Criteria for being considered a start-up when applying for a sponsor licence.
Why start-ups should consider obtaining sponsor licences, particularly post-Brexit.
Description of 'Worker' and 'Temporary Worker' licence categories and their relevance to start-ups.
A detailed list of mandatory and optional documents required for the application.
Explanation of the roles like Authorising Officer, Key Contact, and Level 1 and 2 Users in the sponsorship process.
Steps involved in applying for a sponsor licence, including assessing recruitment needs and submitting an online application.
Criteria for proving the legitimacy of jobs offered to international specialists.
Breakdown of various fees associated with the sponsor licence process.
Responsibilities of start-ups after acquiring the licence, including record-keeping and reporting.
Details about the renewal process, including the submission through SMS and Home Office review.
Information on how Tech Nomads can help in the process.
As a start-up in the UK, your growth strategy might involve recruiting specialist workers from overseas. To hire global talents, the Home Office requires UK businesses to obtain a sponsor licence. This licence allows sponsoring skilled worker visa applicants under the Tier 2 and Tier 5 visa categories. After obtaining the sponsor licence, start-ups can hire the necessary international talent and grow their businesses.
This guide quips start-ups and their founders with the tools and instructions needed to successfully obtain a sponsor licence in the UK.
Before discussing the eligibility and requirements for obtaining a sponsor licence for start-ups in the UK, it's essential to define what constitutes a start-up in this context and understand why such businesses might need a sponsor licence.
It is not a surprise that a start-up is a new, emerging business. Usually, such an organisation has a fast-paced environment, focusing on rapid growth and scaling. It is common for start-ups to have a global market outlook; hence, they are often interested in sponsoring licences and working with foreign employees. To apply for the licence, the Home Office laid down a specific definition for the start-up: a business operating or trading in the UK for less than 18 months on the date they apply for the sponsor licence.
Note: The Home Office doesn't define a start-up business based on how many people it employs, how much money it makes, or whether the person running the company has successfully managed other businesses in the UK before.
Brexit, as you might expect, is the first and foremost reason emerging businesses in the UK should get interested in obtaining sponsor licences. The aftermath of leaving the EU, combined with the pandemic, led to the most severe labour shortage in the UK since the 1990s. This shortage has made it difficult for young businesses to find talents to hire domestically. By obtaining a sponsor licence, start-ups can fill this gap by hiring skilled foreign workers.
Moreover, a sponsor licence gives young businesses a strategic advantage in the market. The licence enables start-ups to access a global talent pool, attracting diverse perspectives and skills critical for innovation and growth. The start-ups enhancing their workforce with foreign professionals enjoy the flexibility and advantage to address immediate and future talent needs.
There are two primary categories: ‘Workers’ for skilled, long-term or permanent roles, and ‘Temporary workers’ for specific, short-term positions. For most start-ups, the ‘Worker’ licence is the preferable option, as it aligns more closely with their typical hiring needs.
The ‘Worker’ licence caters to a range of roles, allowing start-ups to bring in skilled professionals essential for their growth and development. This category includes several subdivisions:
Although there are more subdivisions of 'Workers' licence type, the Skilled Worker and Senior or Specialist Worker Visa are the most suitable for young organisations.
Additionally, focusing on the ‘Worker’ licence allows start-ups to tap into a wider pool of global talent, crucial for businesses in their growth phase. This licence type not only offers the flexibility to hire skilled workers from abroad but also aligns with the long-term strategic goals of a start-up, which often include scaling up rapidly and integrating diverse skill sets into their workforce.
In contrast, the ‘Temporary Worker’ licence is more suited for short-term, specific needs and may not align with the typical growth trajectory of a start-up.
When applying for a sponsor licence, UK start-ups must provide a range of documents to the Home Office. Only four documents are required. However, consider providing as many relevant documents as possible to strengthen the application.
To obtain a UK sponsorship licence, startups must demonstrate UK Company Registration Documents and eligibility through:
Newly established start-ups are eligible to apply for a sponsor licence, but those in operation for less than 18 months need to provide additional documentation, such as a corporate bank account with a UK bank.
Every start-up must show proof of a UK bank account registered with the Financial Conduct Authority and the Prudential Regulation Authority. Acceptable documents include a letter from the bank detailing the business operations or recent bank statements.
When you're applying for a UK sponsorship licence as a start-up, you need to appoint some key people in your company to handle specific responsibilities. These people are known as 'Key Personnel', and they should manage your sponsorship duties.
Here's a simple breakdown of what you need to know:
There are four main roles:
Only Level 1 and Level 2 Users can use the SMS. If the Authorising Officer or Key Contact needs access, they should also be set up as Level 1 or Level 2 Users.
The Key Personnel should generally be your employees or directors. However, there are exceptions like using an employee from a third-party organisation for HR functions or having a UK-based representative.
Your Key Personnel should mostly be based in the UK and must not have any serious criminal convictions. There are some exceptions for overseas Authorising Officers, especially if you're applying under the UK Expansion Worker route.
Start-ups in regulated industries, like financial services or healthcare, may need additional sector-specific documentation. This could include regulatory body registration or inspection reports.
While start-ups may not have the full suite of traditional documents due to their short trading history, the Home Office offers some flexibility in documentation.
Start-ups should also provide any evidence of listings on stock exchanges, registration with HMRC, financial reports, and any other relevant business documents.
Sponsor Licence Application Process, Maintaining and Renewal
The sponsor licence application process for start-ups involves 5 stages:
Note that after submitting the application for sponsor licence online, you must send any supporting documents within 5 days.
Start-ups in the UK applying for a sponsor licence must prove the legitimacy of the job they offer to an international specialist. To confirm the job authenticity, the start-ups should elaborate on the following points:
Your start-up must adhere to these criteria not only during the application process but also throughout the licence's validity period. Home Office compliance officers might conduct visits post-licence issuance to check continuous compliance. Any deviation from these obligations or actions that undermine immigration control may lead to the licence being revoked.
In certain cases, UK Skilled Worker visa applicants may face further scrutiny to verify job authenticity. The Home Office might request additional evidence from the international worker within 28 days or ask them to attend a face-to-face interview. In this interview, the focus will be on:
While such in-depth checks are not always standard, the UK Visas and Immigration (UKVI) pays special attention to sectors it considers high-risk. However, the specific sectors deemed high-risk are not clearly defined in the Home Office caseworker guidelines.
Sponsor Licence Fee: This is the first expense for start-ups planning to recruit internationally. The fee depends on your company's size. Small businesses or charities pay £536, while medium or large companies are charged £1,476.
Certificate of Sponsorship (CoS) Fee: A CoS, a digital document describing the job and the future employee, is needed for each worker you sponsor. For each CoS, start-ups will incur a cost of £199.
Immigration Skills Charge (ISC): Aimed at boosting local workforce training, the ISC's cost varies based on your start-up's size and the length of employment. Small companies and charities are charged £364 for the first year and £182 for each additional 6-month period. In contrast, medium and large businesses pay £1,000 initially and £500 for every subsequent 6-month period.
After receiving a sponsor licence, start-ups must fulfil several responsibilities. The Home Office expects such companies to ensure their foreign employees adhere to their visa terms, including working in the job for which they were sponsored and reporting changes in their circumstances. Start-ups must be ready for regular Home Office monitoring, which includes:
Start-ups are required to keep and update detailed records of their sponsored employees. This includes information like contact details, addresses, passport copies, records of absences, biometric residence permits (BRPs), employment contracts, and National Insurance numbers.
It's also crucial to report certain changes via the Sponsor Management System (SMS) to UK Visas and Immigration (UKVI). These changes might be within the start-up, like a change in ownership, or related to sponsorship, such as a sponsored employee no longer working.
Conducting right-to-work checks is mandatory to verify that all employees are legally allowed to work in the UK. Start-ups should keep copies of relevant documents, such as passports and visas, and regularly ensure these are up to date.
The Home Office conducts compliance visits, which can be either announced or unannounced, to verify that start-ups are meeting their obligations as sponsors. These visits are crucial to confirm adherence to immigration regulations and proper record maintenance.
The Home Office also performs ongoing audits to monitor sponsor compliance. These audits are critical as they not only evaluate current adherence to regulations but also help identify areas where start-ups may need further guidance or improvements to maintain compliance standards.
UK businesses with a sponsor licence must manage their licence renewal, as these licences do not renew automatically. It's essential to apply for renewal before the current licence expires to ensure the ongoing validity of sponsored workers' visas.
The Home Office will review four years' worth of information and documentation, focusing on:
The Home Office may request further documents, which should be provided within five days to prevent risks like application refusal, licence revocation, or reduced certificate of sponsorship allocation.
For organisations with at least two successful past renewals and no compliance concerns, a streamlined process may be available. This process typically excludes extensive checks like company and insolvency checks, reviews of certificate of sponsorship usage, licence structure, visit history, outstanding change requests, and risk profile, as well as checks on accreditation, registration, and other trading aspects. It also might skip compliance visit referrals.
If a startup has not been inspected in the last four years, it should expect a Home Office visit before the renewal is approved. It's important to ensure that the licence and SMS are fully updated before applying for renewal.
Seeking assistance in your sponsor licence application as a start-up?
Tech Nomads is ready to assist you in sponsor licence application and further renewal processes.
To explore your options of hiring foreign employees, you may:
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