Tier 2 Sponsor Guidance: Skilled Worker Visa Compliance

The UK’s Tier 2 visa was replaced by the Skilled Worker route at the end of 2020. While the Skilled Worker visa operates under similar principles to the old Tier 2, sponsor licence requirements have evolved.

Visa sponsorship is more than just ticking boxes. The UK government has tightened rules, increased civil penalties and placed greater scrutiny on sponsor compliance. Employers therefore have to stay attuned to their compliance obligations, or risk enforcement action.

In this sponsor guidance article, we set out the key areas of compliance that must be met by employers sponsoring visa workers in the UK.

 

Sponsor guidance: sponsor licence application

 

If you are looking to hire foreign skilled workers to work in the UK, in most cases, you will first need to apply to the Home Office for a sponsorship licence. The application for a UK sponsorship licence is made online, comprising an application form and extensive supporting documentation to support your eligibility under the sponsorship criteria, which include:

 

• You are a genuine organisation operating lawfully in the UK
• Your organisation is offering a genuine vacancy that meets the visa skill level and minimum appropriate rates of pay
• Your organisation has adequate HR systems in place to meet your ongoing sponsorship duties and obligations
• You have identified key personnel named on your licence application who are suitable to undertake the necessary sponsorship duties

 

The Home Office will review your application submission, carry out online verification checks, and possibly even conduct an online audit or site visit, to verify the suitability of your HR systems and key personnel, before determining whether to grant you a sponsorship licence.

Issues or errors with your sponsor licence application can result in a refusal, which can have serious implications for businesses relying on talent from overseas. Taking professional advice can optimise your prospects of a successful licence application.

 

Sponsor licence application fees

 

The cost of applying for a Skilled Worker sponsorship licence depends on the size of your organisation. The fee for medium or large sponsors is currently £1,476, whilst the fee for small or charitable sponsors is set at £536.

For a ‘Temporary Worker’ licence, the fee is £536, regardless of the organisation’s size.

The fee for the premium sponsor service is £8,000 per year for small, medium or charitable organisations, and £25,000 per year for large organisations.

In addition, you will be liable to pay the Immigration Skills Charge each time you sponsor a migrant worker under the Skilled Worker route. This is currently set at £1,000 per employee per year, reduced to £364 for small or charitable organisations. This is on top of the fee required for every certificate of sponsorship that you assign under your licence.

Further costs will also be payable when, for example, assigning the Certificate of Sponsorship to the job applicant.

Sponsors are prohibited from recouping the following fees from sponsored workers:

 

• Sponsor Licence Application Fee: This includes fees for new applications or adding routes to an existing licence.
• Certificate of Sponsorship Fee: Fees for CoS assigned on or after this date cannot be passed on to the worker.

 

Employers must bear these costs themselves, although some may be recoverable, provided there is a lawful agreement in place with the worker.

 

Sponsor guidance: appointing key personnel

 

Every organisation applying for a sponsor licence must designate individuals for the following roles:

 

• Authorising Officer: A senior person responsible for the recruitment of migrant workers and ensuring that all sponsor duties are met.
• Key Contact: The main point of contact between the organisation and UKVI.
• Level 1 User: Responsible for the day-to-day management of the sponsor licence via the Sponsorship Management System (SMS).

 

Upon obtaining a licence, sponsors may also appoint Level 2 Users, who have more limited access to the SMS.

Once you have been granted a licence you can also choose to nominate individuals as Level 2 users.

Importantly, sponsors must have an Authorising Officer and at least one Level 1 user in place at all times. If a member of staff leaves and you fail to appoint someone else to the role, UKVI can choose to downgrade your licence (and charge you for the opportunity to upgrade it again) or even revoke your licence altogether.

It is also important to understand what these roles require, and who can (and critically cannot) be appointed.

Note that if your nominated personnel on your sponsorship licence application form have a history of immigration violations or any unspent criminal convictions, this could result in your application being denied.

 

Authorising officer

 

The Authorising Officer will usually be UKVI’s first and primary point of contact with your organisation. They will receive e-mails concerning changes to sponsors’ duties, the need to renew Certificates of Sponsorship or the licence itself etc. They are also required to authorise most of the changes or updates you might make to your licence (e.g notifying UKVI that you’ve opened a new branch). They do this by signing the Submission Sheet that will be generated whenever you submit a notification of change via the Sponsorship Management System (SMS).

The Authorising Officer will not have automatic access to the SMS to carry out any of the practical functions relating to sponsoring migrant workers – unless you also choose to make them a Level 1 user.

When applying for a licence you must appoint an Authorising Officer. And you must have one at all times whilst you hold a licence. If you fail to have an Authorising Officer in place at any point, or have one who doesn’t meet UKVI requirements (e.g they’re not based in the UK) your licence can be suspended, downgraded or even revoked.

You must also report any changes to their contact details to UKVI, again if you fail to do this your licence can be affected.

When the Points Based System was first introduced the Home Office required the Authorising Officer to be a senior member of staff. In the seven years that the PBS system has been operating UKVI have recognised that it’s not helpful for them to have an Authorising Officer who is so senior in the company that they have no involvement with recruitment or immigration and therefore are unable to answer many of UKVI’s queries. Two years ago they therefore amended the requirement for new licence applicants, requiring their Authorising Officer to be the “most senior person responsible for the recruitment of all migrant workers and ensuring that sponsor duties are met”.

If there is more than one person who could fill this role, you can decide who to nominate. Whoever you nominate, you must be sure that they fully understand the importance of the role.

Other requirements for your Authorising Officer are that they must be:

 

• An employee or officer of the organisation
• Based in the UK
• Entitled to work in the UK (i.e they don’t have to be British as long as they have an appropriate immigration status that enables them to work)
• Free from criminal convictions

 

 

Key contact

 

Your Key Contact is, as the name implies, the UKVI’s other main point of contact for the licence. The Home Office will contact them in the event that they have queries about your sponsor licence application, the documents submitted or the payment.

The Key Contact also does not have automatic access to the SMS. If they require access to the system they will need to be set up as a level 1 or level 2 user.

When applying for a licence you must nominate a key contact. And you should have one at all times whilst you hold a licence.

Your Key Contact can be an employee or officer of the company, or a legal representative (as long as they are based in the UK.)

 

Level 1 user

 

Your Level 1 user(s) will usually be the person or people who are doing your day-to-day immigration work.

They have full access to the Sponsorship Management System (SMS), from which all functions of your licence are operated. That means they can:

 

• undertake routine sponsorship activities, including assigning Certificates of Sponsorship (CoS), reporting migrant activity and changes of circumstance, request CoS, apply for and assign restricted CoS
• view information about your licence, notify UKVI of changes to your organisation
• apply to renew your licence and track the progress of your application

You must always have at least one Level 1 user in place, who can access the SMS to carry out these tasks. In your sponsor application, you can only nominate one Level 1 user, and this person must be an employee. Once your licence has been granted you can appoint more Level 1 users, including your Representative or other members of staff. UKVI recommend that you keep numbers to the minimum necessary for effective business operation.

You can appoint any of the following as a Level 1 user:

 

• an employee or office holder
• your UK-based legal representative
• an employee of a 3rd party company or organisation if you contract out some or all of your HR functions to them.

 

Level 2 user

 

Level 2 users also have access to the SMS, but on a much more restricted basis. They can only:

• assign an Unrestricted CoS
• report migrant activity

 

They cannot:

 

• access your general licence information
• report any changes to the organisation
• request or assign a Restricted CoS

 

You can appoint as many level 2 users as you need once your licence is in place.

 

Eligibility requirements for key personnel

 

There are some requirements that all of your Key Personnel must meet. They must be:

 

• Based in the UK: For the duration of the period that they fill one of the licence roles they must be permanently based in the UK. In other words, even if your UK company is a subsidiary or branch of an overseas company and your HR function is based outside the UK you must still appoint UK based personnel to fill the sponsor licence roles.
• Employment Status: The Authorising Officer and at least one Level 1 User must be employees, partners or directors within the organisation. Notably, at least one Level 1 User must also be a “settled worker,” such as a British citizen or an individual with indefinite leave to remain.
• Free from criminal convictions: UKVI will carry out checks on appointed Authorising Officers, Key Contacts and Level 1 users for unspent criminal convictions at the time of your licence application, and can check at any point after that during the life of your licence.
• Legal Standing: Individuals prohibited from acting as company directors are not eligible to serve as key personnel unless they have obtained specific court permission.
• National Insurance Number: All key personnel must possess a valid National Insurance number unless exempt.

 

None of your Key Personnel can be:

 

• Individuals not based in the UK.
• Contractors or consultants contracted for specific projects.
• Individuals subject to a Bankruptcy Restriction Order or Undertaking.
• Individuals subject to a Debt Relief Restriction Order or Undertaking.
• Individuals legally prohibited from being company directors without court permission.

 

UKVI may refuse an application where any of the key personnel were involved with a sponsor whose licence has been revoked within the last 12 months.

 

Key personnel compliance issues

 

You must provide contact details for all Key Personnel at the time of your licence application and if any changes occur subsequently. The contact address given for each of your Key Personnel must be either:

 

• your main address
• a branch or head office included in your licence
• your Representative’s business address

 

If your organisation moves location you must update the contact details for your Key Personnel, as well as updating the licence address itself.

d a licence where they identify a breach of either of these rules and we are increasingly hearing of cases where this has happened.

Your Level 1 or Level 2 users must not assign a Certificate of Sponsorship to themselves or assign a CoS to a close relative or partner (including husband, wife, civil partner or unmarried partner, parent, child or sibling.)

You must have a minimum of one Level 1 user who is a settled worker. The only exceptions to this rule are if your Authorising Officer has valid leave as a:

 

• Representative of an Overseas Business
• Tier 1 (Graduate Entrepreneur) migrant
• Tier 1 (Entrepreneur) migrant

 

 

Sponsor guidance: assigning Certificates of sponsorship

 

If your application is successful you will be granted a sponsorship licence with an “A” licence rating. This will allow you to assign certificates of sponsorship to each foreign worker you employ. These are electronic documents, each containing a unique reference number.

This reference number is required for each individual to make their individual visa application to the Home Office for entry clearance.

 

Sponsor guidance: your compliance responsibilities

 

If your sponsor licence application is successful, as a licensed sponsor, you agree to meet all of the duties and obligations associated with sponsoring a migrant.

You will be given access to the Sponsor Management System (SMS), an online tool to be used to administer your day-to-day sponsor activities, such as assigning certificates of sponsorship. It will also allow you to report any changes in the circumstances – of an individual worker or organisational – to the Home Office. Failure to will be deemed a breach of your duties.

In particular, you are under a duty to ensure compliance with the immigration rules and prevent abuse of the system. This includes the following:

 

Keep up-to-date records of all sponsored workers

This includes copies of their passport, visa documentation, and any relevant right-to-work evidence. These records must be securely stored and accessible for inspection.

 

Monitor and record employee attendance

You must have robust HR processes to track attendance and report unauthorised absences. This includes notifying the Home Office if a sponsored worker fails to report to work within 10 days of their expected start date.

 

Report key changes in employee circumstances

You must use the Sponsor Management System (SMS) to report if a worker stops working, switches roles, or breaches visa conditions. Reports must be submitted within 10 working days of the change occurring.

 

Cooperate fully with the Home Office

Sponsors are subject to compliance audits and site visits, both announced and unannounced. You must provide access to records, premises, and relevant personnel during an inspection.

 

Ensure legal compliance with rights to work checks

All employees must have valid permission to work in the UK and you must prove that you have conducted the relevant right to work checks verifying their lawful status.

 

Any failure to comply with your duties could result in your licence rating being downgraded, or even your licence being suspended or revoked. If your licence rating is downgraded, you will be required to pay for an action plan at a cost of £1,476 to help you reinstate your “A” licence rating.

Read our full guide to sponsor licence compliance here > 

 

Need assistance?

 

Sponsorship licence applications are at risk of refusal for errors and omissions that could be avoided with sponsor guidance. From ascertaining eligibility, through to advice on company structure, sponsored roles and salary levels and compiling your supporting documents, the sponsor licence specialists at DavidsonMorris can help.

We can also provide ongoing support to help ensure your organisation remains compliant with your duties under law and does not fall foul of Home Office scrutiny or penalties.

For advice with your sponsor licence, contact us.

 

Sponsor guidance FAQs

 

What are my main compliance responsibilities as a sponsor?

As a licensed sponsor, you must comply with UK immigration rules by maintaining accurate records, tracking employee attendance, reporting changes in worker circumstances, and cooperating with Home Office inspections. You are also required to carry out right-to-work checks and ensure all sponsored workers meet visa conditions.

 

What happens if I fail to meet my sponsor duties?

Failure to comply can result in a downgraded sponsor licence rating, suspension, or even revocation. If downgraded to a B-rating, you must pay £1,476 for a Home Office action plan to restore your A-rating. Serious breaches may lead to civil penalties or criminal charges.

 

How do I report changes in worker circumstances?

You must report changes through the Sponsor Management System (SMS) within 10 working days. This includes non-attendance, resignation, role changes, or visa status updates. Late or incorrect reporting can be seen as non-compliance.

 

What records must I keep for my sponsored workers?

You must keep copies of passports, visas, employment contracts, salary details, and attendance records. These must be kept securely and made available for Home Office inspections.

 

How often does the Home Office conduct compliance visits?

The Home Office can conduct announced or unannounced compliance audits at any time. Inspections may take place before granting a licence, during renewal, or if there are compliance concerns.

 

Can I outsource my compliance duties to a third party?

While some HR functions can be outsourced, you remain legally responsible for ensuring compliance. If a third party fails to meet sponsorship duties, your organisation will be held accountable.

 

What is the penalty for employing an illegal worker?

Employers can be fined up to £60,000 per illegal worker if they fail to carry out proper right-to-work checks. A sponsor licence may also be revoked, preventing future hiring of skilled workers.

 

How do I reinstate my A-rating if downgraded?

If downgraded to a B-rating, you must follow a Home Office action plan, which costs £1,476. Once all compliance issues are resolved, you can apply for your A-rating to be reinstated.

 

What should I do if my organisation moves or changes structure?

You must update the SMS to reflect changes in your business address, ownership, or organisational structure. Failure to report changes can result in compliance action.

 

Glossary

 

 

Term	Definition
Sponsor Licence	A licence granted by the Home Office allowing UK employers to hire skilled workers from overseas.
Sponsor Management System (SMS)	An online platform used by licensed sponsors to manage sponsorship duties, including assigning Certificates of Sponsorship and reporting changes.
Authorising Officer	A senior person within the organisation responsible for ensuring compliance with sponsor duties.
Key Contact	The primary point of contact between the sponsoring organisation and UK Visas and Immigration (UKVI).
Level 1 User	An individual with full access to the SMS, responsible for carrying out day-to-day sponsorship duties, including assigning Certificates of Sponsorship and reporting changes.
Level 2 User	A person with limited access to the SMS, usually restricted to assigning Unrestricted Certificates of Sponsorship and reporting migrant activity.
Certificate of Sponsorship (CoS)	A digital document assigned by a sponsor to a migrant worker, enabling them to apply for a Skilled Worker visa.
Compliance Visit	An inspection carried out by the Home Office to assess whether a sponsor is meeting its duties. These can be announced or unannounced.
Licence Downgrade	A penalty imposed by UKVI for non-compliance, moving a sponsor from an A-rating to a B-rating, requiring corrective action.
Action Plan	A Home Office-imposed compliance programme that downgraded sponsors must follow to regain their A-rating, costing £1,476.
Licence Revocation	The cancellation of a sponsor licence due to serious breaches of sponsorship duties, preventing the employer from hiring overseas workers.
Right to Work Check	A legal requirement for employers to verify that all employees have the legal right to work in the UK before employment begins.
Illegal Working Penalty	A fine of up to £60,000 per worker imposed on employers who fail to conduct proper right-to-work checks.
Immigration Skills Charge (ISC)	A fee sponsors must pay when assigning a Certificate of Sponsorship, set at £1,000 per worker per year (£364 for small or charitable sponsors).