Sponsor Licence

A sponsor licence, also known as a sponsorship licence, is essential for UK companies wishing to employ non-UK nationals. Holding such a licence, UK enterprises are empowered to provide Certificates of Sponsorship (CoS) to qualified individuals from abroad, who may then apply for a work visa, such as the Skilled Worker Visa. Educational institutions aiming to bring in international students are similarly required to secure a sponsor licence from the Home Office.

The Home Office has recently declared that from April 2024, the practice of renewing sponsor licences every four years will be discontinued. Licences that expire on or after 6 April 2024 will be automatically renewed for a further period of 10 years. Licences expiring before this date will remain subject to the current protocol, with renewals needing to be processed under the existing system. Before these changes, sponsor licences were issued for a term of four years, obligating licence holders to apply for renewal prior to their licence’s expiration.

Effective from 1 January 2025, any attempt to recuperate sponsorship fees that your company is obligated to pay will result in the revocation of your sponsor licence. This includes the fees related to the Skilled Worker sponsor licence, any associated administrative expenses, the Certificate of Sponsorship fee for a Skilled Worker, as well as the Immigration Skills Charge for a Skilled Worker or a Senior or Specialist Worker.

The sponsor licence application process is rigorous. Retaining your licence necessitates full adherence to a stringent compliance framework, which includes ensuring that all HR processes and procedures operate smoothly in accordance with the requirements of the Home Office.

Eligibility Criteria for a Sponsor Licence

To qualify for a sponsor licence application, organizations must satisfy several criteria:

• Be an authentic business, lawfully active and trading within the UK.
• Operate primarily from a UK base.
• Pose no risk to immigration control.
• Employ key personnel who are reliable and trustworthy.
• Maintain a robust HR system capable of upholding the responsibilities of a licensed sponsor consistently.

Business Requirements for Sponsor Licence Eligibility

Entities seeking a sponsor licence must be legitimate, legally functioning UK entities, such as Public Limited Companies (PLCs), Limited Companies (Ltd), Limited Liability Partnerships (LLPs), or Sole Traders. They should be genuine, with an operational presence in the UK, adhering to all legal requirements. For instance, a limited company or LLP must be duly registered with Companies House. Additionally, businesses must possess the correct planning permission or approval from the Local Planning Authority for their trading premises.

Start-ups are not excluded from applying for a sponsor licence. Nevertheless, businesses that have been trading in the UK for less than 18 months are required to furnish proof of a current corporate bank account with a bank regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).

Certain types of sponsor licences may demand more specific business eligibility criteria. For example, companies applying for a UK Expansion Worker sponsorship licence should not have an active trading history in the UK, yet they must have established a UK ‘footprint’.

Requirements for Sponsor Licence Suitability

During the application for a UK sponsor licence, companies must demonstrate their integrity, reliability, and capability to fulfill the obligations that come with holding a licence. Specifically, a business must:

• Implement appropriate HR systems to comply with sponsor duties.
• Always be prepared for a compliance visit from UK Visas and Immigration (UKVI), whether it is announced or unannounced.
• Have a clean record with no unspent convictions for immigration-related offenses or tax evasion.
• Provide proof of adherence to all the conditions of any previous sponsorship licences.
• Not have had a sponsor licence revoked within the past twelve months.

Genuine Business Need for Sponsorship

Applicants for a sponsor licence need to prove a legitimate requirement for employing foreign workers. This involves passing the genuineness test, which confirms the intention to sponsor workers for roles that are eligible and that meet the necessary skill and salary requirements. The Home Office will assess whether the roles in question are appropriate for the business and align with its existing workforce. It’s critical to note that the genuineness test applies both at the initial application and for the duration of the licence’s validity.

Companies must provide details about the specific roles they seek to fill through sponsorship, including information on any potential candidates, if applicable. While it’s not strictly mandatory to furnish comprehensive recruitment details, doing so can enhance the application’s credibility.

Key Personnel Requirements for Sponsor Licence

In the sponsor licence application, the UK Visas and Immigration (UKVI) will require the names of all key personnel involved. These key personnel should be settled in the UK, free from any unspent criminal convictions, be listed on the company payroll, and not have familial ties with the prospective sponsored employee. The four primary roles of key personnel are:

• Authorising Officer – A high-ranking individual responsible for the overall management of the licence, addressing immigration matters, and ensuring compliance with all duties related to the sponsorship licence.
• Key Contact – This is the principal liaison with the Home Office.
• Level 1 & 2 Users – These are individuals appointed to handle the Sponsor Management System (SMS) on a routine basis.

Sponsor Licence Categories for Employers

Employers in the UK can obtain two principal types of sponsor licences to employ international workers: licences for skilled or long-term employment and licences for temporary workers. When applying, businesses must identify the licence type that aligns with their recruitment needs and are only permitted to hire international employees under the granted licence category. Companies may apply for various subcategories under worker licences, depending on their operational needs and qualifications.

Worker Licence

A “Worker” licence is issued to employers intending to recruit skilled international workers for roles that may be temporary, long-term, or permanent. This licence covers several specific visa categories, including:

• Skilled Worker
• Scale-up Worker
• Senior or Specialist Worker Visa (which has replaced the Intra-company Transfer visa)
• Minister of Religion
• International Sportsperson

Temporary Worker Licence

A “Temporary Worker” licence enables UK employers to engage international staff on a temporary basis, including for voluntary positions. More information on the types of visas covered under this licence can be found on our Temporary Workers page.

Employers should note that not all job types are eligible for sponsorship. Under the Skilled Worker licence, for instance, candidates must satisfy the UK’s points-based immigration system. Employers are required to pay a minimum salary that corresponds to the role’s standard or “going rate,” which may vary based on factors such as the role itself, the candidate’s qualifications, their age, and whether they’re newly entering the job market. Employers are advised to review the specific requirements of the intended work visa before proceeding with the sponsorship of a prospective employee.

Required Documentation for Sponsor Licence Applications: Appendix A

Appendix A provides a comprehensive list of potential documents that may be required by the Home Office from applicants seeking a UK sponsor licence. Typically, at least four documents must be submitted. However, the guidance in Appendix A indicates that fewer documents may suffice for applicants that are UK Government-recognised public bodies, such as local authorities, or companies listed on the London Stock Exchange Main Market.

The exact documents requested will vary depending on the nature of your business and the specific licence you are applying for. Below is a non-exhaustive sample of documents that you might need to provide:

• Financial statements for the most recent fiscal year to demonstrate your business is authentic and operational.
• Contract copies pertaining to goods or services for a minimum of one year preceding the application date.
• Confirmation of a corporate bank account with a UK bank regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
• VAT registration certificate.
• Franchise agreement.
• Documentation verifying registration.
• Official endorsement from a relevant governing body.
• For sponsorship of religious workers: information about your main organization and your affiliation with them, organizational hierarchy charts if applicable, congregation size, clergy employment details if applicable, addresses of worship locations, and worship schedule details.
• Evidence of connection with a qualifying foreign business through shared ownership, control, or a joint venture agreement.
• Details of your graduate training programme.
• Evidence of an established UK business presence or ‘footprint.’
• Proof of business activities outside the UK.
• Documentation supporting your intended business expansion into the UK.

Additional Supporting Documents for a Sponsor Licence Application

You might also be requested to supply the following additional documents:

• Organisational structure chart.
• Employer’s liability insurance certificate for a minimum coverage of £5 million from a Financial Conduct Authority-sanctioned insurer.
• Evidence of listing on:
  • The London Stock Exchange AIM market.
  • The London Stock Exchange as an international company.
  • International stock exchanges recognised by the Financial Conduct Authority.
• Self-assessment tax return to HMRC (SA300 or SA302).
• Corporate Tax Return (CT620 or CT600).
• Licence to serve alcohol at your premises issued by the local authority or court.

Please be aware that the list of additional supporting documents is not comprehensive.

Fees for Sponsor Licence

The application fees for a UK sponsor licence are as follows: 

Type of licence	Small or charitable sponsors	Medium or large sponsors
Worker licence	£536	£1,476
Temporary Worker licence	£536	£536
Worker and Temporary Worker licence	£536	£ 1,476
Adding a Worker licence to an existing Temporary Worker licence	No cost	£940
Adding a Temporary Worker licence to an existing Worker licence	No cost	No cost

To qualify as a small or charitable sponsor, a business must meet at least two of the following criteria:

• An annual turnover not exceeding £10.2 million.
• Total assets valued at £5.1 million or less.
• A workforce of 50 employees or fewer.

Understanding Sponsor Licence Numbers and Certificates of Sponsorship (CoS)

A sponsor licence number is a distinctive identifier found on a Certificate of Sponsorship (CoS), which an overseas worker uses when applying for a work visa. A CoS is a virtual record that includes critical details about the job offer, such as the job type and employment period.

Within your organization, a designated individual can request CoS through the Sponsorship Management System (SMS). Once the Home Office approves it, usually within a day, the CoS can be provided to the international worker as proof of their job offer, allowing them to proceed with their work visa application.

The cost of a CoS ranges from £25 to £239, depending on the type of licence your business holds.

Defined and Undefined CoS 

Defined CoS are specifically for individuals applying from outside the UK for a Skilled Worker visa. Employers must obtain a defined CoS before it can be allocated to a skilled worker.

Undefined CoS are for individuals switching to a Skilled Worker visa from within the UK and for all other visa categories, irrespective of where the application is made. Employers estimate the number of these they will require in their initial year of sponsorship. Once received, undefined CoS can be assigned to workers without needing to apply each time.

Sponsor Licence Responsibilities

The Home Office requires assurance that a company applying for a sponsor licence is both knowledgeable and capable of fulfilling its sponsorship responsibilities. This includes establishing systems and processes for:

• Recording, reporting, and monitoring worker absences; updating the Sponsorship Management System (SMS) with any changes in worker circumstances.
• Verifying that sponsored workers possess the necessary skills and meet the criteria for the UK sponsorship visa for which they are applying.
• Conducting right-to-work checks within the UK.
• Collecting and keeping specific documents related to the hiring of international workers.
• Informing the Home Office of particular events, such as when a sponsored worker’s employment ends or if there are significant changes within the business.

Currently, the Resident Labour Market Test (RLMT) is no longer a requirement, meaning sponsors do not need to verify if a local worker is available for the job before offering it to an overseas candidate.

Monitoring and Reporting Obligations

Employers are tasked with tracking sponsored workers and maintaining records, which include up-to-date and historical contact information, passport copies, work absences, biometric residence permits (BRP), employment contracts, and National Insurance (NI) numbers.

Additionally, sponsors must report any significant changes through the SMS to UKVI, such as alterations in business ownership or any amendments to the conditions of sponsorship, like if a sponsored worker discontinues their employment.

Sponsor Licence Compliance Visits

UK Visas and Immigration (UKVI) compliance officers may conduct scheduled or surprise compliance visits to verify a sponsor’s adherence to their responsibilities. These visits can occur both before a sponsor licence is approved (pre-licence compliance visits) and after it has been granted.

During a pre-licence visit, a UKVI official will assess whether the prospective sponsor has the appropriate systems and processes to adequately maintain records, report changes, and monitor employees, as well as to confirm the business’s legitimacy and active trade status. Should the compliance officer determine that the organisation fails to meet eligibility, suitability requirements, or lacks the necessary systems, they have the authority to deny the sponsor licence application.

After a licence is granted, ongoing compliance checks ensure that the business fulfils its monitoring, reporting, and recordkeeping duties under the sponsorship licence. Non-compliance may result in the sponsor licence being downgraded, suspended, or revoked.

Sponsor Licence Validity Period

Sponsor licences are valid for four years. From April 2024, the four-year renewal requirement will be eliminated.

Note that UK Expansion Workers’ sponsorship licences cannot be extended beyond the initial two-year period, and Scale-up sponsor licences are non-renewable after the four-year term. Companies in these situations may consider applying for a different type of worker licence, such as the Skilled Worker licence.

Sponsor Licence Rating System

An employer’s sponsor licence rating can be ‘A’ or ‘B’. New licences typically receive an ‘A’ rating. If the Home Office has concerns about a business’s compliance with sponsorship duties, it may downgrade the licence to a ‘B’ rating, restricting the ability to issue new Certificates of Sponsorship. The sponsor must then show improvements as per the Home Office’s requirements to restore their ‘A’ rating.

A sponsor downgraded to a ‘B’ rating must address all compliance issues to avoid having their licence revoked. Should revocation occur, the immigration status of any sponsored employees will be affected, potentially being cut short. In such cases, it’s critical to consult an immigration solicitor to help restore the sponsor licence.

Handling Sponsor Licence Application Refusal

A sponsor licence application may be refused for reasons including:

• Non-compliance with UK sponsorship licence requirements.
• Delayed responses to Home Office communications.
• Doubts regarding the authenticity of the application.
• Unresolved criminal convictions.
• Submission of incorrect or fraudulent information.

There is typically a ‘cooling-off’ period after a sponsor licence application is refused.

Application for Renewal of Sponsor Licence

Organizations that sponsor foreign workers are obligated to reapply for their sponsor licence on a four-year cycle. To maintain uninterrupted sponsorship capabilities, it’s essential for businesses to submit their licence renewal application prior to the current licence’s expiration date. Businesses are advised to reassess and confirm their compliance with the sponsorship criteria associated with their licence type, ensuring that all necessary internal systems and processes are still effectively in place to carry out their sponsorship responsibilities.

The process for renewing a sponsor licence is carried out online through the Sponsorship Management System (SMS). The associated renewal fee is £536 for small businesses or charitable organizations, while medium to large businesses are required to pay a fee of £1,476.

Source: Sponsor Licence