You’ve sponsored international talent. The system works until one missed report or salary mismatch turns an A-rated licence into a B overnight.
The U.K. sponsorship system allows employers to hire skilled workers from overseas through the Skilled Worker and other visa routes. To do so, organisations must hold a sponsor licence, which comes with strict compliance duties. Failure to meet these obligations can lead to licence downgrades, suspensions, or even revocations. Nearly 2,000 sponsor licences were cancelled last year, often due to preventable administrative errors.
Why this matters now
Recent policy updates by the U.K. Home Office, following the 2024–2025 clarifications on cost recovery and salary calculations, have significantly raised the compliance bar.
Employers can no longer recover immigration-related costs, such as Certificates of Sponsorship (CoS) fees, legal fees, or premium service charges, from employees, even through salary deductions. Violations can trigger immediate enforcement action, including downgrades or licence revocations.
At the same time, salary and skill thresholds are rising, and right-to-work checks are under increased scrutiny. Even small errors now carry greater risk. For employers, this means the stakes are high: losing or downgrading a licence not only halts new recruitment but can also jeopardize the status of existing sponsored workers.
What are Sponsor Licence Ratings
The Home Office categorises sponsor licences into two ratings: A-rated and B-rated.
A-Rating
- Indicates full compliance with sponsorship duties.
- Allows organisations to assign Certificates of Sponsorship (CoS) and hire or extend foreign national employees.
- Requires accurate record-keeping, timely reporting through the Sponsorship Management System (SMS), valid right-to-work checks, and cooperation with UK Visas and Immigration (UKVI) audits.
B-Rating
- Indicates partial compliance or identified breaches that require corrective action.
- Blocks the organisation from assigning new Certificates of Sponsorship (CoS) until an action plan is completed.
- Comes with a mandatory Home Office action plan fee of £1,579, payable within 10 working days.
- Failure to complete the plan may result in full licence revocation.
There is no right to appeal a downgrade. Existing sponsored employees can continue working, but future visa renewals may be limited at UKVI’s discretion.
What triggers a downgrade
Licence downgrades often result from avoidable compliance lapses treated by the Home Office as systemic failures. Frequent triggers include:
- Incomplete or outdated records for sponsored employees.
- Missed deadlines for reporting changes in employment or company structure.
- Inaccurate right-to-work checks or expired visa records.
- Lack of cooperation during UKVI information requests or audits.
Even minor errors, like missing job titles or mismatched dates, can trigger enforcement.
The key is proactive, ongoing monitoring.
What Happens After a Downgrade
Once a downgrade occurs, the Home Office issues a formal action plan that must be completed within three months. During this period:
- Sponsors cannot assign new CoS or freely hire overseas talent.
- Existing sponsored employees may continue working, but extensions depend on the action plan’s progress.
- UKVI will re-audit the organisation to confirm corrective steps.
Failure to comply can lead to full revocation. In severe cases, UKVI may skip the downgrade phase entirely and revoke the licence immediately.
How can you return to an A-rating
Restoring an A-rating is possible but requires proof that all compliance issues have been fully addressed. Organisations must show:
- Updated HR and compliance policies.
- Improved recordkeeping and reporting accuracy.
- Documented internal audit processes.
Once approved, the organisation can resume assigning CoS and hiring overseas talent. If corrective actions are incomplete, the B-rating remains, and future sponsorship rights may be restricted.
HR’s UK Sponsor Licence Compliance Checklist
To safeguard your sponsor licence, HR teams should take these proactive steps:
1. Run Regular Internal Audits
Review HR systems, employee files, and SMS records quarterly. Confirm that start dates, job titles, and visa expiry dates match across all systems.
2. Train Staff Handling Immigration Tasks
Ensure HR personnel understand Home Office deadlines, SMS reporting requirements, and document retention standards.
3. Review Employment Contracts and Policies
Remove or update any clauses that pass immigration costs to employees, such as CoS fees, legal fees, or the Immigration Skills Charge.
4. Monitor Salary Thresholds and Deductions
Confirm that any loan repayments or deductions do not reduce pay below the Skilled Worker route minimums.
5. Develop a Contingency Plan
Outline how your organisation will respond if your licence is downgraded or suspended. Assign roles for internal communication, legal escalation, and employee impact assessment.
Quick HR Audit Checklist
✅ Verify that all right-to-work documents are current, signed, and stored securely for every sponsored employee.
✅ Check that payroll data matches visa records, including start dates, job titles, and salary levels.
✅ Review SMS reports to ensure all job changes, location updates, and resignations have been submitted within 10 working days.
✅ Confirm that HR, Legal, and Finance teams have defined ownership for sponsorship and reporting duties.
✅ Validate that no immigration costs, such as Certificate of Sponsorship (CoS), legal, or premium service fees have been recovered from employees.
✅ Test internal processes through mock audits and document findings for continuous improvement.
✅ Schedule quarterly compliance reviews to confirm all sponsor duties remain up to date and audit-ready.
How WayLit Helps
HR teams can automate much of this UK sponsor licence compliance tracking with WayLit. Besides handling immigration cases, WayLit manages CoS lifecycles, monitors visa expirations, and flags salary or documentation risks before they become audit findings. With audit-ready reporting and proactive alerts, HR teams can stay compliant without constant manual oversight.
Have questions? Reach out to us at support@waylit.com
Looking Ahead
Sponsor licence compliance is about protecting your company’s ability to hire and retain global talent. HR teams should treat compliance as part of workforce planning, not an afterthought.
By implementing structured reviews, clear ownership, and digital systems, HR can stay one step ahead of Home Office scrutiny and keep global hiring uninterrupted.
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