The Court of Appeal recently confirmed in the case of Capital Care Services UK Ltd v Secretary of State for the Home Department [2012] EWCA Civ 1151 that the Secretary of State was entitled to revoke a sponsorship licence granted to Capital Care Services (UK) Limited (Capital Care) in circumstances where it was mistakenly granted in the first place and was subject to withdrawal at any time. In the circumstances, Capital Care did not have a legitimate expectation that the licence would run for the full four-year term.

Capital Care Services UK Ltd was granted a Tier 2 sponsor licence in error in January 2009 for a period of four years, despite its business model being fully disclosed to the Secretary of State. The licence was granted on the basis of the requirements and duties as laid out in the Tier 2 sponsor guidance in place at the time. Following concerns raised during a visit in November 2010, the licence was suspended in February 2011. The licence was later revoked in July 2011 despite representations made by Capital Care.

Capital Care applied for judicial review of the decision to revoke its licence on the grounds that it had a legitimate expectation of four years’ use of the licence, it had suffered a loss as a result and the decision was so unfair as to amount to an abuse of power. Permission to apply for judicial review was refused on the basis that the licence should not have been granted at all, the UKBA made it clear that the four years’ duration was not guaranteed, the company could not prove loss and there was an overriding public interest in the protection of immigration control. 

The issue at the centre of the case was that Capital Care is an employment agency and the Tier 2 sponsor guidance clearly states at paragraph 61 that such businesses can apply for a sponsor licence ‘…but only to sponsor migrant workers who will be employed by you’. The guidance goes on to state that if a sponsor licence is granted but it is later found that migrants have been sponsored then supplied to another employer and responsibility for deciding their duties, functions and outcomes or outputs of their job has not been retained, then the licence will be revoked. This requirement was contained in the Tier 2 sponsor guidance at the time Capital Care applied for a licence and has been carried through in all amended Tier 2 sponsor guidance since.

In light of the ruling it is of utmost importance that Tier 2 sponsor licence holders ensure that they check their business models to ensure that they are compliant, especially those employers who have Tier 2 migrants working on a contract basis with another organisation. Further guidance on migrants working on a contract basis can be found at paragraphs 533 to 536 of the Tier 2 sponsor guidance, which reiterates that the sponsoring organisation must have full responsibility for deciding the duties, functions and outcomes or outputs of the migrant’s job.

For a full copy of the judgment, please click here and to access the current Tier 2 sponsor guidance, please click here.