In response to political pressure to curb immigration, the UK Home Office has stepped up enforcing compliance with sponsor licence obligations by UK businesses that employ overseas workers.
This has led to a surge in the number of suspensions and revocations of sponsor licences, with a 300% increase in negative action taken against sponsors as a result of an investigation or compliance visit.
Since 5 July 2024, Home Office data show there have been 9,000 visits by immigration enforcement officers, resulting in 6,410 arrests, representing a 48% increase in visits and a 51% increase in arrests compared to the previous year.
Additionally, there have been 1,921 civil penalty notices issued to employers since 5 July 2024.
The first quarter of 2025 saw 339 Skilled Worker sponsor licences suspended and 276 Skilled Worker sponsor licences revoked, a notable uptick compared to previous years.
Sponsors and organisations applying for a sponsor licence must therefore be aware of the compliance requirements and obligations imposed by UKVI (UK visas and immigration) to avoid such negative action.
Broadly speaking, the obligations are:
- Prevention of illegal working;
- Reporting duties;
- Record-keeping duties;
- Complying with UK immigration laws;
- Complying with wider UK law; and
- Not engaging in behaviour or actions that are not conducive to the public good.
Figures published by UKVI show that health and care, IT, technology and engineering sectors all rely heavily on visa sponsorships of overseas workers to plug skills gaps.
In view of the significant rise in both the amount of audit activity and the number of sponsor licence revocations and suspensions, ensuring compliance with sponsor duties is crucial to maintaining sponsor licensing and avoiding penalties.
Loss of licence and its impacts
A Home Office audit can happen at any time and sponsor licence holders must ensure they have the right processes and policies in place to demonstrate compliance.
An unsuccessful audit can result in the revocation or suspension of a business' licence, restricting future sponsorships or cancelling the visas of existing employees outright. The levels of disruption this may cause a firm can be debilitating.
For the licence to be reinstated, sponsors would need to demonstrate progress against an action plan within a prescribed timeframe – otherwise, the licence could be revoked.
Licence revocation would entail:
- Cancellation of leave for all sponsored staff;
- Sponsors prohibited from applying for new licences over a specified cooling-off period of 12 months; and
- Reputational damage
Sponsors failing to carry out correct right to work checks without good reason for each employee could also face fines and be ordered to pay a civil penalty for an illegal worker.
There are also cases of severe personal sanctions such as bans on hiring or even criminal prosecution for the organisation's authorising officer (who has overall responsibility for the sponsorship licence).
Common reasons for the loss of a business' sponsor licence include failing to conduct correct Right to Work Checks, not updating Sponsor Management Systems, poor record-keeping, and breaches of hybrid working policies.
As immigration and sponsorship rules are a complicated and sensitive area, failing to seek professional advice is typically a contributing factor when businesses fail such audits.
Wider challenges
Businesses may undertake an internal audit if they have the resources and expertise to do so, however most firms do not.
A sponsor that has concerns regarding its licence compliance often reach out to immigration specialists to carry out in-person health checks on the state of their compliance.
These processes are valuable, but they are also timely and costly. Obtaining budget sign off can be challenging for many organisations.
Given the increased costs and additional administrative burden associated with sponsoring overseas workers, many employers have introduced fee claw back agreements (the reclamation of previously paid money) in employee contracts or are restricting sponsorships all together.
This poses challenges in terms of balancing the requirements of the Equalities Act, given there is no longer a resident labour market test that requires employers to favour resident workers over foreign nationals when hiring for a UK based role.
The risks of a discrimination claim need to be considered carefully alongside any policy which seeks to limit or restrict sponsorship for applicants who require work permission.
The risks and costs, as well as the random nature of checks associated with correctly complying with immigration sponsorships can be daunting for businesses.
To address this issue, some immigration advisers have developed simple self-help audit tools which will help businesses prepare for inspections and assess compliance.
These tools allow employers to self-assess their immigration compliance against key areas of sponsor management compliance and serve to complement a firm's existing compliance practices.
It remains to be seen what effect the government's focus on sponsor licences will have on business, but in the current climate, companies looking to hire overseas staff in the UK must prioritise compliance to avoid falling foul of enforcement measures and incurring unnecessary setbacks, fines and penalties.