Sponsored Worker Visa Problems: How UK Employers Can Protect Their Sponsor Licence, Contracts and Business

In Brief

If your business is heavily reliant on a sponsored workforce or on a single highly specialised Skilled Worker Visa or Global Talent Visa holder, do you have a management strategy to address the performance risk of immigration status failure?

For some businesses, immigration status failure is a major, often overlooked commercial risk that should be assessed, monitored, and risk managed.

Our Business Immigration Lawyers in London work with multi-nationals, SMEs, founders, and entrepreneurs, and help employers across all sectors manage global mobility associated performance risk.  

In this blog, our UK Immigration Solicitors explore how immigration issues can pose risks to contractual performance, why the problem is growing, and what employers can do to protect themselves.

Contact OTS Solicitors.

Commercial Risk and Immigration Non-compliance

We find that too often, employers do not realise the significance of joining the dots and recognising the commercial risk of immigration non-compliance. Unfortunately, HR staff, client relationship managers, or some management boards can discover how a relatively minor immigration issue can trigger major consequences for the company.

When any sponsored worker loses their immigration status, the corporate consequences can extend far beyond HR administration and recruitment.

Over the years we've advised thousands of employees and employers, finding that individuals' immigration status problems can lead to the following:

1. Operational disruption
2. Inability to meet contractual obligations
3. Regulatory non-compliance
4. Financial loss
5. Reputational damage

Visa Status and Risk Management

During consultations, or sponsor licence audits we always emphasis the scenario where a sponsored employee loses their right to work in the UK, their employer cannot continue their employment, notwithstanding:

1. The importance of the worker's role in the company
2. The terms of the employee’s contract of employment
3. Regulatory issues and the requirement to employ an employee with the sponsored worker’s qualifications and skillset

Effect of Loss of Right to Work

If a sponsored employee loses their right to work through:

1. Visa expiry
2. Failure to secure a visa extension
3. Visa refusal
4. Visa curtailment

The employer also loses their right to employ the worker. Under the illegal working legislation, the employer can no longer claim protection from liability for employing a worker who does not have the right to work in the UK.

Employers and Illegal Working Legislation

If an employer continues to employ a sponsored employee or an employee with immigration status issues who no longer has the right to work in the UK, it could result in

1. A civil penalty of up to £45,000 per illegal worker for a first offence under the illegal working legislation
2. Sponsor licence revocation or suspension
3. Criminal liability in serious cases
4. Potential loss of regulatory standing or accreditation
5. Contract performance review and civil litigation

Civil litigation risk is not limited to third party contractual compliance or supply chain issues. The risk can also extend to and jeopardise the legal relationship between the employer and:

1. Other workers
2. End consumers
3. Partners, such as joint venture participants or franchisees

Examples of Immigration Related Contractual Performance Risk

We always remind employers that the loss of even a single sponsored employee in a key role can result in practical issues, such as

1. Inability to meet project delivery time
2. Health and safety risks
3. Non-compliance with minimum contractual standards and warranty terms
4. Continuity of service provision
5. Employee engagement and staff retention

Individual Immigration Visa Issues and Corporate Fallout

As Business Immigration Solicitors we often find only a few companies carry out a risk management assessment of how an individual employee or a class of employees with sponsored status could cause financial harm to the business through:

1. Invocation of contractual penalty clauses
2. Compensation claims
3. Termination rights

Breach of a commercial contract through non-compliance with a contractual warranty or representation is not always quickly spotted by employers. That may be due to the company lacking a robust contract review process, or to the loss of one or two sponsored workers not being deemed significant. However, even the loss of one or two specialist overseas workers can result in a company being in breach of its contracted obligations and warranties, such as insufficient numbers of qualified personnel or inadequate staff ratios to supervise junior staff or care for patients.

Even if the loss of sponsored staff does not result in warranty breaches, immigration issues can lead to civil litigation through third party and consumer delay and non‑performance claims for damages for associated losses or triggering the termination of the contract.

Why Sponsored Workers Lose Their Immigration Status

It can be helpful for HR staff and key personnel to understand the common causes for overseas employees losing their visa status and right to work in the UK. They include:

1. Failure to renew a visa due to a missed deadline
2. Visa refusal
3. Visa ending through the worker breaching immigration rules or visa conditions
4. Sponsor licence revocation and visa curtailment

Not all overseas workers will require sponsorship and a Work Permit Visa, as some visa holders are entitled to work in the UK without employer sponsorship. For example, those in the UK on Family Visas, Spouse Visas, or Global Talent Visas.

A company may have no input into the worker’s visa extension application and only find out that their employee has either missed the extension application deadline or had their visa application refused, and therefore lost their right to work in the UK, when the HR team completes a repeat right to work check as required under the illegal working legislation, because the employee only had limited leave to remain.

Other overseas workers may have their visas expire early for non-employment-related reasons, such as a Spouse Visa holder separating from their British citizen spouse and informing the Home Office of the separation. With good communication, there may have been the opportunity for the company to sponsor the worker on a Skilled Worker Visa rather than lose the employee.

Sponsor Licence Non‑Compliance and the Impact of Licence Revocation

If the Home Office revokes the employer’s sponsor licence, all sponsored workers are affected. Their visas will be curtailed to 60 days or less, depending on the time left on their Skilled Worker Visas.  If the company continues to employ its workers, it breaches the right to work legislation and compounds the problems that led to the revocation of its licence.

With increased Home Office enforcement activity, companies are at heightened risk of having their sponsor licence suspended or revoked. This is especially true in high risk sectors, such as health care, hospitality or construction.

Sometimes a company can place its licence at risk for what it perceives as a minor infringement of the sponsor licence reporting and recording duties, such as promoting a sponsored worker into a role that does not meet the eligibility criteria for work sponsorship or by not reporting employee absences in accordance with their sponsor management system obligations.

Tips on how Employers Can Reduce Immigration Risk With a Globally Mobile Workforce

Corporate Immigration Solicitors in London recommend companies:

1. Regularly review immigration compliance systems
2. Use a Sponsor Licence Management Service if compliance is not a company strength
3. Conduct HR and right to work audits to spot workers with expiring visas before the employees lose their right to work through individual inaction or ignorance of the immigration rules
4. Provide employee immigration support for assistance with individual visa applications
5. Arrange regular and sector specific immigration law training for HR staff, key personnel and managers so they each understand the correlation between the immigration status of an individual worker from overseas and the financial and other consequences to the company of failing to adopt or implement a risk strategy
6. Regularly review contracts with third parties and customers to check if staff changes could trigger potential contractual penalties or civil litigation
7. Take immigration, employment law and commercial contract legal advice to correlate processes and procedures to minimise exposure and risk
8. Review insurance provisions and contracts as part of a comprehensive risk management strategy

How Our Business Immigration Lawyers at OTS Solicitors Provide Strategic Advice

The commercially savvy London immigration team supports employers by:

• Conducting sponsor licence audits
• Providing a full Sponsor Licence Management Service
• Managing individual visa applications and renewals
• Advising on right to work compliance
• Advising on and responding to Home Office investigations
• Reviewing employment and commercial contracts with risk strategy at the forefront of their specialist advice
• Providing emergency sponsor licence, immigration and employment support if an overseas worker/s loses immigration status

Contact OTS Solicitors for Strategic Business Immigration Legal Advice.

Frequently Asked Questions on Immigration Status

What should the company do if a sponsored worker loses their visa status?

The company must minimise its liability and risk of civil penalty. Seek urgent immigration and employment legal advice on suspending the worker from work to avoid a civil penalty for employing a worker who no longer has the right to work, and to explore whether the worker can regain their immigration status.

Can a third party terminate a contract if a sponsored worker loses their right to work?

Possibly. It depends on the contractual terms and the importance of the worker/s to the contract. For example, contractual termination may be permissible if the loss of the overseas worker means the company cannot meet contractual staffing levels or performance.

Will a sponsor licence be suspended or revoked if a worker loses their visa?

Possibly. It depends on the reasons why the worker lost their visa. It's best to seek sponsor licence advice if there is concern that a licence is at risk, as individual circumstances are critical to the advice.

For example, if the worker failed to renew a Family Visa and this was identified by HR staff through an additional repeat right to work check, the loss of the worker’s visa should not affect the licence. The answer may be different if the visa loss was due to its curtailment following a Home Office investigation.

How can the company prevent immigration issues from disrupting contracts?

Detailed and sector specific contract negotiation, contract monitoring, strong contract compliance systems, and contract reviews, combined with effective immigration audits and the use of a Sponsor Licence Management Service, can all help to ensure that a company reduces the risk of immigration issues disrupting contracts.

Contact OTS Solicitors for Business Immigration Legal Advice.