Is it time to make immigration compliance a priority agenda item for UK businesses?

As the last two years have proven, continuity planning is a key agenda item for any business, with the ability to maintain an agile global workforce being paramount. For those businesses which hold UK a sponsor licence, this must include compliance with sponsor duties. 

The scenario

We were recently approached by a medium-sized business whose global mobility team was struggling to get buy-in from senior leadership when it came to providing resourcing and budget. Immigration compliance was a key concern for the team. When asked the question, “What impact would the loss of their sponsored workforce have on the business?” the response was, “Catastrophic.” Through more focussed discussions, specific concerns were raised regarding the business’ lack of investment into its immigration compliance obligations and failure to appreciate the risk to business continuity of possible consequential compliance breaches.  

Sponsorship compliance should not be taken lightly

Like many immigration regimes, the UK places a responsibility on its employers to know the identity of their UK workforce, whilst satisfying themselves that their UK employees have the right to work. For those familiar with the UK sponsorship system, a regime that keeps many sponsors on their toes, responsibilities for sponsor licence holders go much further than this.

In line with the UK Government’s Sponsorship Roadmap, published in August 2021, the updates made to the sponsor guidance on 22 August 2022 show the UK immigration system evolving further to digital processes. As digitisation plays a key part in the Sponsorship Roadmap, sponsors should be prepared for data to be shared between government departments more easily. Although we have seen the practice of data sharing as far back as 2008, especially in the identification of illegal working, the frequency and expansion into other uses is evident with these latest changes.

Compliance checks are now defined in two ways – an in-person “compliance visit” and a virtual “digital inspection.” The latter is expected to continue checking PAYE data against declared sponsored migrant salaries and publicly available documents from organisations such as Companies House, as previously, as well as other Governmental data which may be shared with UK Visas and Immigration (“UKVI”).

Reporting duties

An ongoing compliance obligation placed on UK sponsors is to track and monitor their sponsored workforce. Where there are changes in specific elements of an individual’s sponsored employment (work location, working hours, job title) these must be reported through the UKVI’s Sponsor Management System within 10 working days. Where there is deemed to be a significant change in the role, this may even result in a new Certificate of Sponsorship (“CoS”) being required, which means the employee must reapply for their status again before they can begin the new role.

Reporting is not just limited to changes in circumstances linked to the sponsored employee. Although linked entities by common ownership or control can also be listed on a licence, it is changes to the licence holding entity which the UKVI will keep an eye on. Changes in ownership, company status, and trading address must all be reported. With expectations that M&A activity is likely to increase, sponsors should also note the importance of assessing such activity against the ownership structure and implications for sponsor licences.

Similar to the sponsorship of an individual, where there are deemed significant changes to a sponsor’s ownership, a new licence may be required. While a sponsor is going through the steps of reapplying for a licence it is important for leadership to know that this could restrict sponsoring anyone new.   

Where there is a lack of reporting, identification of non-compliance by the UKVI was formerly a manual process. But as government departments sync and allow for data sharing, changes in sponsoring entity and employee work arrangements will be flagged more easily. No matter the size of the business, it is evident that this places pressure on sponsors to keep on top of their reporting duties and maintain robust in-house processes.

One size does not fit all

How a sponsor manages its compliance, in our experience, often depends on the size of the organisation, its internal network and the knowledge of those responsible for the licence. Where we have been approached by startups and SMEs experiencing compliance action from the UKVI, responsibilities linked to sponsorship compliance are commonly more centralised. Non-compliance often arises where there is a lack of understanding of general compliance requirements or due to loss of knowledge upon a change in personnel.

By comparison, larger sponsors often have sophisticated, established compliance processes where   key personnel possess detailed knowledge and have regular training. Nevertheless, when put under the microscope, lack of communication between departments or a lack of budget allocation can inadvertently result in oversights.

What are we seeing?

On 25 June 2020, we saw the Corporate Insolvency and Governance Act (the “Act”) receive Royal Assent. Experts across a wide range of practice areas welcomed this legislation, noting that both short- and long-term provisions within the Act made the UK an attractive restructuring hub.

Whether a direct correlation or not, we have supported unprecedented volumes of licence updates over the last two-year period and continue to witness trends in corporate restructuring that have a direct impact on sponsor licence holders. Sadly, not all are captured and reported within the required 20 working day time period as the impact of restructuring and the implications on a sponsor licence are often overlooked by senior leadership.

The UKVI will become aware of such changes in a licence holder’s structure through its increased use of digital resources. It is expected that the synchronisation of government departments will accelerate that identification, forcing sponsors to up their reporting game.

Whilst in-person UKVI compliance checks continue and are expected to remain the principle means of reviewing a sponsor’s compliance processes for the time being, the UKVI is transitioning into digital methods of compliance inspections, which will include virtual interviews and expansion of data-sharing in the detection of non-compliance.

What does this mean for sponsors?

We strongly encourage all sponsors to consider internal policies and whether any ‘house-keeping’ is required. This could be as simple as opening lines of communication amongst senior leadership to ensure proactive steps are taken and the sponsor licence and sponsored workforce remain secure.

Need to know more?

For further information and advice on this topic, please contact Director Naomi Goldshtein at [email protected] and Senior Associate Victoria Welsh at [email protected]. This blog was published on 12 September 2022, and due to the circumstances, there are frequent changes.

To keep up to date with all the latest updates on global immigration, please visit our dedicated COVID-19 site, subscribe to our alerts and follow us on LinkedIn, Twitter, Facebook and Instagram.