A guide to employing overseas workers

Senior Solicitor - Immigration and Employment

With the end of free movement for EU nationals, the closure of the EU Settlement Scheme and the introduction of theUKpoints-basedimmigration system, UK employers are askingwhat this meansforthe continuation of their usual recruitment practice of hiring EU workers to bypass the UK skills gap. UK business owners are asking for advice on how to sponsor overseas workers as employees. To help you our business immigration solicitors have created a guide for UK employers on employing and sponsoringoverseas workers.

A sponsor licence enables an employer to recruit and employoverseas workerswho aresubject to UK immigration controlsandwho require a work visa tofind employmentin the UK.Without aHome Office issuedsponsor licence your businesswon’t be able to sponsorworkers who aresubjectto UK immigration controlsand whoneeda sponsoring employer to be able to work in the UK.

Which overseasworkersdon’t need a sponsor?

Brexit and the end of free movement for EU nationals changed which overseas workers are not subject toUKimmigration control.

Until the 31 December 2020 EEA nationalswereable to live and work in the UK free of immigration restrictions.Since the 31 December 2020an EEA national arrivingin the UKto liverequiresa work visa, business visa or family visa andmustcomply with the same Immigration Rules as a non-EEA national.

From a recruitment perspective,it is helpful to know which overseas workers aren’t subject to immigration control and who don’t require sponsorship. These workers include:

• Non-EEA citizens who have obtainedIndefinite Leave to Remainin the UK.
• EEA nationalswhoentered theUKto livebefore the end of free movement on the 31 December 2020and who securedsettled statusor pre-settled statusundertheEU Settlement Scheme.
• EEA nationals who entered the UK before the 31 December 2020and appliedlate for settled status. The government deadline for applications under the EU Settlement Scheme was the 30 June 2021,but the deadline has been extended for those whohave areasonable explanation for their latesettled statusapplication.
• EEA or non-EEA citizens who secure British citizenship.

Whether a potential employee is subject to immigrationcontrolsis an important consideration for UK employersasa businesscan’t legally employ any person who doesn’t havethe legal right to work in the UK.An overseas worker doesn’t have a right to work if they require a sponsoring employer and your business doesn’t hold a sponsor licence.

Can my businessapply for a sponsorship licence?

Many small companiesand employersworry that they won’t be eligible to apply for a sponsor licence. However, the Immigration Rules allow any size of companyor employerto apply for a sponsor licence provided thatthe businessmeetsthe following eligibility criteria:

• Your business isa genuine organisation that operates lawfully in the UK.
• Your business hasa genuine need to recruitoverseasworkers to meet vacancies that meet thework visacriteria.
• Your business haskey personnel in your organisation who will be able to manage the sponsor licence.
• Your HR systems are robust enough to handle the requirements of the sponsor licencemanagement,recording and reporting duties.

How do you apply for an employer’s sponsor licence?

An application for an employer’s sponsor licencemustbe made online and submitted tothe Home Office. Your application must be supported by specified documents thatneed to besent tothe Home Officewithin five working days of submission of the online application.Business immigration solicitorscan submit both the onlineapplication and the supporting paperwork on your behalf. It is sensible totake legal advice before submitting your applicationbecause:

• Your choice of key personnel to manage the sponsor licence can be the difference between your sponsor licence being approved or rejected.
• If you fail to specify key personnel, or do not demonstrate that you have the HR capacity and systems in place to meet the sponsor licence reporting and recording duties, your application may be delayed or refused.
• If your sponsor licence application is delayed, this will delay your recruitment plans and potentially your company expansion.
• If your sponsor licence application is refused, theHome Office won’trefund your sponsor licence application fee. The fee for the sponsor licence application depends on the size of your business.

How long does a sponsor licence last for?

A sponsor licence lasts for four years. If a sponsor licence lapsesbecausea sponsor licence renewal application isnotmade your business can't continue to act as a sponsoring employer. Yoursponsored employees will have their visas curtailed and will either need to find a new sponsoring employer or leave the UK.For information on renewing a sponsor licence read our article:How to renew a sponsor licence .

A sponsor licence can end early if a business asks for the sponsor licence tobe terminatedor if the Home Office decidesto suspend or revoke the licence. The revocation of a sponsor licence isn’t something most business plans caterforso it is best to ensure your business complies with its sponsor licence reporting and recording duties.

Which overseas workers can a UK business hire with a sponsor licence?

If your businesssecuresa sponsor licence fromthe HomeOfficeyou cansponsorapersonwho is subject to UK immigration controls. The sponsored worker must hold:

• ATier 2 (General) visa– The Tier 2 (General) visa route ended in December2020but existing visa holders continue to hold valid work visas,or
• A skilled worker visa– introduced as part of the UKpoints-basedimmigration systemin December 2020,or
• An intra company transfer visa– for multi-national companies looking to transfer existing overseas employees to work for their UK branch.

What isTier 2 sponsorship?

Many business owners will see reference to ‘Tier 2 sponsorship’ referring to the various Tier 2 visaroutes.TheTier 2 visa is themost commonvisa category used by UK employers to recruitoverseasworkers. In the Tier 2 visa there are four mainwork visa routes, namely:

VisaComment

Tier 2skilled worker visa This replaced the Tier 2 (General) visa.

Tier 2 (Intra-company transfer) visa For employers wanting to transfer existingoverseasemployeesto the UKbranch of their company.

Tier 2 (Sportsman) visa This visa enables national sports people and coaches to work in the UK.

Tier 2 (Minister of Religion) visa This visa allows religious workers to enter the UK and undertake work of a religious nature.

Recruiting and sponsoring a skilled migrant worker

When recruiting an overseasworker,theoverseas workercould either be:

• Already in the UK and sponsored by another UK employer.(To change employment to your business therecruit wouldneed to applyto the Home Officefor a newwork visa),or
• Applying fromoverseas for awork visa.

If your businesssecures asponsor licence, you may think that you will be able to offer employment to anyoverseas workerwhomeets thejob description,but that isn’t the case. If you want tosponsan overseas workeryour businessneedsto:

• Check if the jobvacancy is for a roleon the government produced list of standard occupation codes(SOCcodes).The list of occupations and ‘going rate’ criteria are contained intheImmigration Rules Appendix Skilled Occupations .Ifthe job you are recruiting for doesn’t fit within a SOCcodethen the overseasjob applicant won't secure a skilled worker visa even if all the otherskilled worker visaconditions are met.
• Check to see if the job ison theshortage occupation list.The list can be accessedon thegovernment website .Ifthe jobison the shortage occupation listthis could have benefits for both employer and employeeasdifferent minimum salary threshold applies to jobs on the shortage occupation list. In addition,the visa applicant may find it easier to secure the seventy points required under the points-based immigration system for their skilled worker visa.
• Create a job specification and advert for the job bearing in mind the standard occupation codes and shortage occupation list.
• After the recruitment process is complete, if the successful candidate requires a work visa, a certificate of sponsorship needs to be allocatedto the visa applicantand the business needs to pay the immigration skills charge.
• The successful job applicant then applies to the Home Office for theirskilled worker visa paying the relevant fee and immigration health surcharge.
• If the Home Office grant a visa the employer must complete theright to work checkson the new employeebefore the employee takes up employment.
• Prior to and during the worker’s employment, the employer must comply with their reporting and recording duties under the sponsor licence.For example, this means that the employermust retain some documents relating to the recruitment of the overseas worker. The obligation to carry out reporting and recording continues throughout the sponsoringemployee’semployment. For example,reporting aworker’schange of address.

The certificate of sponsorship

To enable the successful job applicant to apply for a work visa they must first be allocated a certificate of sponsorship (COS) by their prospective sponsoring employer. The COS contains vital information to help the Home Office determine the visa application and is simply a reference number that enables a Home Office official to access the relevant information.

There aretwo types of COS, namely:

• An undefined certificate of sponsorship– the undefined COS is suitable if the job applicant isalready in the UK with valid leaveand isapplying to switchto the skilled worker visacategory from another immigrationroute,orisapplying under one of the other visa routes from within the UK or overseas.
• A defined certificate of sponsorship– the defined COS is suitable for skilled worker visa applications that are being made from outside the UK.If your business needs a defined COS an application needs to be made on the sponsor management system for a COS.

What are the eligibility criteria for a skilled worker visa?

When your business is aware that there is asector relatedUK skills shortage it is important that you assess whether your job vacancies are likely to meet the eligibility criteria for theoverseas workers to apply for askilled worker visa. That’s because there are limitedvisaalternatives. There are few visasthat are industryspecificandthe government hasn’t introduced alower skilled visa routeto assist with the reduced availability of EU workers following the end of free movement.

• The worker has a genuine job offer from a UK employer who holds a Home Office issued sponsor licence.Ifyourbusiness holdsa sponsor licence to sponsor Tier 2 (General) visa applicants,your companydoesn’tneed to apply for askilled worker visa sponsor licenceuntil yourcurrent sponsor licenceis due to expire. If your business doesn’t have an existing sponsor licence you will need to apply for one.
• The jobisat the required skill level of RQF3 or above.This is theequivalentofA levelstandard.The job applicant doesn’t need to have an A level qualification or equivalent overseas qualification. The point is that the job must be at the skill level of needing an A leveland the job description must fall within one of the jobs contained in the standard occupational code.That is why it is importantfor UK employerstoconsider boththe SOC code andthejob specification prior to commencing the recruitment process.
• The worker meets the English language requirement.The required level of English is a minimumlevel B1 on the Common European Framework of Reference for Languages scalefor reading, writing, speaking, and understanding English.TheEnglish language requirement can either be met by the job applicant sitting a test provided by a Home Office approved supplier(SELT)or falling within one of the exemptions because of their qualifications or home country.
• The worker meets the maintenance requirement. The maintenance requirement is set by the Home Office.Thevisaapplicant must show they meet the financial requirementthrough either havingsufficient funds(currently £1,270) or the sponsoring employer needs to include on the certificate of sponsorship that they certify the maintenance requirement. If the applicant is meeting the maintenance requirement the £1,270 must have beenin their bank account when applyingfor the visaandbeenavailable for at leasttwenty-eightconsecutive days, with daytwenty-eightbeing withinthirty-onedays of making the visa application.
• The worker will be paid theminimum salary thresholdby the employer.Working out the minimum salary threshold for a particular job can be complicated as an employer has to look at the minimum salary threshold as well as the government published going rate for the job and then look to see if adjustments can be made. For example, if the job is on the shortage occupation list or if the job applicant falls within the definition of a new entrant.
• The worker achieves at least seventy pointson the points-based immigration system.Fifty of the points are mandatory and twenty can be tradeable.

How does a skilled worker visa applicant achieve seventy points under the points-based immigration system?

It is important that a company understands how points are awarded to skilled worker visa applicantsto ensure they have an idea of whether a candidate is likely to secure a work visa.

Confusingly for sponsoring employers and visa applicants, points are classed as mandatory or tradeable. Whilst mandatory points are a must the tradeable points can betradedto achieve the seventy points as set out below:

Skilled worker visa requirementPoints allocatedMandatoryTradeable

Genuine job offermade by the sponsoring employer 20 yes

Job meetstheskill level 20 yes

Applicant meetsthe English language requirement 10 yes

Salary of £20,480 to £23,039gross per yearor at least 80% of thegoing ratefor thejob(whichever is higher) 0 yes

Salary of £23,040 to £25,599gross per yearor at least 90% of the going rate for thejob(whichever is higher) 10 yes

Salary of £25,600gross per yearor above or at least the going rate for thejob(whichever is higher) 20 yes

Jobon the shortage occupation list 20 yes

PhD in a subject relevant to the job 10 yes

PhD in a STEM subject relevant to the job 20 yes

The flexibility over points can lead to confusion over the minimum salary threshold required for a job applicant to meet the eligibility criteria for a skilled worker visa. This is becausethe salary is not onlyexpressed infixedbandsbutthere isreference tothe‘going rate’for the job.

Just to add to the complexities of the minimum salary threshold for the skilled worker visa, the salary level must be calculated by the hour and notsimplyannually.The minimumhourlypay cannot beless than £10.10 per hour, even if the annual salary is above the required level.That is to avoid the scenario of an employee being offered the minimum salary threshold for the job but being required to work additional hours so effectively reducing their pay below the threshold.

In some cases,if the salaryon offerto the visa applicantis at least £20,480,then therecruit may be able to secure a skilled worker visa. For example, if the job your business is recruiting for is on theshortage occupation listor the worker has a PhD qualification thatisrelevant to the job they have applied for.

Further complexity is added if the worker qualifies as a ‘new entrant’ as there is then more flexibility on the minimum salary threshold.

Which skilled migrant workers qualify as new entrants for a skilled worker visa?

A new entrantis classed as a skilled worker visa applicant who is:

• Under the age of twenty-six on the date of their visa application and is seeking a three-year visaas a skilled worker.
• Sponsored inapostdoctoral research position.
• Sponsored and in professional training or studying for professional qualifications, registration or chartered status or a recent graduate.

The salarythresholdfor new entrants isthirty percentlower than the rate forgeneral skilled worker visa applicants,but theminimum salary thresholdof £20,480 must still be met.

There are also differentminimum salary thresholdsfor workers inkeyhealth or educationjobs.

The complexity of the minimum salary threshold, the definition of new entrant and the alternate option of recruitment under the new graduate visa mean that it is sensible to takebusiness immigrationlegal advice prior to recruiting a worker from overseas.

Sponsoring overseas workers andthe immigration skills charge

If you obtain a sponsor licence, then each time you employ and sponsor an overseas worker your businesswillbe required to payan immigration skills charge. The amount of the immigration skills charge depends on the size of your organisation andmustbe paid when you assign acertificate of sponsorshipto your sponsored worker.

The immigration skills charge was introduced in April 2017 by theImmigration Act 2016and theImmigration Skills Charge Regulations2017,theruleswere thenamended in theImmigration Skills Charge (Amendment) Regulations 2020.

The immigration skills charge applies to workers enteringthe UK for six months or more on:

• A Tier 2 (Intra-company transfer) visa,or
• A skilled worker visa.

If your proposed sponsored employee is already in the UK and is applying for anew work visa to change their sponsored employer andjoin your organisation, your businesswill need to pay the immigration skills charge for the length of theemployee’s newvisa.

How much is the immigration skills charge?

The amount of the immigration skills charge depends on the nature and size of your organisation,and the length of the sponsored worker’s visa. The sponsor management system should calculate the immigration skills charge for you. The immigration skills charge calculation is based on:

Length ofskilled worker visa or intra company transfer visaSmall employer or charitable sponsorMedium to largeemployer

First twelve months ofthevisa £364 £1,000

Each additional six months of the visa £182 £500

Maximum potential immigration skills charge to sponsor a worker for five years £1,820 £5,000

For example, if your sponsored employee has a visa for nineteen months you will need to pay the immigration skills charge for two years. The Immigration Rules say that if your sponsored worker willbe in the UK for more than sixmonths butless than twelve monthsthenyou must pay thetwelve-monthimmigration skills charge fee.

If you do not pay the full amount of the immigration skills charge for the full length of the sponsored worker’s visa, theworker’svisa application will berefusedand you will need to start the recruitment process again.

Getting a refund of the immigration skills charge

If you are sponsoring a worker on awork visafor their maximum visa period, then it is understandable that you’llwant to know about refunds, because the employment of anyrecruitis not without risk and continued employment is subject to satisfactory performance by the employee.

You should get a refund of the immigration skills charge if the sponsored worker’s visa application is either refused bythe Home Officeor is withdrawn by the visaapplicant. Ifthe sponsored employee starts to work for you, then you will get a partial refund of the immigration skills charge if the employee:

• Receives a visa for a shorter period than the length of time you sponsored the worker for on thecertificate of sponsorship.
• Applies for a new job andtherefore obtains a newsponsoring employer.
• Leaves your employment prior to the end date on thecertificate of sponsorship.

Normallythe Home Officewillrefund the immigration skills charge within ninety days of the event that led to the request for a full or partial refund of the immigration skills charge fee.

Are there exemptions topayingthe immigration skills charge?

There are some situations wherea businesswill be exempt from having to pay the immigration skills charge for your sponsored worker. The exemptions are:

• The sponsored employeeis ona Tier 2 (Intra-company transfer) graduate trainee visa.
• The sponsored worker is on a Tier 4 student visa and is switching to askilled worker visa.

What are your duties as a sponsorundera Home Office sponsor licence?

Fulfilling your duties under your sponsor licence is essential if you want to be able to continue to sponsoroverseasworkersas employees. The full guidance on sponsor licence duties can be foundon thegovernment website ,but the main duties of a sponsor licence holderinvolve record keeping and reporting. It is essential that your key personnel have the skills, experience,systems,and support in place so that they can comply with the following duties:

• Maintain key personnel and sponsor licence details on the sponsor management system(SMS).
• Conduct right to work checks and comply with illegal working legislation.
• Create and assigncertificatesof sponsorshipto sponsored workers.
• If necessary, apply for an increase in the number ofcertificates of sponsorshipyou can assign.
• Report relevant activities relating to your sponsored workers, for example, if a sponsored worker changes address or does not attend work.The SMS guidance on reporting on sponsored workers can be found in this government document .

What are the consequences of employingoverseas workersillegally?

To some employers, the thought of sponsoringoverseas workers who are subject to immigration controlscan seem too complicated,with excessive bureaucracy involved in the sponsor licenceapplication andmanagement process. However, the reality is that withtheUK skills shortage, many employers face the fact that they either need a sponsor licenceand to comply with illegal working legislation ortheycan’t recruit the workers with the skills they needfor their business.

The consequences of employingoverseas workersillegally are potentially very serious and could result inyour business:

• Receiving a civil penalty fine.
• Facing a criminal prosecution.
• Suffering reputational damage through adverse publicity.
• Being unableto secure a sponsor licencein the futureandtherefore beingprevented from sponsoringoverseasworkerssubject to immigration control.

What next?

If you are an employerstruggling with the impact of Brexit and the end of free movement on your traditional business practice of hiring EU workersand need advice on howtosponsoroverseasworkersas employees,help withyour sponsor licence application orthe management of your sponsor licence,ourbusiness immigration law solicitorscan help.Please leave us your details and we’ll contact you to discuss your situation and legal requirements. There’s no charge for your initial consultation, and no obligation to instruct us. We aim to respond to all messages received within 24 hours.

About our expert

Senior Solicitor - Immigration and Employment

Fozia has been practising in the field of immigration law for over 20 years, specialising in Business Immigration since 2015. Fozia has advised an array of businesses, from start-ups to multinationals, owner-managed businesses through to SMEs, as well as individuals looking for immigration solutions. With a range of experience across the board, it is unusual for her to come across an immigration issue that she cannot tackle.