A Guide to Employing Overseas Workers

Last updated: 21 July 2021

Estimated reading time: 20 minutes

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With the end of free movement for EU nationals, the closure of the EU Settlement Scheme and the introduction of the UK points-based immigration system, UK employers are asking what this means for the 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. Here’s our guide for UK employers on employing and sponsoring overseas workers.  

Jump to:

  1. What is a sponsor licence? 
  2. Which overseas workers don’t need a sponsor? 
  3. Can my business apply for a sponsorship licence? 
  4. How do you apply for an employer’s sponsor licence? 
  5. How long does a sponsor licence last for? 
  6. Which overseas workers can a UK business hire with a sponsor licence?    
  7. What is Tier 2 sponsorship? 
  8. Recruiting and sponsoring a skilled migrant worker  
  9. The certificate of sponsorship  
  10. What are the eligibility criteria for a skilled worker visa? 
  11. How does a skilled worker visa applicant achieve seventy points under the points-based immigration system?  
  12. Which skilled migrant workers qualify as new entrants for a skilled worker visa? 
  13. Sponsoring overseas workers and the immigration skills charge  
  14. How much is the immigration skills charge? 
  15. Getting a refund of the immigration skills charge  
  16. Are there exemptions to paying the immigration skills charge? 
  17. What are your duties as a sponsor under a Home Office sponsor licence?  
  18. What are the consequences of employing overseas workers illegally? 
  19. What next? 

What is a sponsor licence? 

A sponsor licence enables an employer to recruit and employ overseas workers who are subject to UK immigration controls and who require a work visa to find employment in the UK. Without a Home Office issued sponsor licence your business won’t be able to sponsor workers who are subject to UK immigration controls and who need a sponsoring employer to be able to work in the UK.  

Which overseas workers don’t need a sponsor? 

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

Until the 31 December 2020 EEA nationals were able to live and work in the UK free of immigration restrictions. Since the 31 December 2020 an EEA national arriving in the UK to live requires a work visa, business visa or family visa and must comply 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 obtained Indefinite Leave to Remain in the UK. 
  • Irish citizens.  
  • EEA nationals who entered the UK to live before the end of free movement on the 31 December 2020 and who secured settled status or pre-settled status under the EU Settlement Scheme
  • EEA nationals who entered the UK before the 31 December 2020 and applied late 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 who have a reasonable explanation for their late settled status application.  
  • EEA or non-EEA citizens who secure British citizenship.      

Whether a potential employee is subject to immigration controls is an important consideration for UK employers as a business can’t legally employ any person who doesn’t have the 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 business apply for a sponsorship licence? 

Many small companies and employers worry that they won’t be eligible to apply for a sponsor licence. However, the Immigration Rules allow any size of company or employer to apply for a sponsor licence provided that the business meets the following eligibility criteria:  

  • Your business is a genuine organisation that operates lawfully in the UK.  
  • Your business has a genuine need to recruit overseas workers to meet vacancies that meet the work visa criteria.  
  • Your business has key 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 licence management, recording and reporting duties. 

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

An application for an employer’s sponsor licence must be made online and submitted to the Home Office. Your application must be supported by specified documents that need to be sent to the Home Office within five working days of submission of the online application. Business immigration solicitors can submit both the online application and the supporting paperwork on your behalf. It is sensible to take legal advice before submitting your application because:  

  • The type of supporting documents you need to supply depends on the nature and size of your organisation. The Home Office document detailing the evidence required in support of a sponsor licence application is found in the Sponsor guidance Appendix A: supporting documents for sponsor applications.  
  • 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, the Home Office won’t refund your sponsor licence application fee. The fee for the sponsor licence application depends on the size of your business.  

For additional information on the sponsor licence application process, read our article: Sponsor licence: Guidance for employers

How long does a sponsor licence last for? 

A sponsor licence lasts for four years. If a sponsor licence lapses because a sponsor licence renewal application is not made your business can’t continue to act as a sponsoring employer. Your sponsored 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 to be terminated or if the Home Office decides to suspend or revoke the licence. The revocation of a sponsor licence isn’t something most business plans cater for so 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 business secures a sponsor licence from the Home Office you can sponsor a person who is subject to UK immigration controls. The sponsored worker must hold:  

  • A Tier 2 (General) visa. –The Tier 2 (General) visa route ended in December 2020 but existing visa holders continue to hold valid work visas, or   
  • A skilled worker visa – introduced as part of the UK points-based immigration system in 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 is Tier 2 sponsorship? 

Many business owners will see reference to ‘Tier 2 sponsorship’ referring to the various Tier 2 visa routes. The Tier 2 visa is the most common visa category used by UK employers to recruit overseas workers. In the Tier 2 visa there are four main work visa routes, namely:  

Visa Comment 
Tier 2 skilled worker visa  This replaced the Tier 2 (General) visa.  
Tier 2 (Intra-company transfer) visa For employers wanting to transfer existing overseas employees to the UK branch 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 overseas worker, the overseas worker could either be:  

  • Already in the UK and sponsored by another UK employer. (To change employment to your business the recruit would need to apply to the Home Office for a new work visa), or  
  • Applying from overseas for a work visa.  

If your business secures a sponsor licence, you may think that you will be able to offer employment to any overseas worker who meets the job description, but that isn’t the case. If you want to sponsor an overseas worker your business needs to:  

  • Check if the job vacancy is for a role on the government produced list of standard occupation codes (SOC codes). The list of occupations and ‘going rate’ criteria are contained in the Immigration Rules Appendix Skilled Occupations. If the job you are recruiting for doesn’t fit within a SOC code then the overseas job applicant won’t secure a skilled worker visa even if all the other skilled worker visa conditions are met. 
  • Check to see if the job is on the shortage occupation list. The list can be accessed on the government website. If the job is on the shortage occupation list this could have benefits for both employer and employee as different 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 allocated to the visa applicant and the business needs to pay the immigration skills charge. 
  • The successful job applicant then applies to the Home Office for their skilled worker visa paying the relevant fee and immigration health surcharge. For more information on the immigration health surcharge read our article: Immigration health surcharge: How does it work?   
  • If the Home Office grant a visa the employer must complete the right to work checks on the new employee before 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 employer must retain some documents relating to the recruitment of the overseas worker. The obligation to carry out reporting and recording continues throughout the sponsoring employee’s employment. For example, reporting a worker’s change 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 are two types of COS, namely: 

  • An undefined certificate of sponsorship – the undefined COS is suitable if the job applicant is already in the UK with valid leave and is applying to switch to the skilled worker visa category from another immigration route, or is applying 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 a sector related UK skills shortage it is important that you assess whether your job vacancies are likely to meet the eligibility criteria for the overseas workers to apply for a skilled worker visa. That’s because there are limited visa alternatives. There are few visas that are industry specific and the government hasn’t introduced a lower skilled visa route to assist with the reduced availability of EU workers following the end of free movement. 

The eligibility criteria for the skilled worker visa are found in the Immigration Rules Appendix Skilled Worker and are summarised below:  

  • The worker has a genuine job offer from a UK employer who holds a Home Office issued sponsor licence. If your business holds a sponsor licence to sponsor Tier 2 (General) visa applicants, your company doesn’t need to apply for a skilled worker visa sponsor licence until your current sponsor licence is due to expire. If your business doesn’t have an existing sponsor licence you will need to apply for one.  
  • The job is at the required skill level of RQF3 or above. This is the equivalent of A level standard. 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 level and the job description must fall within one of the jobs contained in the standard occupational code. That is why it is important for UK employers to consider both the SOC code and the job specification prior to commencing the recruitment process.  
  • The worker meets the English language requirement. The required level of English is a minimum level B1 on the Common European Framework of Reference for Languages scale for reading, writing, speaking, and understanding English. The English 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. The visa applicant must show they meet the financial requirement through either having sufficient 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 been in their bank account when applying for the visa and been available for at least twenty-eight consecutive days, with day twenty-eight being within thirty-one days of making the visa application.  
  • The worker will be paid the minimum salary threshold by 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 points on 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 applicants to 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 be traded to achieve the seventy points as set out below: 

Skilled worker visa requirement Points allocated  Mandatory  Tradeable 
Genuine job offer made by the sponsoring employer  20 yes  
Job meets the skill level  20 yes  
Applicant meets the English language requirement  10 yes  
Salary of £20,480 to £23,039 gross per year or at least 80% of the going rate for the job (whichever is higher)  yes 
Salary of £23,040 to £25,599 gross per year or at least 90% of the going rate for the job (whichever is higher)  10  yes 
Salary of £25,600 gross per year or above or at least the going rate for the job (whichever is higher) 20  yes 
Job on 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 because the salary is not only expressed in fixed bands but there is reference to the ‘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 not simply annually. The minimum hourly pay cannot be less 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 salary on offer to the visa applicant is at least £20,480, then the recruit may be able to secure a skilled worker visa. For example, if the job your business is recruiting for is on the shortage occupation list or the worker has a PhD qualification that is relevant 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 entrant is 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 visa as a skilled worker. 
  • Sponsored in a postdoctoral research position. 
  • Sponsored and in professional training or studying for professional qualifications, registration or chartered status or a recent graduate. 

The salary threshold for new entrants is thirty percent lower than the rate for general skilled worker visa applicants, but the minimum salary threshold of £20,480 must still be met.  

There are also different minimum salary thresholds for workers in key health or education jobs. 

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 take business immigration legal advice prior to recruiting a worker from overseas.  

Sponsoring overseas workers and the immigration skills charge  

If you obtain a sponsor licence, then each time you employ and sponsor an overseas worker your business will be required to pay an immigration skills charge. The amount of the immigration skills charge depends on the size of your organisation and must be paid when you assign a certificate of sponsorship to your sponsored worker.  

The immigration skills charge was introduced in April 2017 by the Immigration Act 2016 and the Immigration Skills Charge Regulations 2017, the rules were then amended in the Immigration Skills Charge (Amendment) Regulations 2020. 

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

  • A Tier 2 (General) visa, or  
  • 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 a new work visa to change their sponsored employer and join your organisation, your business will need to pay the immigration skills charge for the length of the employee’s new visa.  

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 of skilled worker visa or intra company transfer visa  Small employer or charitable sponsor Medium to large employer   
First twelve months of the visa £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 will be in the UK for more than six months but less than twelve months then you must pay the twelve-month immigration 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, the worker’s visa application will be refused and you will need to start the recruitment process again.  

For more information read our article: Immigration skills charge for employers: what you need to know

Getting a refund of the immigration skills charge  

If you are sponsoring a worker on a work visa for their maximum visa period, then it is understandable that you’ll want to know about refunds, because the employment of any recruit is 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 by the Home Office or is withdrawn by the visa applicant. If the 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 the certificate of sponsorship.   
  • Applies for a new job and therefore obtains a new sponsoring employer.  
  • Leaves your employment prior to the end date on the certificate of sponsorship.  

Normally the Home Office will refund 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 to paying the immigration skills charge? 

There are some situations where a business will be exempt from having to pay the immigration skills charge for your sponsored worker. The exemptions are: 

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

Fulfilling your duties under your sponsor licence is essential if you want to be able to continue to sponsor overseas workers as employees. The full guidance on sponsor licence duties can be found on the government website, but the main duties of a sponsor licence holder involve 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 assign certificates of sponsorship to sponsored workers.  
  • If necessary, apply for an increase in the number of certificates of sponsorship you 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 employing overseas workers illegally? 

To some employers, the thought of sponsoring overseas workers who are subject to immigration controls can seem too complicated, with excessive bureaucracy involved in the sponsor licence application and management process. However, the reality is that with the UK skills shortage, many employers face the fact that they either need a sponsor licence and to comply with illegal working legislation or they can’t recruit the workers with the skills they need for their business.  

The consequences of employing overseas workers illegally are potentially very serious and could result in your business:  

  • Receiving a civil penalty fine.  
  • Facing a criminal prosecution.  
  • Suffering reputational damage through adverse publicity.  
  • Being unable to secure a sponsor licence in the future and therefore being prevented from sponsoring overseas workers subject to immigration control.   

For more information about the impact of prosecution for illegal working, and what you can do to safeguard yourself and your business by following the illegal working legislation, read our guide on what to do if your business is prosecuted for illegal working.    

What next? 

If you are an employer struggling with the impact of Brexit and the end of free movement on your traditional business practice of hiring EU workers and need advice on how to sponsor overseas workers as employees, help with your sponsor licence application or the management of your sponsor licence, our business immigration law solicitors can 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.

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