Guide to Tier 2 Sponsorship License for UK Businesses

Guide to Tier 2 Sponsorship License for UK Businesses

Thursday, April 11, 2019

All Tier 2 Sponsorship License matters are handled by our Corporate Immigration group that brings together experienced lawyers from both the Immigration and Corporate and Employment practices.

This ensures that each of our clients is confident during the application process and well-equipped to maximise the value of the Tier 2 Sponsorship License for their business.  

“UK businesses planning to recruit talent from outside the European Economic Area or Switzerland require a government permit in order to do so. This permit is called a ‘Sponsorship License’ and can be ‘Tier 2’ — for highly skilled long-term staff including company transfers, or ‘Tier 5’ — for temporary workers including volunteers or interns.”

Companies wishing to hire highly qualified non-EEA staff will need the first type of license — the ‘Tier 2 Sponsorship License’.

  • You are a genuine organisation operating lawfully in the UK
  • Your key personnel named on the sponsor application are honest, dependable and reliable
  • You have effective HR and recruitment systems and practices in place
  • You are offering genuine employment that meets the Tier 2 skill level and appropriate rates of pay

In this guide, we set out key points that companies need to keep in mind if they are thinking about securing a Tier 2 Sponsorship License.

“You are eligible to apply for a Tier 2 Sponsorship License for your business if it is a genuine organization lawfully operating in the UK. To prove this, you must provide certain documents that will largely depend on the nature of your business and the type of your organization. You will need to provide at least 4 pieces of documentary evidence to support your application.”

You must also demonstrate to the immigration authorities that you can offer genuine employment that meets the relevant skill and pay rate requirements. The skill threshold for you to sponsor a worker using your licence is substantial: at graduate level or above. In other words, the sponsorship system currently in place is primarily designed for highly skilled professionals with considerable expertise to fill in the gaps in the domestic labour market.

To make your case for the sponsor licence even more compelling, in some instances we advise our clients to carry out the Resident Labour Market Test before submitting the application, which involves advertising the position you are recruiting for, thereby offering UK/EEA nationals an opportunity to apply for the role.

When deciding your application for a sponsor licence, the immigration authorities will also seek to establish whether you are a reliable organization capable of complying with your sponsor duties. In doing so, they will assess your key personnel, history and background. Your current human resources procedures and recruitment practices will also be subject to close scrutiny.

Essentially, the application process can be broken down into the following 4 stages:

  • Application preparation consisting of gathering all the necessary documents, carrying out the Resident Labour Market Test (where appropriate) and ensuring compliance with your sponsor duties
  • Submission of your application online followed by sending the necessary documents by post. This stage is critical as there is no appeals mechanism to challenge a decision if your application is refused. Depending on the reasons for the refusal, you may be barred from re-applying for 12 months, also known as a “cooling-off period”
  • Pre-licence compliance visit where the immigration authorities will examine your human resources and recruitment processes to ensure that you are able to fulfil your sponsor duties
  • Post-licence approval when you can technically start employing foreign workers, provided you remain compliant with your sponsor duties and have a genuine position meeting all the relevant criteria.

“If your license is approved, it will be valid for 4 years. Once your license is granted, the Home Office will provide you with the credentials needed to access their ‘Sponsorship Management System’ (known as ‘SMS’). When logged onto this system, you will be able to generate a specific document that is necessary to hire any non-EEA employee — a Certificate of Sponsorship (known as ‘CoS’)”

Each CoS has a unique number and enables the prospective non-EEA employee to apply for a visa or leave to remain in the UK. A CoS can only be used by the specific individual it has been assigned to and they must do it within three months of the date the CoS is issued.

If your prospective employee is outside the UK when you make them the offer, you will need to generate a ‘restricted CoS’ — so called because the government has placed a cap on the number of such certificates that can be issued in any given year. This is currently capped at 20,700 certificates per year.

If they are already in the UK in an eligible visa category, however, you will need an ‘unrestricted CoS’ — there is no limit on these.

Having a Certificate of Sponsorship is a prerequisite for your prospective employee to be able to apply for a work visa (known correspondingly as ‘Tier 2 Work Visa’).

You can only recruit a non-EEA employee if you have completed a resident labour market test and can show that no suitable settled worker is available to fill the job, or the job is exempt from the resident labour market test.

“You will need to maintain compliance with both immigration rules and employment regulations to enjoy the benefits of your Tier 2 Sponsorship License.”

  • You will need to maintain specific records for each of your non-EEA employees and report any changes or issues that occur, and be able to provide these records should the Home Office request them
  • You will need a rigorous system in place that keeps track of when the Tier 2 employee’s immigration permission is due to expire so that appropriate action and follow-up right to work checks may be performed
  • Tier 2 employees are subject to the Immigration Health Surcharge fee of £1,000 per employee per year of their period of stay. For small business, the fee is £364

If your business is involved in a merger, takeover, de-merger, sale of the controlling number of shares, or other restructuring, the non-EEA employees you sponsor will be impacted.

If a sponsored non-EEA employee is transferred under TUPE, the employer taking them on must have a Sponsorship License or must apply for one within 20 working days of the transfer.

Whether the UK leaves the EU with or without a deal, after 31 December 2020 the immigration system for skilled workers as we know it will stop to exist and a new immigration route will be introduced for those wanting to come and work in the UK from Europe and the rest of the world.

Soft Brexit

If the UK exits EU with a deal, there will be a transition period until 31 December 2020 during which all EEA nationals can live and work in the UK without the need to obtain a permission to do so from the British Government, i.e. the freedom of movement provisions will continue to apply until the end of the transition period. All EEA nationals exercising right of residence in the UK by 31 December 2020 can confirm their settled/pre-settled status under the EU Settlement Scheme and stay, live and work in the UK thereafter.

For anyone arriving in the UK after 31 December 2020, however, will need to be sponsored under the immigration regime then in place, details of which should be revealed in early 2019.

Hard Brexit

In the event of a “no-deal” Brexit freedom of movement will end on 29 March 2019, following which all EEA nationals wishing to come to the UK for longer than 3 months will have to apply for a European temporary leave to remain, a temporary non-extendable immigration status valid for 3 years. Applications will be subject to suitability and criminality checks. Holders of this temporary leave can live, work and study in the UK on the same terms as they currently do. At the end of the 3-year period all EEA nationals wanting to remain in the UK will have to apply under the Post-Brexit UK immigration system that will apply to all nationalities equally without favouring any particular group of foreign nationals. The new immigration system is expected to be implemented by 01 January 2021.

Those EEA nationals who are in the UK on or before 29 March 2019, can apply for a settled/pre-settled status under the EU Settlement scheme.

While the government is yet to announce the details of the new immigration system that will replace the existing scheme for skilled workers, what we already know is that there will be no preferential treatment for EEA nationals. Effectively, those coming from Europe to the UK for work, study and business purposes after 31 December 2020 will have to apply under the new immigration regime along with non-EEA arrivals.

It is expected that the existing sponsorship regime and its stringent requirements currently applicable to non-EEA nationals will be revamped to accommodate candidates from EU. In particular, it has been recommended that the Resident Labour Market Test measures be relaxed or scrapped altogether while the current cap of 20,700 for high-skilled workers entering the under the existing sponsorship regime is likely to be removed.

The government will also consider introducing a route for low skilled migration as seasonal businesses, e.g. agriculture, hospitality etc, are predicted to take the most hit post Brexit.

Businesses employing staff from outside the UK should start short to medium term planning now to ensure they are well positioned to adjust to the upcoming changes while maximising the opportunity that Brexit brings both for companies and individuals.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.