UK Tier 2 visa sponsorship licence compliance and loss risk for majority of UK businesses

New research warns that up to 95 percent of UK small and medium sized enterprises (SMEs), hiring non-EU migrants on Tier 2 Visas, run the risk of losing their Tier 5 or Tier 2 visa sponsorship licence and face closure by the Home Office. As Brexit looms, it’s understood that less than 25 percent of SME companies are aware of the serious sanctions they face for failing to comply with sponsor licence regulations.

Non-compliance with strict Home Office ‘right to work’ rules for foreign employees could lead to prison sentences for company directors, closure and irreversible damage to a company’s reputation.  

Sanwar Ali comments:

The current Tier 2 visa and Tier 2 Sponsorship licence system is very complicated and unfair.  The system for applying for a tier 2 sponsorship licence is very confusing.   It is difficult to tell from the guidance documents provided by the Home Office what documents you need to apply for a sponsorship licence and exactly what you need to do to meet compliance requirements.  

At times, completely untrue statements about a business may be taken seriously so resulting in a loss of a sponsorship licence.  One business that does not follow compliance requirements carefully may have no problems ever. Another business with good compliance procedures may have their licence revoked.   Decision making is not uniform so leading to injustices occurring.

Businesses need to feel confident that if they try their best to deal with tier 2 compliance they will not be penalised.  Businesses should not be penalised when the requirements are so unclear that they are in effect practically impossible to comply with.  

Tier 2 visa sponsorship licence non-compliance fines

Perhaps more worryingly is that 53 percent of 1,000 UK employers polled as part of the research, thought that fines for sponsorship licence non-compliance were as little as £50. In fact, fines can amount to as much as £20,000 per illegal worker, while directors could face imprisonment for up to five years.

The survey further highlighted confusion over documentation, with less than 50 percent of SME companies certain of what records needed to be kept on file for overseas workers. Meanwhile, a staggering 96 percent of Tier 5 and Tier 2 visa sponsors said they did not report ‘changes in circumstances’ for sponsored workers.

Tier 2 Visa Resident Labour Market Test and advertising vacancies incorrectly  

The study found that, out of the 1,000 companies surveyed, not one was advertising a job vacancy correctly in accordance with sponsorship licence rules, when required, for hiring a non-EU national. Furthermore, the study uncovered crucial errors in terms of compliance checks and internal audits.

It’s apparent that UK SMEs are falling short of the duties expected of a Tier 5 or Tier 2 visa sponsor. In July 2016, the Home Office introduced harsher punishments for companies, regardless of whether a company had broken the law intentionally, or were innocently caught out because they didn’t have their paperwork in order.

As part of stricter measures, in accordance with the 2016 Immigration Act, increased prison sentences were introduced for company directors, while ‘on the spot’ company closures also came into force.

Tier 5 and Tier 2 sponsorship licence duties

UK employers who possess a Tier 5 or Tier 2 sponsorship licence to recruit non-EU workers are duty-bound to retain specific foreign employee records. These include attendance and absences, evidence of resident labour market tests (where necessary), professional accreditations and copies of employee wage slips.

Although employees are not subject to the same penalties in accordance with ‘right to work’ checks, the tiniest discrepancy in a foreign staff member’s data could result in a sponsor having their licence suspended or even revoked.

Skills crisis ahead of Brexit

UK SMEs are already experiencing a growing skills crisis, especially across the engineering, finance and IT sectors, which rely heavily on talent from overseas. The crisis will only deepen with more and more companies losing the right to recruit skilled overseas staff because of failures to meet their sponsor licence duties.

Worse still, with Brexit looming, a new UK immigration system is likely to be in place by March 2019 when the free movement of people between the EU and the UK comes to an end. It’s likely that EEA nationals will then require some form of entry clearance to work in the UK, and sponsorship is a highly probable option.

A company losing a licence post-Brexit could prove disastrous as the battle to secure overseas talent becomes ever more competitive. Employers wanting to retain non-EU and EEA staff are being urged to get fully prepared prior to Brexit. can help with Tier 2 Visa Sponsorship Licences and Tier 2 Visas

If you need help with a Tier 2 visa, or a Tier 2 Sponsorship Licence, including help with complying with your Tier 2 Sponsorship Licence obligations can help. More and more employers are facing sudden unannounced onsite inspections. Contact us for a copy of our free Tier 2 Sponsorship Licence Compliance guide.

For more information and advice on UK immigration law and UK visa applications please contact us on 0344 991 9222 or at