorship activities—on behalf of the sponsor. The Border Agency will hold the Authorising Officer fully accountable for the organisation’s actions, or failures, as a sponsor.
Key Contact. This person is the employer’s main point of contact with the Border Agency and the first person the Border Agency will contact with any questions it may have. The Key Contact person must be an employee within the organisation and be based in the UK. An Authorised Officer may also serve as the Key Contact person.
Level 1 User. A Level 1 User has the right to operate all aspects of the Sponsor Management System on behalf of the employer. A Level 1 User must be either an employee of the sponsor or an authorised representative. In either case, this person must be based in the UK. An Authorising Officer may be the Level 1 user as well.
Level 2 User. A Level 2 User has the right to operate only limited aspects of the Sponsor Management System on behalf of the employer.
What happens after the sponsorship application is submitted?
Based on its assessment of the information in the application, supporting documents, its own investigations and sometimes a compliance visit by a Border Agency officer, the Border Agency will either license the employer as a sponsor for four years or refuse the application. A successful applicant receives a sponsorship license number, and its Level 1 and Level 2 Users are given access to the Sponsor Management System.
When the Border Agency issues a license, a sponsor is given an “A” rating or a “B” rating. The “A” rating means the sponsor’s application and systems are acceptable. The “B” rating means the sponsor must do better in some areas. The Border Agency will discuss these areas for improvement with the sponsor and agree an action plan for rectifying the deficiencies with the sponsor.
Are there penalties associated with the sponsorship system?
The sponsorship system represents a significant outsourcing of functions that have traditionally been seen as government responsibilities. The UK government believes there are benefits for sponsors in this outsourcing. It also believes these benefits must be accompanied by penalties to ensure that sponsors operating the sponsorship system do so with seriousness commensurate with the underlying responsibilities.
Failure of a sponsor to comply with its obligations as a sponsor may result in the following penalties:
- Border Agency officials are empowered to issue on-the-spot civil fines for a sponsor’s failing to carry out its obligations as a sponsor. (See the “duties” section above for a summary of these obligations.).
- The failure to comply, or to be seen as capable of complying, with the sponsor duties may result in the denial of a license application, the employer being granted only a “B” rated license, an “A” rated sponsor’s license being downgraded to a “B” rating, or a sponsor having its license revoked.
If these failures are intentional, the sponsor and the designated persons managing the sponsorship system on behalf of a sponsor may face criminal sanctions.
In short, these sanctions can affect the employer’s ability to bring more workers into the UK and to continue to employ workers it has already sponsored.
Employers to whom employees are transferred in an asset acquisition under TUPE 2006 (see below) face potential risks and penalties for illegally employing transferring migrant workers. If the new employer is a sponsor already, it will need to ensure that transferring workers who are subject to immigration control have their status changed to reflect their new employment. If the new employer is not already a sponsor, it will need to apply for, and be granted, a license before it can make the necessary changes to the status of these transferring employees. See also the “employment law implications” section below.
The penalties applicable to all employers for failing to carry out the “right to work” document checks continue to be applicable to sponsors as well.
- An employer who employs an adult subject to immigration control who is not entitled to undertake the work in question is liable to pay a civil penalty of up to £10,000 per illegal worker. An employer can avoid this fine if it has complied with the requirements to check and copy certain immigrationrelated documents before the employee starts working and, at least annually, re-checks the “right to work” documents of those of its employees who are subject to immigration control.
- If an employer employs a worker knowing that the person is an adult subject to immigration control and that the person does not have leave to enter or to remain in the UK or is subject to a condition preventing that person from accepting employment, the employer may be criminally prosecuted. Where this offence is committed by an employer that is a corporate entity “with the consent or connivance of” any director, officer, manager or person purporting to act in one of those capacities, these individuals may also be criminally prosecuted.
What are the employment law implications of the sponsorship system?
Employers need to consider how their obligations under the new immigration system fit in with their existing duties to employees. This is particularly relevant in the context of avoiding unlawful discrimination in recruitment and employment practices, ensuring compliance with data protection legislation and in relation to transfers under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006).
Employers must ensure that they carry out document checks for evidence of the right to work in the UK on all job applicants so as to avoid discrimination claims under the Equality Act 2010 on grounds of race, colour, ethnic or national origin, or nationality.
Employers should also have regard to the statutory code of practice issued by the Border Agency which provides guidance to employers on complying with their duties to prevent illegal working while avoiding discriminatory practices. Failure to observe the code of practice is not of itself unlawful but may be taken into account by an employment tribunal in deciding whether or not discrimination has occurred.
An employer’s duties under the new immigration system involves keeping accurate and up-to-date records of their employees. This may involve the introduction of new employment conditions and policies to ensure compliance with data protection and privacy principles. For example, the sponsor’s duty to maintain up-to-date contact details for migrant workers, such as their mobile telephone numbers, will be impractical without there being a counterpart obligation in the employment contracts of these employees to keep the employer informed of any changes in these details.
Transfer of Undertakings (Protection of Employment) Regulations 2006
TUPE 2006 provides that, where there has been a transfer of a business, or part of a business, or a “service provision change,” the new employer will inherit all rights, liabilities and obligations in relation to employees transferring with that business. The Border Agency must be notified of the changes affecting any sponsored worker within 28 days of the transfer of employment. The new employer must be a licensed sponsor or must apply for a sponsorship license within 28 days after the transfer.
When should an employer start preparing to apply for sponsorship status?
It will take time for an employer to determine what needs to done, by whom and how. And that is before an employer can be ready to submit its license application. Once the application is submitted, it takes time for the Border Agency to conduct its investigations and make its determination.
Three conditions should be in place before an employer submits its license application to the Border Agency.
- The sponsor-applicant should be well on the way to having in place the HR systems that will enable it to fulfil its sponsorship duties. These systems are likely to be sampled by a Border Agency compliance officer as part of a compliance visit. An employer intending to apply to be licensed as a sponsor should start auditing its current personnel records, recruitment practices, and employment policies and procedures to see how they compare to the sponsorship requirements. Amendments should be implemented in those parts that do not meet these requirements.
- An employer must consider which individuals will assume the responsibilities required of its Authorised Officer, Key Contact and Level 1 and Level 2 Users. The employment law implications of these assignments should be fully understood and discussed with these employees.
- An employer must ensure that it will have the necessary supporting documentation available to support the license application. (See “bona fide employer” section above.) This documentation needs to be sent to the Border Agency within 10 days of electronic submission of the application, and some of this documentation is likely to have to be specially organised.