As the government continues to crunch the numbers relating to net migration, it is setting the compliance threshold for sponsor licence holders ever higher – and is increasingly targeting sponsored Tier 2 workers.

Obtaining a fresh sponsor licence is becoming increasingly difficult. The Home Office is asking for more information and scrutinising each application. It wants to know the reason for the application and details about the nature of the business and the posts to be filled. It also expects to see evidence of the resident labour market test (where applicable) and details of the individuals whom the business wishes to sponsor.

Where the employer is exempt from conducting a resident labour market test, it is now advisable to make this clear in the sponsor licence application. The Home Office wants to know that the sponsor has actively sought recruitment within the settled workforce before submitting an application and offering roles to non-EU or settled workers.

It appears clear that there is a drive to reduce the number of Tier 2 sponsor licence holders. The Home Office is not only making it more difficult for first-time applications, but also closely observing businesses with existing licences. It is expected to conduct more frequent audits and sponsor licence holders should be aware that audits can be unannounced.

Sponsors must ensure that their human resources systems and processes are up to date at all times and compliant with regard to legal right to work checks, sponsorship management system reporting, migrant tracking, record keeping and recruitment. Where a licence is coming up for renewal, sponsors should prepare for an audit as part of the renewal process.

If the Home Office conducts an audit and is not satisfied with the processes in place, it can implement an action plan, downgrade the licence to a 'B' rating or revoke the licence entirely. The business impact of such a downgrade or revocation should be at the forefront of sponsors' compliance strategy.

For further information on this topic please contact Ben Sheldrick at Magrath LLP by telephone (+44 20 7495 3003) or email ( The Magrath LLP website can be accessed at

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