The Home Office is increasingly contacting sponsors querying whether sponsored workers are being paid in line with their Certificate of Sponsorship and National Minimum Wage, as well as whether sponsor reporting duties have been met. In this article we provide an update on recent activity and outline our recommendations for sponsors to proactively review compliance in this area.

HMRC and the Home Office routinely share and match wage data. If you hold a work route sponsor licence and discrepancies are identified, the Home Office may email you to check whether a breach of the sponsor guidance has happened. We are seeing more of this activity in recent months, as part of the Home Office's broader surge in immigration compliance action.

What's the compliance risk?

The Home Office may revoke your sponsor licence if you pay a worker less than the amount stated on their Certificate of Sponsorship (CoS) and:

• You don't notify the Home Office of the change in salary; or
• The reduction isn't otherwise permitted by the Immigration Rules or the sponsor guidance for workers and temporary workers.

The sponsor guidance confirms this revocation ground is mandatory, and that revocation can happen without the Home Office first suspending the licence.

It's important to be aware that revocation action can happen solely due to a failure to report a change in salary on the Sponsor Management System, even if the reduction is permitted by the Immigration Rules. 

Permitted salary reductions include where:

• The reduction coincides with an absence for the following reasons:
  • Statutory maternity, paternity, shared parental, neonatal care or parental leave;
  • Statutory adoption leave;
  • Sick leave;
  • Assisting with a national or international humanitarian or environmental crisis, with the agreement of their sponsor;
  • Participating in legally organised industrial action;
  • Jury service; or
  • Attending court as a witness;
• The worker is on a graduate training programme covering multiple roles (noting that the sponsor must notify each change of job and salary);
• The worker is a Skilled Worker who has had a change to their job (e.g. reduced hours or change to a different role within the same occupation code) and after that change would still be eligible to score tradeable points in the same way as they did for their previous application (there are also similar provisions for Tier 2 (General) migrants); or
• The reduction coincides with a temporary reduction in hours/phased return to work for individual health reasons and:
  • The change is supported by an occupational health assessment; and
  • The reduced pay isn't below the required hourly rate applicable when the person received their most recent grant of permission.

In the recent case of Southcroft Healthcare Lodge Ltd, the High Court provides a reminder that each sponsor licence revocation ground is independent, and a breach of any one can justify revocation. Among other things, the sponsor in that case both failed to pay four of its sponsored workers the salary stated on their CoS and failed to report the reductions.

What salary evidence is the Home Office checking? 

The Home Office may ask for evidence such as:

• Signed and dated contracts for sponsored workers;
• Business bank statements for the sponsor;
• Payroll breakdowns covering sponsored workers;
• Payslips for sponsored workers;
• National Insurance numbers for sponsored workers;
• HMRC Real Time Information;
• P60s; and
• Any other relevant evidence of salary payments to sponsored workers.

Normally the Home Office requires that the evidence is submitted within 10 working days of the request.

If there are discrepancies or other issues identified, the sponsor should raise these when responding.

Failure to respond with the requested information within the deadline may result in the sponsor licence being revoked.

What can you do to reduce the risk of sponsor compliance action?

We would suggest the following:

• Review salary compliance for all sponsored workers, including (but not limited to):
  • Whether required salary reduction reports have been made, including details of permitted absence reasons; other allowed reduction reasons; and any payments to you as the sponsor, or to a related organisation that must be subtracted for meeting the applicable salary thresholds);
  • Whether National Minimum Wage and Working Time Regulations have been met at all times;
  • Whether all PAYE scheme references for your business are reflected in the Sponsor Management System and are correctly flagged for each sponsored worker;
• Consider seeking legal advice if any salary reduction reports have not been made, or a reduction has happened outside the permitted reasons; and
• Ensure you have record-keeping systems in place to enable you to provide any salary-related evidence (including for any workers on shadow payroll) to the Home Office promptly if requested.

Need more help?

If you have any queries about salary-related requirements for sponsored workers or need assistance with sponsor compliance, including strategic advice, training or a mock audit, please contact a member of our immigration team.