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Tier 2 Sponsor licence - an overview of UK's current skilled worker scheme.

With the introduction of a new immigration system, the Tier 2 Visa work route was replaced by the Skilled Worker Visa route. Any organisation that had a Tier 2 Sponsor Licence was automatically changed over to hold a Skilled Worker Sponsor Licence.

    What is a Skilled Worker Sponsor licence (formally known as Tier 2 Sponsor Licence)?

    A skilled worker Sponsor licence enables employers to be able to recruit from overseas, this can help organisations open up opportunities to gain the best talent from all over the world. Organisations can recruit individuals and sponsor them to work in the UK on a Skilled worker visa. The Sponsor Licence was formally known as Tier 2 Sponsor licence, this changed when the Home Office introduced the new immigration system.

    What is the difference between a Tier 2 Sponsor Licence & Skilled worker Sponsor Licence?

    Ultimately there is no much difference, organisations that already held a valid Tier 2 Sponsor Licence were automatically granted a new Skilled Worker licence, and the expiry date was consistent with their licence. Employers who did not have a licence should have obtained a Sponsor Licence if their intention was to hire foreign nationals from and post-January 2021.

    How do you get a Skilled Worker Sponsor License?

    In order to apply for a Skilled Worker Sponsor Licence (replacing the Tier 2 Sponsor Licence), a Company must make an application to the Home Office along with supporting documents and ideally a cover letter detailing the company background and reasoning for the sponsor licence application.

    On some occasions, the Home Office may require additional documents that evidence the company’s HR procedures and policies to assess whether the company could meet the compliance requirements for sponsorship duties. The Home Office may also decide to conduct a compliance visit at the company premises before they make a decision on whether to grant the licence.

    At City Legal, we can conduct a mock audit of your company's HR procedures before you make an application to the Home Office, which will help identify any weaknesses and an action plan can be put in place to rectify them.

    What documents will I need to apply for a Sponsor Licence?

    The documents you need to submit to the Home Office varies with the organisation, depending on many factors. Usually, a minimum of four specified mandatory documents is required to be sent when applying for a Skilled Worker Sponsor Licence. The actual required document list is extensive and will depend on what type of organisation is applying for a Sponsor Licence such as Stat-up, SME, Franchise or Public body and some of the basic documents may include Bank statement, certificate of VAT registration, Proof of business premises, Evidence of registration as an employer for PAYE etc. The documents that are needed to be submitted also depends on the type of licence you are applying for e.g. If you are applying for Intra Company Transfer subcategory, you will also have to submit evidence of common ownership between the company in the UK and in the company abroad.

    How much does a Sponsor Licence application cost?

    Depending on the size and type of the organisation, the application fees vary. The Application fees are payable every time the organisation renews their licence. These fees tend to be reviewed yearly by the Home Office and is published on their website.

    Below is the table which sets out the current fees:

    Type of licenceFee for small or charitable sponsorsFee for medium or large sponsors
    Temporary Worker£536£536
    Worker and Temporary Worker£536£ 1,476
    Add a Worker licence to an existing Temporary Worker licenceNo fee£940
    Add a Temporary Worker licence to an existing Worker licenceNo feeNo fee

    Currently a small organisation or charitable organisation would need to pay £536 for a worker or temporary worker Sponsor Licence. You’re usually a small sponsor if two of the following apply:

    • Company’s annual turnover is £10.2 million or less
    • Company’s total assets are worth £5.1 million or less
    • Company has 50 employees or fewer

    You’re a charitable sponsor if you’re either:

    • a registered, excepted or exempt charity
    • an ecclesiastical corporation established for charitable purposes

    Medium and large organisations are required to pay a sponsor licence fee of £1,476 for worker licence and £536 for a temporary worker licence, if applying for both at the same time only a fee of 1476 applies.

    What does it mean to be an A-rated Sponsor or a B-rated?

    When you make an application to the Home Office for a Sponsor licence they will give you a licence rating when granted. If your application is approved you will normally get an A-rated licence. An A-rated licence lets you assign certificates of sponsorship and the organisation is then listed on the register of sponsors.

    An organisations rating can however change at a later date if the organisation fails to meet sponsor duties, this is when the organisations rating changes to a B-rating or the licence is revoked. If this happens the organisation will not be able to issue new certificates of sponsorships (CoS) until improvements have been made to then be upgraded back to an A-rated sponsor, this does not include employees currently employed by the organisation.

    If the Home Office does decide to downgrade the organisation's sponsorship rating then they will have to follow an action plan provided by UK Visas and Immigration (UKVI) to upgrade the licence, the organisation will also be subject to pay £1,476 for an action plan. If all the steps on the action plan are not followed the organisation's licence may be revoked or another B-rating will be issued and the fee would have to be paid again to follow a new action plan.

    You can only have 2 B-ratings in the 4 years your licence is valid, you will lose your licence if you still need to make improvements after your second action plan. If your licence is revoked you can not appeal, however, you can reapply but can only do so after 12 months.

    What is a Certificate of Sponsorship (CoS)?

    A Certificate of sponsorship (CoS) is an electronic document which is generated on the Sponsor Management System (SMS) after a Sponsor Licence has been granted. In order for an organisation to sponsor a migrant worker, the company must first request a Certificate of sponsorship from the Home Office via the SMS. Once this has been granted, the company will then need to assign it to the migrant worker they wish to sponsor, this will generate a unique reference number for the candidate to submit during their visa application. The worker must then submit their visa application within three months of CoS issued and must not apply before three months before their start date of the job listed on the certificate.

    There are two types of certificates that an employer can issue to a worker depending on their circumstances, these are:

    Defined certificates – this certificate is used when an employee is applying for a Skilled Worker Visa from outside the UK. The Organisation employing the migrant worker can

    Undefined certificates – these are for skilled workers applying from inside the UK, where applicants are already on another visa and intend to switch.

    How much does the Certificate of Sponsorship cost?

    Certificates are free for citizens of the following countries:

    Austria, Belgium, Croatia, Republic of Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Luxembourg, Malta, Netherlands, North Macedonia, Norway, Poland, Portugal, Slovakia, Spain, Sweden or Turkey.

    For other citizens, you need to pay for each certificate.

    Type of certificateCost per certificate
    Temporary Worker£21

    If the organisation wishes to assign a CoS to a worker on a Skilled Worker Visa or Intra-company Transfer visa, they might also need to pay the immigration skills charge.

    What is Immigration Skills Charge?

    The Immigration Skills Charge is a charge for each foreign worker that you employ; the amount the employer must pay depends on many factors. This charge would be payable when the employer is assigning a CoS to the worker. The Immigration Skills Charge is also based on the size of the organisation. The Home Office sets these charges; the table below highlights the charges for different organisation sizes:

    PeriodSmall or charitable sponsorsMedium or large sponsors
    First 12 months£364£1,000
    Each additional 6 months£182£500

    If the worker will be in the UK for longer than 6 months but less than a year, you must pay for at least 12 months.

    How long does it take to get a sponsorship Licence once I have applied?

    The standard processing time for Sponsor Licence applications is around 8 weeks. The Home Office may decide to conduct a compliance visit at the organisations premises to ensure they have the necessary measures in place to comply with sponsorship duties. The application may be refused if the organisation has failed to demonstrate that all sponsorship duties are complied with during the Home Office visit.

    Organisations can use a premium service from the Home Office to allow them to get a decision faster within 10 working days.  This is a paid service and costs £500.

    What can I do if my application for a Skilled Worker sponsor licence is refused?

    If the application is not valid, due to the non-submission of mandatory documents or informations, organisations normally can re-apply immediately. If the Home Office has decided to refuse issuing the Sponsor Licence to an organisation there is normally a six-month cooling off period before the organisation can re-apply. This would mean that the organisation can not re-apply until after the six-month period. However in some cases where there is believed to be a mistake form the Home Office side to refuse the Sponsor Licence application, the organisation may submit a pre-licence error correction. If the decision is still not over turned then the only possible way of challenging would be through a Judicial Review process.

    What are the eligibility requirements for a Sponsor Licence?

    There are different eligibility requirements when an organisation is applying for a Sponsor Licence. To be eligible to apply for a Sponsor Licence, the organisation must have a UK presence and must be operating or trading lawfully in the UK. If an organisation has multiple UK branches the organisation can apply for one Sponsor Licence to cover all the linked UK entities, however this depends on the circumstances.

    If the organisation is required to be registered with or regulated body to operate lawfully in the UK, the organisation needs to submit proof that it is registered with the regulated body and any branches covered by the licence.

    The Home Office must be satisfied that the organisation is able to offer genuine employment in a skilled occupation and that the organisation will pay the correct rate of salary, that has been set out by the Home Office.

    What happens if I employ migrant workers without a sponsorship licence?

    An individual who is on another visa can be employed by an organisation who does not hold a Sponsor Licence however, this is only if the worker has certain work rights on their current visa. If an Employer employs a migrant worker without a correct visa or work rights the employer may face potential civil penalties as well as criminal convictions. The employer can check the status of a workers work rights with the Home Office if they are not sure through the employer checking service.

    Why is maintaining a Sponsor Licence important?

    If an employer looses its Sponsor Licence it means they cannot hire new workers and it could also mean its current workers who are being sponsored will loose their rights to work. This can impact an organisation heavily if they are reliant on foreign workers.  If a Sponsor Licence is not maintained an organisation may loose its Licence and therefore will have to reapply after some time and will have to pay the costs of doing so. In many sectors – such as agriculture, tech, hospitality and finance – the ability to recruit talent from overseas is essential to meeting business client demands, launching innovative projects and growing the business, therefore maintaining the licence is imperative.

    What is Skilled Worker Visa (formally known as Tier 2 Work Visa)?

    The Skilled Worker Visa was formally known as the Tier 2 Work Visa before the new immigration system was introduced. The skilled work visa route is for those migrants with a job offer from a Home Office approved sponsor and if they meet certain other criteria like skill level, English language proficiency and earn a minimum salary threshold. On a Skilled Worker Visa, the worker can also have their partner or children (dependants) to apply to join them in the UK.

    What is the salary requirement for Skilled Worker Visa?

    The salary requirement is wither minimum salary or the ‘going rate’ for the type of work the migrant will be doing. This amount is set by the Home Office and must be followed by the organisation as a minimum when hiring a migrant worker through the skilled worker route. The migrant worker will usually need to be paid at least £25,600 per year unless the ‘going rate’ for the job is higher than this. For example if the migrant has been offered a salary of £27,000 per year, but the going rate is £30,000 then the worker would not meet the salary requirements for the visa.

    Why should you choose City Legal?

    City Legal has immense experience in dealing with Sponsor Licence applications and can also provide other services to organisations to ensure that they can fulfil their sponsor duties and responsibilities. We are a multi award-winning law firm and pride ourselves in being approachable, innovative and always going that extra mile to make sure our clients receive the individual attention they deserve. We have the privilege of working with some of the most well-known companies in the world. Our Immigration team maintains a high reputation and is committed to provide clear, transparent and reliable advice to our clients.

    We understand that running a business of any kind is stressful and takes a lot of time, so let us take the stress out of applying and let us take care of everything so you don’t have to. We will use our expertise to help you understand the supporting documents you need to submit as they can differ greatly depending on the type of business you run as well as the positions you have available.

    Any organisation can say how great they are but we let our clients do the talking for us, have a look at some of our Trust Pilot reviews.

    Services available at City Legal:

    How can I get more information and help with applying for a Sponsor Licence?

    For expert advice and assistance regarding an application to obtain a Sponsor licence or to apply for a Skilled Worker visa or any other route, contact  us at enquiries@citylegalservices.co.uk or call for a free consultation on 020 8175 4000 

    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.
    About the Author

      Arti Adarsh

    Arti is a CIPD qualified HR Consultant specialising in providing professional advice, guidance and assistance to companies on becoming a licensed sponsor and meeting the sponsor duties as well as compliance obligations under PBS Skilled Worker Route.

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