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Home Office tightens the Sponsor Licence compliance screws on IT service providers

In order to obtain a Sponsor Licence from the Home Office, IT service providers must sign up to various duties and obligations as part of the UK’s Sponsor Licence compliance regime. The Home Office takes the view that as employers benefit directly from sponsorship, they must play their part in ensuring the system is not abused. Significant trust is placed in a Sponsor and with this comes a responsibility to be fully compliant with the Home Office rules. In R (Raj and Knoll Limited) v Secretary of State for the Home Department, the court outlined that the role of the court is simply supervisory and the Home Office is entitled to maintain a “fairly high index of suspicion” and a “light trigger” with enforcing compliance. The courts further noted that they will respect the experience and expertise of the Home Office to ensure robust immigration control. In short, it is essential that sponsors keep the Home Office on side.

Increasingly, the Home Office has been undertaking unannounced audits, particularly but not exclusively, for those employers who are deemed to score highly in the Home Office’s risk assessment matrix. Compliance audits are now more robust and detailed, frequently lasting several hours and including interviews with HR staff and Tier 2 visa holders. HR systems will be tested during a compliance visit and failure to comply can lead to the suspension and possible revocation of the Sponsor Licence. It is fair to say that no company can be 100% compliant all of the time; human error, IT issues and rogue employees exist in all walks of business. It is therefore important to have procedures and policies in place to catch these issues.

We have identified four recent changes to the way in which the Home Office undertakes these compliance visits:

  • Reporting lines - the Home Office asks not only the Tier 2 migrant but also client staff who the migrant is reporting to and who is responsible for their day to day role. Where this is the client, the Home Office correctly states that this is a breach of the sponsor guidance. The Home Office is clearly focusing on migrants who are spending long periods at a single client site where they suspect they are filling a full time vacancy in the client’s business.
  • Roles - compliance officers will interview Tier 2 migrants and ask them to go through the detailed duties and responsibilities for their role to see if this matches with the information on the Certificate of Sponsorship (CoS). If the migrant gives vague general answers, the Home Office may decide they are not doing the job for which the CoS was assigned.
  • Recruitment and the resident labour market test - The Home Office is now asking to see CVs of unsuccessful candidates for positions filled after a resident labour market test and is looking behind the reasons why British or resident applicants were rejected. We have seen examples of the Home Office insisting that certain British candidates were in fact suitable for the role.

Home Office visits to client sites

The Home Office has begun a more worrying trend of visiting client sites and interviewing Tier 2 visa holders based at these sites. The Home Office guidance was recently amended to emphasise the need for sponsors with migrants working at client sites to ensure that the third party is aware of the possibility of unplanned and unannounced visits and checks being conducted at their premises and ensure their full cooperation. We have very recently had experience of this two-pronged approach where a compliance officer will attend the sponsor’s office and a second officer will visit the client site at the same time!

Why does the Home Office scrutinise the IT service sector?

The alleged abuse of the Tier 2 route by IT service providers has been mooted for years. It is true that such companies account for a very high proportion of all Tier 2 workers in the UK. Critics have been harsh in suggesting they are a vehicle to undercut the UK’s resident IT workforce by providing IT services on low-cost services contracts. The Migration Advisory Committee (MAC) made various recommendations to address this issue and we have seen the closure of the Tier 2 ICT short term visa route, an increase in minimum salary requirements and the introduction of the skills charge for Tier 2 ICT route. This is clearly aimed at cutting out the lower end of the ICT scheme by making it too expensive to bring over less experienced IT staff to the UK.

Whatever the arguments are about the need for skilled IT workers and whether they are undercutting resident IT workers, it remains a fact that huge government contracts rely on overseas companies providing outsourced software development and IT services.

What should IT service providers be doing?

Steps IT service providers can take to safeguard their businesses and ensure compliance include:

  • Prepare for a Home Office visit - The Home Office is focusing on compliance audits. The genuineness of the IT services will be examined thoroughly and even small administration errors in record keeping can be enough to revoke a sponsor licence. The message for sponsors is that preparation is key in order to put in place robust HR processes to prevent compliance breaches.
  • Implement well defined reporting lines – Create a hierarchy chart and update this regularly to ensure that you as the sponsor have full responsibility for the duties, functions and outcomes, or outputs of the job. The Sponsor must be the manager, responsible for salary, monitoring absences, approving holidays etc. Communicate this to your sponsored workers regularly.
  • Update Master Service Agreements (MSA) - Include a paragraph in the contract to put your client on notice that the Home Office may require access to the client’s offices in order to question the Tier 2 workers based there.
  • Review Statements of Work (SoW) regularly - The Home Office will require evidence that the contract in place is time bound. Therefore, update each project with a SoW. Please note, informal vague MSAs are not sufficient - they can form the basis of the relationship but you need the SoW signed by both parties agreeing that the sponsor is responsible for the project. Please note the SoW must be to perform specialist software tasks consistent with the sponsored migrants job descriptions and CoS.
  • Keep interview notes - Keep full interview notes for all unsuccessful resident candidates showing clearly the reason why they were unsuitable and how the criteria that were applied were advertised.
  • Include the Tier 2 sponsored employees in the visa process – Consider the scenario if one of your Tier 2 visa holders was interviewed by the Home Office, how would they respond? In preparation for such a scenario, discuss their role with them and be clear with reporting lines. Provide your Tier 2 sponsored workers with a copy of their CoS and ensure they have the skills and qualifications to undertake the role.
  • Job descriptions - Spend time in drafting job descriptions correctly. Do not simply draft vague, generic wording or exaggerate duties. Review what employees on client sites actually do on a day to day basis and present this in plain English.
  • Retain evidence of work undertaken – Copies of timesheets, invoices, appraisals, emails of instruction, client feedback etc. should all be kept.
  • Sever ties with non-compliant customers - If you have multiple UK client contracts in place, note that one non-compliant contract is sufficient for the Home Office to revoke your licence, which will ultimately damage all of the contracts.
  • Implement reporting system - Put a system in place to ensure that sponsored migrants report where they are working if they work at multiple sites and ensure that these addresses are either on their original CoS or that a report is made if a new client site is added at which they will work.
  • Protect your reputation - Anyone on your premises will need to have the right to work. Most worryingly, Home Office compliance officers have been visiting the end client’s site, which can be a very embarrassing and a difficult trend to manage, not to mention the possible reputational damage to the end client who is paying for the service.
Disclaimer: No material or information provided on this website should be construed as legal advice. Readers should always seek appropriate professional advice to resolve their Legal Matters.
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