How to get a sponsor licence in the UK

By Baya Immigration Legal Services on Small Business UK - Advice and Ideas for UK Small Businesses and SMEs

You might be asking yourself whether you need a sponsor licence. The truth is that, sometimes, it’ll land you with the specialist skills to meet the needs of your business.

Here’s what you need to know about applying for one.

What is a sponsor licence?

A sponsor licence is a licence issued by the UK government that allows businesses to sponsor workers from outside the UK to work for them. The Home Office like to make clear that holding a sponsor licence is a privilege, not a right, and comes with conditions.

Why does your business need one?

A sponsorship licence can benefit your business by allowing you to address any skill shortages by hiring workers from overseas. The licence can also facilitate growth and expansion, providing access to a larger pool of skilled talent who can help take your business to the next level.

Alternatively, you might have someone working for you already on a graduate or student visa who you want to employ past the end of that visa.

Which licence is right for you?

The licence that is the usually the most relevant to small businesses is the skilled worker licence. However, there are industry specific licences – for example, in the creative industry or if you recruit religious workers. There are also expansion worker licences for companies expanding into the UK from overseas.

One example of how government economic strategy has evolved around sponsorships is the ‘Scale-up Visa’. Launched in 2022, its intention is to make it easier for UK businesses experiencing rapid growth to hire global talent, especially in sectors such as engineering, software development, programming, and science R&D. Eligibility to become a scale-up sponsor is that a company has grown 20% per year (in either employment or turnover) and has at least 10 employees.

Do you have a ‘genuine vacancy’?

The ‘genuine vacancy’ requirement is essential for a successful sponsor licence application. That is one that:

1. Requires the jobholder to perform the specific duties and responsibilities for the job and meets all of the requirements of the relevant route
2. Does not include dissimilar and/or predominantly lower-skilled duties
3. Is appropriate to the business in light of its business model, business plan and scale.

Firstly, your business must be looking to sponsor a worker who has the skillset to fulfil a specific set of duties and responsibilities in a certain role. The role must be on the UK Visa and Immigration’s (UKVI) list of skilled worker jobs and must be paid at a minimum salary specified by the government. The absolute minimum for most roles is £38,700/ Some ‘shortage occupations’, or people that are new to the job market (under 26 or a student/graduate) can be paid £30,980. In certain professions you can be paid less as well.

Secondly, UKVI are unlikely to find the vacancy genuine if it involves duties that are similar to ones your current staff undertake, or duties which can be done by lower skilled workers who can be hired from the UK labour market.

Third, the vacancy should be necessary for your business. If the business doesn’t truly need the worker to achieve its objectives, then it will be difficult to prove that it is genuine.

What do I need to do as an employer before applying?

Once you determine eligibility, you will need certain systems and people in place.

HR systems: You will need appropriate HR systems that can effectively monitor your sponsored workers.

What is appropriate for your business usually depends on the business’ resources. Some use an online HR system, but it may not have all of the features that your business needs, so an employer would need to be aware of this when employing an HR system. Very small and newly-formed businesses often use something as simple as Microsoft Excel to monitor annual leave, sickness, visa expiry dates and contact details. The Home Office don’t specify a system, they specify the data that has to be kept, so how a company does that is ultimately up to them. 

Key personnel:

• The Authorising Officer (‘AO’): A senior person responsible for managing the sponsored workers, who must be British or settled.  

• The Key Contact: The main point of contact with UKVI.

• The Level 1 User: Responsible for the day-to-day running of the licence using the Sponsor Management System (SMS).

What documents do I need?

When you have the correct personnel and systems in place, it is time to apply. This involves filling in an application form online, paying a fee, and submitting certain documents. Which documents you submit depends on the type of business you are running, the industry you are in, whether you are regulated and when the business started. 

What is the application process and what does it cost?

1. Submit the online application
2. Pay the sponsorship licence fee (small sponsor – £536/medium or large sponsor – £1,476)
3. Submit the supporting documents within five working days
4. Await UKVI’s decision

If you pay an additional fee of £500 you can have the sponsor licence application considered more quickly by the Home Office. Be aware that licences that the Home Office consider ‘high risk’ are likely to have an interview with the Authorising Officer. It is worth having an audit with a reputable advisor in advance to ensure you are fully aware of your duties as a sponsor.

Legal fees for the sponsor licence application are usually around £3,500 including compliance training and auditing. In some instances, immigration law firms offer assistance on a no-win, no-fee basis.

What happens after you have obtained a licence?

If UKVI decide to grant you a sponsor licence, you can then apply for and assign a certificate of sponsorship (CoS) to the foreign worker. This certificate allows you to hire that specific worker.

The costs for the CoS assigning depend on whether the applicant is liable for an immigration skills charge (ISC) or not. If they are not, for example because they are a student or are in a specific role which is exempt from ISC the Home Office fee will be just £239. If they are ISC liable, the fee will depend on the size of the company. A large company will pay a £3,000 levy on hiring a foreign national for three years. A small company will pay £1,092 for hiring a foreign national on a three-year visa. 

Once the CoS has been granted, the worker can apply for a skilled worker visa and if their application is successful, they can start working for your business.

Many businesses leave the final stage to the client, this means that the client is responsible for applying for the visa application. In most instances, the client is liable for a Home Office fee and an Immigration Health Surcharge of £1,035 per year of the visa being granted. These fees are also applicable for dependents, so if you are employing a person with family, these costs can be significant. It might be that it’s best for your business to pay the costs of the visa (not the CoS) and ask for the funds to be repaid by taking out of their salary.

That’s a lot of numbers, what does it cost to get a licence, CoS and visa for one employee?

The ballpark figure is about £10,000 – £12,000 for a small company, including legal fees, Home Office fees, but not including dependents. That would get the employee a three-year visa, although you can go straight for a five-year visa at a higher cost. After five years the employee would get indefinite leave to remain and would be able to work without further sponsorship.   

What are the common mistakes in the application stage?

Businesses often make the same mistakes when applying for a licence. Common mistakes resulting in the rejection of the application include:

• Failing to provide the right documents and information for the business within the strict deadlines
• Failing to understand their duties and not having systems in place that meet the compliance requirements 

What do businesses need to be aware of when they have the licence?

Holding a sponsor licence requires ongoing compliance. If the licence holder does not comply with their key duties, they may lose their licence.

These duties include:

• Conducting right to work checks
• Keeping accurate records
• Reporting mandatory changes in the Sponsorship Management System

These duties are also strictly enforced. The Home Office often audit sponsor licence holders to check compliance. This could take the form of an interview conducted remotely or an in-person visit to your business premises.

How can an immigration lawyer help?

Applying for and managing a licence can be complex, but it does not have to be. If you instruct an immigration lawyer, they can help your business avoid the common pitfalls and increase your application’s success rate.

Post-approval, they can assist you with the Certificates of Sponsorship, visa applications, and maintaining compliance, ensuring your business is ready for any Home Office inspection.

If you are seeking talent not available locally, then a sponsor licence may be right for you. With the right support, applying for and holding a sponsor licence can be straightforward and manageable.

This article was written by Baya Immigration Legal Services.

Read more on employing people

What’s the right way to go about advertising jobs for my small business? – If you think you should be advertising jobs but want to hire internally, what do you do? We explore the pros and cons of each

Employment Rights Bill – what’s in the legislation? – We take a look at Labour’s Employment Rights Bill and how the business community has reacted to the measures

Can you make employees sign an NDA? – Chris Hadrill, Partner in the employment team at Redmans Solicitors, explains the function of NDAs in an employer-employee relationship

The post How to get a sponsor licence in the UK appeared first on Small Business UK.