Sponsor Licence Revocation for Underpaying Skilled Workers: How Salary Must Be Assessed

In Brief

A Certificate of Sponsorship records the annual salary a sponsor has undertaken to pay. A below-rate week or month does not necessarily prove that the worker has been paid less than the required annual rate, but individual pay periods cannot be ignored. Employers need a defensible, worker-by-worker explanation showing how the Certificate of Sponsorship, contract, hours, leave, payroll adjustments and Sponsor Management System reports fit together over the period examined.

On 30 July 2026, the High Court granted Daniel’s Special Care Limited permission to challenge the revocation of its sponsor licence on grounds concerning salary assessment and the related scope of the Home Office’s discretion. This was a permission-stage judgment: the court did not quash the revocation, restore the licence or decide that the workers had been paid correctly. Sponsors facing an underpayment allegation should obtain prompt advice from sponsor licence revocation solicitors and submit a complete reconciliation rather than relying on general explanations about payroll fluctuations or commercial pressures.

What Happened in Daniel’s Special Care?

Daniel’s Special Care Limited is an English domiciliary-care provider. According to the official High Court judgment, the Home Office carried out a compliance visit on 24 February 2025, suspended the company’s sponsor licence on 23 July 2025 and revoked it on 13 October 2025. The concerns included alleged shortfalls in three sponsored workers’ hours and pay, failures involving historical contact records, evidence from the employer’s HR system and right-to-work documentation.

The sponsor renewed its application for permission to seek judicial review on five grounds. Permission was refused on grounds concerning alleged factual errors in the record-keeping evidence, the right-to-work and HR-system material, and the argument that the Home Office should have made further enquiries about documents mentioned but not adequately supplied. Permission was granted only on grounds four and five: the rationality of the salary assessment and the related scope of the discretion to revoke.

Permission Is Not Final Success

The legal status of the judgment is critical. Daniel’s Special Care is an interlocutory Administrative Court decision that found two grounds properly arguable. It did not determine that the Home Office acted unlawfully, that the workers received the required pay or that the sponsor was entitled to recover its licence. Those matters would require substantive determination unless the dispute is resolved in another way.

Permission to proceed with judicial review does not itself suspend or reverse revocation. Unless the Home Office withdraws or reconsiders its decision, or the court grants appropriate interim relief, the licence remains revoked while the claim continues. An employer must therefore address the litigation timetable alongside the immediate consequences for recruitment, sponsored workers, right-to-work checks and service delivery.

Why Complete Evidence Matters

The refusal of permission on grounds one to three provides a separate compliance lesson. A sponsor responding to suspension is expected to submit the records on which it relies. Referring to information stored in an HR platform is not equivalent to providing usable screenshots, reports or exports. The court did not accept that the Home Office was required to obtain material that the sponsor had mentioned but had not adequately supplied.

That conclusion does not allow the Home Office to disregard relevant evidence actually placed before it. The arguable salary ground concerned whether further payroll information supplied after suspension had been properly assessed. The distinction is between evidence submitted but arguably mishandled and evidence that the sponsor expected the decision-maker to locate, reconstruct or request for itself.

When Can Underpayment Lead to Sponsor-Licence Revocation?

The current Workers and Temporary Workers sponsor guidance places salary underpayment within Annex C1, which identifies circumstances in which the Home Office will revoke a sponsor licence. Annex C1(aa) applies where a sponsor pays a sponsored worker less than stated on the worker’s Certificate of Sponsorship and either the sponsor has not notified the Home Office of the change or the reduction is not otherwise permitted by the Immigration Rules or sponsor guidance.

It is therefore incomplete to say that every temporary variation below the Certificate of Sponsorship figure automatically establishes a mandatory revocation ground. The evidence must establish an actual shortfall and the Home Office must address whether the change was notified or legally permitted. Once the established facts fall within Annex C1, however, the position is exceptionally serious because the published guidance states that the Home Office will revoke the licence.

The Salary Promised on the Certificate of Sponsorship Matters

Paying the general Immigration Rules minimum is not necessarily sufficient. If the Certificate of Sponsorship states a higher salary, the sponsor must account for any difference between that promised figure and the worker’s actual pay. The calculation may also involve contractual salary, guaranteed hours, the applicable going rate, hourly-rate requirements, National Minimum Wage law and the rules governing deductions and absences.

An accidental payroll error should not be dismissed as immaterial. Its cause may be relevant to remediation and any public-law challenge, but the absence of deliberate wrongdoing does not itself establish compliance. The sponsor should promptly identify the cause, determine whether an SMS report or new immigration application is required, correct the position where legally possible and preserve a clear audit trail.

Immigration Salary, Contractual Pay and Minimum Wage Are Separate Tests

One payment problem can engage several legal regimes. Paying the Immigration Rules minimum does not answer an allegation that the sponsor promised a higher amount on the Certificate of Sponsorship. Equally, meeting the annual CoS figure does not automatically demonstrate compliance with an hourly-rate requirement, National Minimum Wage legislation, the employment contract or restrictions on deductions. Each test should be calculated separately.

Must a Sponsored Worker Receive the Same Salary Every Month?

Not necessarily. In Treal Care (UK) Ltd v Secretary of State for the Home Department [2025] EWHC 1797 (Admin), a substantive judicial-review judgment handed down on 16 July 2025, the High Court held that the relevant assessment concerned whether the worker was being paid the required annual rate. Neither the Certificate of Sponsorship nor the guidance required the annualised salary to be reproduced mechanically in every day, week or month.

Where a worker has not completed a full year, the Home Office may select a shorter period and annualise the pay received. Treal Care held that selecting the four-month period used in that case was not inherently unreasonable. The period chosen, the calculations and the treatment of known circumstances must nevertheless be rational and based on the evidence available to the decision-maker.

The court also expressed doubt that a worker paid at least the correct annualised salary over the selected four-month period could reasonably be treated as receiving less than the required annual rate solely because one month was below the monthly equivalent. That observation concerned the rational assessment of the facts before the court; it did not create an unrestricted right to defer wages or disregard separate reporting and absence rules.

Daniel’s Special Care applied that reasoning only at the permission stage. The court found it arguable that the Home Office needed to assess further payroll information supplied after suspension and decide whether each employee was receiving the required annual rate, rather than effectively insisting on the annualised amount in every individual month.

Annual Assessment Does Not Make Pay Periods Irrelevant

Sponsors cannot leave workers unpaid for extended periods and assume that a later lump-sum payment will solve the problem. Payslips remain important evidence, and a pattern of shortfalls may show that the promised salary was not genuinely being paid. Delayed payments can also raise separate concerns about contractual compliance, reporting duties, payroll controls and whether remediation occurred only after Home Office intervention.

A defensible calculation should identify the pay received during the assessment period, the pro-rated salary expected for that period, the reason for each fluctuation and the resulting annualised rate. It should then address whether any absence was permitted, whether a reduction was reported and whether hourly-rate, minimum-wage and contractual requirements continued to be met.

Choosing a Representative Assessment Period

No single period will suit every case. Results may be distorted by a recent start date, permitted leave, payroll cut-off dates, an evidenced correction or an irregular working pattern. Sponsors should reproduce the Home Office calculation, disclose the full requested period and explain any principled reason for providing an additional comparison. Selecting only favourable months is unlikely to produce a credible response.

What About Unpaid Leave, Sick Leave and Reduced Hours?

Sponsor guidance normally requires an employer to stop sponsoring a worker who is absent from sponsored employment without pay, or on reduced pay, for more than four weeks in total in a calendar year. The four weeks are calculated by reference to the worker’s normal working pattern and may consist of one continuous absence or several cumulative periods.

Specified exceptions include statutory family leave, statutory neonatal care leave, sick leave, jury service, attending court as a witness, legally organised industrial action and agreed humanitarian or environmental crisis work. An absence exceeding four weeks must still be reported through the Sponsor Management System with its reason, duration and salary consequences. The current guidance and the worker’s route should be checked before a decision is made.

If no specified exception applies but the sponsor considers there are compelling reasons to continue sponsorship, it must report those reasons for UKVI to assess. This is not automatic permission. Shorter absences should also be monitored so that cumulative periods are not overlooked or confused with a salary reduction unrelated to absence.

Reduced Service-User Demand Is Not an Automatic Exception

Care providers may experience fluctuating demand because a service user is hospitalised, a care package ends or commissioned hours change. Those facts can explain the operational background, but they do not automatically permit the employer to reduce guaranteed hours or the salary stated on the Certificate of Sponsorship. Commercial difficulty and labour shortages do not displace sponsorship or contractual obligations.

Before changing hours or pay, the organisation must examine the contract, Certificate of Sponsorship, immigration route and reporting requirements. Depending on the change, the employer may need to report it through the SMS or assign a new Certificate of Sponsorship, and the worker may need a successful immigration application before the reduced arrangements can begin.

Temporary Health-Related Reductions Need Evidence

Current guidance permits certain temporary reductions in hours, or phased returns to work, for individual health reasons where an occupational health assessment supports the arrangement and the applicable hourly-rate requirement remains satisfied. This is narrower than a general discretion to reduce pay during illness. The sponsor should retain the assessment, record the dates and make the required report.

Can Back Pay Correct a Salary Shortfall?

A prompt corrective payment may be relevant, particularly where a genuine payroll-processing or calculation error is identified. The sponsor should preserve the original and revised payslips, bank-payment confirmation, calculation, approval record and explanation of the cause. The documents should demonstrate that the payment was genuine, matched the identified shortfall and reached the worker’s own account.

Back pay does not automatically erase the original problem. The Home Office may still consider whether the worker was underpaid when wages were due, whether the reduction should have been reported, whether employment or minimum-wage law was breached and whether effective controls existed. Daniel’s Special Care establishes only that the treatment of relevant later evidence was arguable; it does not establish that every corrective payment cures a breach.

The explanation must remain consistent with the contract, PAYE records, payslips and bank evidence. Employers should not relabel a discretionary bonus as salary correction or create a retrospective calculation that cannot be reconciled with contemporaneous records. Remediation is more persuasive when it includes root-cause analysis and controls designed to prevent repetition.

Salary-Compliance Events and the Sponsor’s Response

Payroll teams should treat an unexplained difference between sponsored salary and actual pay as an immigration-compliance event. The required response depends on whether the difference results from permitted leave, an irregular working pattern, a permanent contractual change, an isolated payroll error or a continuing breach.

Payroll or employment event	Immediate sponsor action
Short unpaid leave	Record the reason and duration, monitor cumulative absence and check both salary and four-week absence rules.
Sick leave or statutory family leave	Retain supporting evidence, identify the applicable exception and make any required SMS report.
Reduced available shifts	Do not assume lack of work permits lower pay; check guaranteed hours, the contract, CoS and immigration requirements.
Permanent salary or hours change	Check route eligibility and whether a new CoS or immigration application is required before implementation; report through SMS.
Payroll calculation error	Correct it promptly and preserve the calculation, revised payslip, payment evidence, cause and remedial controls.
Several below-rate pay periods	Prepare pay-period and annualised calculations with a worker-by-worker explanation for every fluctuation.
Sponsor-licence suspension	Answer every allegation and submit the complete supporting documents within the deadline in the suspension letter.
Sponsor-licence revocation	Obtain urgent advice on pre-action correspondence, judicial-review timing and any possible interim-relief application.

The table is a starting point, not a substitute for individual analysis. Workers with similar payslips may have different compliance positions because of their contractual hours, leave records, immigration permission, salary threshold, reporting history or the assessment period selected by the Home Office.

What Evidence Should a Sponsor Keep?

A sponsor should be able to reconstruct the payment position for every sponsored worker without relying on oral explanations. Records should connect the Certificate of Sponsorship to the contract, work performed, leave taken, payroll calculation, bank payment and SMS history. They should remain retrievable after a payroll provider, manager or HR platform changes.

• Current and historical Certificates of Sponsorship, sponsor notes and SMS reports.
• Contracts, variation letters, job descriptions and records of guaranteed hours.
• Payslips, payroll reports, PAYE records and evidence of payment to the worker.
• Timesheets, rotas, electronic call records and evidence of hours worked.
• Holiday, sickness, unpaid-leave, statutory-leave and occupational-health records.
• Worker-by-worker pay-period, pro-rated and annualised salary calculations.
• HR-system exports, historical contact details and complete right-to-work records.
• Payroll-correction records, management approval, root-cause analysis and remedial controls.

A structured sponsorship licence audit and compliance review can identify discrepancies before a compliance visit. The audit should test not only whether the annual figure appears correct, but whether each absence or reduction was permitted, documented and reported at the required time.

How Should a Sponsor Respond to Suspension?

The suspension response is normally the sponsor’s main opportunity to correct factual errors and provide a complete evidential explanation. Current guidance gives a sponsor 20 working days from the date of written notification to respond, although the deadline in the individual letter must always be checked. Every allegation, worker and assessment period identified by the Home Office should be addressed.

Documents should be attached rather than merely described. In Daniel’s Special Care, permission was refused on the argument that the Home Office should have sought HR-system evidence which the sponsor said existed but had not adequately supplied. A response should not assume that the decision-maker will reconstruct the employer’s case or request missing records.

The response should reconcile the Certificate of Sponsorship, contract, payslips, bank payments, timesheets, leave records and SMS reports. It should reproduce the Home Office calculations, identify disputed assumptions and explain each correction with documentary evidence. A worker schedule can help organise the file, but it should direct the decision-maker to the underlying documents rather than replace them.

Do Not Ignore Non-Salary Allegations

A convincing salary explanation may not protect a licence if the suspension letter also raises record-keeping, right-to-work, genuine-vacancy or HR-system concerns. Daniel’s Special Care obtained permission on the salary-related grounds but not on the other grounds. Each allegation should therefore receive a separate factual response, evidence bundle and explanation of any remediation undertaken.

Can Sponsor-Licence Revocation Be Challenged?

There is no ordinary statutory appeal against sponsor-licence revocation. An employer may send a pre-action protocol letter asking the Home Office to withdraw or reconsider its decision and may seek judicial review where it can identify a public-law error, such as irrationality, a material factual mistake, procedural unfairness or a failure to apply the governing guidance lawfully.

Judicial review is not a full merits appeal. The court supervises the lawfulness of the decision rather than simply substituting the result it prefers. A claim must be filed promptly and normally no later than three months after the grounds arose. Pre-action correspondence does not stop that time limit, so litigation deadlines must be monitored while correspondence continues.

Where urgent operational or immigration consequences are expected, the sponsor may need advice on interim relief. Relief is not automatic because a claim or permission application has been filed. Employers considering an immigration judicial review should act immediately, preserve the complete compliance file and avoid assuming that proceedings will restore the licence or protect sponsored workers without a further order.

Practical Salary-Compliance Checklist

Before a compliance visit or suspension response, the sponsor should complete these checks for every sponsored worker rather than relying on a sample that may overlook an isolated but serious discrepancy.

• Compare the CoS salary and hours with the current contract.
• Reconcile payslips, bank payments, payroll reports and timesheets.
• Calculate pay over the assessment period and prepare an annualised comparison.
• Identify every below-rate pay period and record the reason.
• Separate permitted leave from reduced work or permanent salary changes.
• Check cumulative absence and the applicable four-week exceptions.
• Confirm that all required salary, hours and absence reports were made.
• Check whether any change required a new CoS and immigration application.
• Correct payroll errors promptly and preserve evidence of payment and remediation.
• Respond to every suspension allegation with the documents actually relied upon.

OTS Solicitors’ View

Daniel’s Special Care provides useful protection against an over-simplified month-by-month calculation, but it is not a relaxation of sponsor duties. The judgment establishes only that the salary-assessment and related discretion grounds are arguable. Sponsors should continue to treat every unexplained shortfall as a serious compliance issue requiring prompt investigation.

What matters most is whether the employer can present a coherent worker-by-worker account. An annualised calculation may demonstrate that one month gives a misleading picture, but it cannot answer separate questions about prohibited reductions, missing SMS reports, guaranteed hours, hourly-rate requirements or excessive unpaid absence. Care-sector pressures may explain fluctuations; they do not automatically excuse them.

The strongest protection is preventative. Payroll, HR, rostering and sponsor-management systems should be reconciled before the Home Office requests information. Once a suspension letter arrives, the response should be treated as a legal and evidential exercise rather than routine correspondence, because omitted records and unclear calculations may be difficult to repair after revocation.

Frequently Asked Questions

Must a sponsored worker receive the same amount every month?

Not necessarily. The relevant assessment may be whether the worker is receiving the annual salary rate stated on the Certificate of Sponsorship over an appropriate and rationally selected period. Monthly fluctuations still require a documented explanation, and the sponsor must separately comply with absence, hourly-rate, contractual, minimum-wage and SMS-reporting requirements.

Can one month of low pay lead to sponsor-licence revocation?

Potentially, depending on the evidence, but one low month does not automatically establish annual underpayment. The Home Office should consider the representative period, the size and cause of the shortfall, relevant leave, later payroll evidence and whether the reduction was reported or permitted. Repeated or unexplained shortfalls will be substantially more difficult to defend.

Does unpaid leave permit a sponsor to reduce salary?

Only where the relevant sponsor-guidance provisions permit the absence and reduction. The employer must record the reason and duration, monitor cumulative unpaid or reduced-pay absence and make any required SMS report. If the permitted period is exceeded without an applicable exception or an explanation accepted by UKVI, the employer may have to stop sponsoring the worker.

Can a care provider reduce sponsored workers’ hours when clients cancel services?

The sponsor should not assume that cancelled visits or reduced service-user demand authorise lower hours or pay. It must check the employment contract, guaranteed hours, Certificate of Sponsorship, immigration salary requirements and reporting duties. A commercial shortage of work does not itself create an exception to the sponsorship rules or remove contractual obligations.

Will back pay cure an underpayment?

Not automatically. Back pay may help show that a genuine payroll mistake was identified and corrected, but it may not remove the original late-payment, reporting, contractual, minimum-wage or control issues. The employer should document the calculation, payment date, cause of the error and measures introduced to prevent the same problem from recurring.

Did Daniel’s Special Care win its judicial-review case?

No final decision was made in the company’s favour. On 30 July 2026, the High Court granted permission to proceed on two grounds concerning salary assessment and the related question of discretion. Permission was refused on three other grounds. The revocation was not quashed, and the sponsor licence was not restored by the permission judgment.

Can a sponsor appeal a licence revocation?

There is no ordinary statutory appeal against sponsor-licence revocation. A sponsor may ask the Home Office to reconsider through pre-action correspondence and may seek judicial review if the decision contains a public-law error. Proceedings must be brought promptly, and sending a pre-action letter does not pause the normal judicial-review time limit.

Can sponsored workers remain employed while revocation is challenged?

A judicial-review challenge does not itself restore the sponsor licence or suspend immigration action. Revocation does not necessarily cancel every worker’s immigration permission at the same moment, but UKVI may cancel or shorten that permission. Employers must check each worker’s current right-to-work evidence and Home Office notices before deciding whether employment can lawfully continue.

What should a sponsor do first after receiving a suspension letter?

The sponsor should record the response deadline immediately, preserve relevant records and allocate responsibility to a senior team. It should then analyse each allegation worker by worker, reconcile the CoS with payroll and attendance evidence, identify missing SMS reports and obtain legal advice before submitting explanations or accepting that a mandatory revocation ground applies.

Contact OTS Solicitors

OTS Solicitors can advise on Skilled Worker salary compliance, sponsor-licence audits, suspension responses, revocation challenges, pre-action correspondence and judicial review. For business immigration advice, call 0203 959 9123 or contact OTS Solicitors.