As the end of the Brexit transition period approaches, organisations that rely on European staff may need to start the process for obtaining sponsor licences. HR teams that take action now will ensure they have everything in place to continue recruiting from overseas from 2021.

Following the UK’s departure from the EU, free movement between the two will end on 31 December 2020. All newly arriving EEA and Swiss nationals to the UK from January 2021 will need to qualify for a UK visa in order to work here.

The Government has published an overview of its new immigration system and guidance for businesses that wish to employ EEA nationals from next year onwards. It is anticipated that the main visa category enabling EEA nationals to work in the UK will be through tier 2 sponsorship, which will require an employing business to have a tier 2 sponsor licence.

Although many businesses already hold a tier 2 sponsor licence, others that rely on European labour will be doing this for the first time. These organisations should look to apply in the next six months to ensure their licence is in place ahead of time and that they are able to sponsor individuals from 2021 onwards.

What is a sponsor licence and how do we obtain one?

In order for an individual to obtain a tier 2 visa, they must be sponsored by a business that holds a tier 2 sponsor licence. It is a two-stage process: first the business applies to the UK Home Office for the sponsor licence and second, once the licence is issued to the business, the business issues a certificate of sponsorship to the individual, who uses it to apply for their UK visa.

There are two main sub-categories of the tier 2 sponsor licence: tier 2 (general) and tier 2 (intra-company transfer). Provided that the criteria are satisfied, any business can apply for the tier 2 (general) sub-category sponsor licence, whereas the tier 2 (intra-company transfer) sub-category applies only to businesses with an overseas presence.

Do we need one?

Whether or not a sponsor licence is appropriate for the business will depend on the business type, its recruitment strategy and its common staffing origins. For example, technology businesses are likely to require a sponsor licence in order to recruit highly specialised talent from overseas. Equally, global businesses often have a sponsor licence to enable overseas staff to work in the UK as required.

With newly arriving EEA nationals requiring a visa under UK immigration rules, businesses should now consider what proportion of their workforce originates from the EEA. This will be particularly relevant for organisations headquartered in the UK but with European offices, or whose staff travel frequently for work around Europe. European businesses that have recently opened a UK office in order to continue trading here after free movement ends should also consider whether their EEA staff members will need to work in the UK or whether their activities are permissible as a business visitor.

If there is a likelihood that the business will need to bring EEA nationals to the UK to work here, a tier 2 sponsor licence will be needed in order to sponsor individuals in this category.

Why get one now?

Organisations should consider preparing for a sponsor licence application at the earliest opportunity. Preparing the application can take several weeks or months depending on the availability of the required information and documentation. Once submitted, it can take around a month for the Home Office to make a decision, with extended processing times during the coronavirus (COVID-19) pandemic. If a compliance audit is required as part of the application, it could be a further month before a decision is made, although these are currently on hold due to the coronavirus pandemic.

Therefore, it is recommended to begin the process early in order to mitigate unnecessary delays in recruiting the foreign talent needed for UK business operations or client contracts.

Indeed, with the end of free movement fast approaching, the Government is recommending that businesses consider applying for a sponsor licence now. Its policy paper on the UK’s points-based immigration system published on 19 February 2020 states: “Employers not currently approved by the Home Office to be a sponsor should consider applying now if they think they will want to sponsor skilled migrants, including from the EU, from early 2021.”

Sponsor licence application

The application process is fairly straightforward, with organisations required to complete a short online form and submit supporting documents. However, as with most things, the devil is in the detail.

The form requires accurate information about: the business; its legal entity/entities; its offices/locations in the UK; VAT/PAYE reference numbers; governing body registrations; and the appointment of three “key personnel” – the authorising officer, key contact and level 1 user, all of whom must satisfy strict criteria.

The supporting documentation consists of a minimum of four items of evidence to demonstrate that the business is actively and legally trading in the UK. The documents must be chosen from a prescribed list set by the Home Office (sponsor licence appendix A) and be in the required format (original or certified copies only). In addition, corporate structure charts and hierarchy charts are usually required, where applicable, and evidence of any overseas entities within the corporate group are required for the tier 2 (intra-company transfer) sub-category.

Genuine business need

Evidence of the business’ genuine need for the sponsor licence will also be required. First, the organisation must demonstrate that the job it wishes to sponsor meets certain minimum salary and skills requirements. For roles that will be sponsored during 2020, the job must be at degree level or above (recognised qualification framework (RQF) level 6). For roles that will be sponsored from January 2021 onwards, the job must be at a minimum of A-Level equivalent or above (RQF level 3).

The role must also be a “genuine vacancy”, described as one that:

• “requires the jobholder to perform the specific duties and responsibilities for the job and meets all of the requirements of the tier and category…”; and
• “does not include dissimilar and/or lower-skilled duties”.

This usually translates into providing evidence of the role and any recruitment processes carried out to identify a candidate (such as the resident labour market test) as well as details of the individual to be sponsored if they have been identified.

Compliance

All prospective and existing sponsor licence holders must ensure they understand and satisfy the ongoing compliance obligations imposed upon all sponsors, which are effective once the application has been made.

These obligations include:

• carrying out compliant right-to-work checks on all employees;
• tracking and monitoring sponsored migrants, and being aware of when sponsorship must be ended;
• retaining the necessary documentation in relation to sponsored migrants and right-to-work checks for all employees; and
• reporting on relevant changes in relation to sponsored migrants and the sponsor’s business within the required time frames.

A compliance audit can be requested by the Home Office either at the initial application stage or at any time during the lifetime of the sponsor licence. During a compliance audit, the compliance officer will assess the sponsor’s suitability and ability to meet its compliance obligations.

Other options

Employers should be mindful that work in the UK will be prohibited for overseas nationals unless an appropriate visa is granted to the individual permitting such work. The representative of an overseas business and the innovator and start-up visa categories place restrictions on which businesses the individual is permitted to work for (usually the business they are setting up in the UK), and the tier 5 category is usually suitable only for short-term internship or charity work.

The UK’s immigration rules do permit a limited amount of business activity for visitors, but productive work is generally prohibited.

Therefore, unless the EEA national employee qualifies for another type of visa permitting work or is eligible under the EU settlement scheme, it is highly likely that they will need to be sponsored under one of the tier 2 categories in order to work for the business in the UK.

Final thoughts

The end of free movement in the UK will bring significant changes in how businesses recruit staff from the EEA. HR should take steps now to assess how their business will ensure continuity of staffing levels, and whether or not a tier 2 sponsor licence will be of benefit in the future.

Publisher: XpertHR

Author: Victoria Welsh