UKBA Sponsor Licence guidance to be reviewed following Gherson intervention

On 29 February 2008 the Government opened the Sponsor Licence Register for UK employers to enable them to sponsor workers under Tier 2 of the Sponsor Licence system when it goes live, currently scheduled for the end of November 2008. Around 344 licence applications have been received to date which would suggest that the system is failing to install confidence in prospective applicants. Nichola Carter, Gherson’s Head of Corporate Litigation sent the note which follows to UKBA on 11 August outlining some of the problems with the system in its present form. Gherson anticipates that changes will be made to the current sponsor guidance as a result of Nichola’s stance to enable bona fide UK businesses to obtain a licence in the knowledge that they will not be opening themselves up to unknown liabilities and risks. We will update on this website as soon as we have further information and please contact Nichola if you are a UK business with concerns about applying for a Sponsor Licence. Nichola advises a range of UK business entities from PLC’s and multi-nationals to small entities.

SPONSOR LICENSING IN THE CONTEXT OF PREVENTION OF ILLEGAL WORKING MEASURES - SECTION 8 ASYLUM AND IMMIGRATION ACT 1996 (PROSECUTION) AND SECTIONS 15 TO 21 IMMIGRATION, ASYLUM AND NATIONALTY ACT 2006 (CIVIL PENALTIES AND PROSECUTION)

By Nichola Carter

Partner, Head of Corporate Immigration

Gherson

INTRODUCTION

1) On 29 February 2008 the Government opened the Register of Sponsors for employers wishing to apply for a Sponsor Licence. A licence will enable them to sponsor skilled migrant workers when Tier 2 of the Points Based System becomes operational, currently scheduled for Autumn 2008. The Government intends that Tier 2 will replace the current work permit system in its entirety.

2) On 29 February 2008 the Government also introduced new measures under the Immigration, Asylum & Nationality Act 2006 (“the 2006 Act”) to tackle illegal working in the UK and has since then significantly increased enforcement operations. A number of employers have received notices of potential liability for a civil penalty (many of which have been converted into civil penalties) and some have also been referred for criminal prosecution.

Such companies are named on the UK Border Agency’s website:

http://www.bia.homeoffice.gov.uk/sitecontent/documents/employersand sponsors/listemployerspenalties/

3) Applications for a Sponsor Licence from employers who have a poor immigration record in relation to the prevention of illegal working or who are deemed to have deceived the immigration authorities are unlikely to be approved1. UKBA has the power to enforce illegal working sanctions against a prospective sponsor where evidence that prevention of illegal working measures have been breached is discovered during the Sponsor Licence process. Specifically UKBA visiting officers are “fully trained in investigating illegal working and may issue civil penalties or refer cases for prosecution… "2

PREVENTION OF ILLEGAL WORKING LEGISLATION

4) In relation to employees employed after 27 January 1997, section 8 of the Asylum & Immigration Act 1996 (“the 1996 Act”) states that:

"(1) if any person (“the employer”) employs a person subject to immigration control (“the employee”) who has attained the age of 16, the employer shall be guilty of an offence if:

(a) the employee has not been granted leave to enter or remain in the United Kingdom; or

(b) the employee’s leave is not valid and subsisting, or is subject to a condition precluding him from taking up the employment,

and (in either case) the employee does not satisfy such conditions as may be specified in an order made by the Secretary of State.

(2) …..it shall be a defence to prove that-

(a) before the employment began, the employee produced to the employer a document which appeared to him to relate to the employee and to be of a description specified in an order made by the Secretary of State; and

(b) either the document was retained by the employer, or a copy or other record of it was made by the employer in a manner specified in the order in relation to documents of that description."

(3) ……the defence….shall not be available in any case where the employer knew that his employment of the employee would constitute an offence under this section.”

5) In relation to employees employed after 28 February 2006, under section15 Immigration, Asylum and Nationality Act 2006 (the 2006 Act):

"(1) it is contrary to this section to employ an adult subject to immigration control if:-

(a) he has not been granted leave to enter or remain in the United Kingdom, or

(b) his leave to enter or remain in the United Kingdom

(i) is invalid,

(ii) has ceased to have effect (whether by reason of curtailment, revocation, cancellation, passage of time or otherwise), or

(iii) is subject to a condition preventing him from accepting the employment.

(2) The Secretary of State may give an employer who acts contrary to this section a notice requiring him to pay a penalty of a specified amount….

(3) An employer is excused from paying a penalty if he shows that he complied with any prescribed requirements in relation to the employment.

(4) But the excuse…shall not apply to an employer who knew, at any time during the period of employment, that it was contrary to this section.

(5) The Secretary of State may give a penalty notice without having

established whether subsection (3) applies.”

Under section 21 of the 2006 Act a person commits an offence and may be liable on conviction to imprisonment and/or a fine if he knew the individual was not permitted to undertake the work.

CODES OF PRACTICE

6) The prescribed requirements referred to above are contained in Codesof Practice documents. These state in summary that, inter alia, in order to establish a defence the employer must show that before the employment commenced the following steps were taken:-

- the prospective employee produced one of the documents on the prescribed list contained in the codes to the employer; and

- the employer took all reasonable steps to check the document was valid and related to the person in question in terms of appearance and details; and

- a copy of the relevant pages (as prescribed in the list) were taken and retained.

7) The Codes of Practice also indicate that if an employer discovers or has discovered a person who is not entitled to undertake the work in question and they report that individual to the UK Border Agency (“UKBA”) and have not established a defence as above, then the level of fine/civil penalty may be reduced.

COMMENT

8) An employer who has not carried out the appropriate checks before the employment commenced and who is found to have employed a person since 27 January 1997 who does not have permission to undertake the work in question will not be able to avail themselves of a defence as specified above.

9) This applies regardless of who the employer is and regardless of whether or not the employer has carried out checks on the employee as specified above at any point since the employment began, for instance as part of preparation for their Sponsor Licence application.

10) For instance, an employer who has, since 27 January 1997, employed a holder of a student visa for more than the permitted 20 hours per week during term time, or a working holidaymaker for more than the permitted 12 months, or a former non-EEA spouse of an EEA national who subsequently obtained a divorce during their employment, or a work permit holder whose work permit was issued to a previous employer, or a business visitor, or a person who had no status at all in the UK etc, and who did not carry out the checks contained in the relevant Code of Practice before the employment commenced will, under the current legislation, have an ongoing liability to pay a penalty or fine in relation to that employment if it is discovered by the authorities (either via their own searches or because it is reported to them by the employer).

11) If an employer reports such matters to the authorities then, pursuant to the Codes of Practice, the authorities may reduce the amount of the fine/penalty. Reporting such matters will not however absolve the employer of liability.

12) In addition, if the employer knew that the employee did not have permission to undertake the work in question then they can never avail themselves of a defence and will be liable to criminal prosecution in addition to a penalty or fine if the employment becomes known to the authorities (either via their own searches or because it is reported to them by the employer).

13) The legislation appears to be silent as to whether or not an employer will be fined or issued with a penalty, or prosecuted, in relation to employment which has ceased although it would appear that the authorities may take action in relation to any employment since 27 January 1997 which falls foul of the legislation, regardless of whether or not the individual is still employed.

14) It appears from the legislation and Codes of Practice that action may be initiated by the authorities by way of a visit to the employer or by way of other means as soon as the employment in question is discovered. For instance, if UKBA discovers from HMRC records that an employer has employed a person for more than their permitted hours, or when they have not had permission to undertake the work in question, it would appear that they can issue a penalty notice or notice of liability to prosecution by post.

SPONSOR LICENCE GUIDE – 27 JULY 2008

15) The Guidance for sponsor applications for Tier 2, Tier 4 and Tier 5 of the Points Based System (“the Guide”) issued on 27 July 2008 confirms that an employer who wishes to obtain a Sponsor Licence must meet specified objectives and agree to take on certain duties associated with the scheme.

16) These are, inter alia, as follows:

- to capture early patterns of migrant behaviour that may cause concern;3

- to monitor compliance with immigration rules;4

- to report any suspicions [the employer] may have that a migrant is breaching conditions of his or her leave. The report must be provided within 10 working days;5

- not to employ a migrant if the conditions on the migrant's leave or lack of leave mean he is not allowed to undertake the work in question; 6

- to seek to minimise the risk of immigration abuse by complying with any good practice guidance that UKBA or any sector body may produce for sponsors.7

17) The Guide confirms that when determining whether or not to issue a licence UKBA "will look at the history and background of the organisation, its key personnel and of the people who control it. Any history of dishonest conduct or immigration crime will be viewed seriously and may lead to us refusing an application." 8

The Guide also states that "A sponsor that uses deception to obtain a licence may be committing a criminal offence." 9

18) The Guide confirms that sponsors may lose their licence and face the sanctions listed in the Guide if they have breached prevention of illegal working measures10.

COMMENT

19) An employer who has not complied with the Government’s measures in

relation to the prevention of illegal working will not have a clean immigration record if, for example:-

- they have employed individuals without the appropriate permission to work

- they have employed students in excess of their permitted hours

- they have employed a working permit holder who did not have the correct work permit

- they have employed an individual who produced to them a forged identity card or passport after their employment commenced

- they have not followed the Codes and reported each and every occasion when they have discovered an employee working without the correct permission

- they have allowed business visitors to work whilst visiting the UK entity or have turned a blind eye to this. 11

Accordingly the Guide indicates that UKBA will view such matters seriously upon application for a sponsor licence and further, if the employer fails to disclose a poor immigration record then it could be accused of using deception to obtain a licence.

20) By way of example, if company “Genuine Employer Ltd” turned a blind eye in 2003 to a business visitor from one of its overseas entities undertaking work whilst visiting the UK office, then that company has not complied with the prevention of illegal working legislation and an application for a Sponsor Licence could be refused. Additionally, if the HR team/key individuals in that company knew that the business visitor was working without correct permission, then the company could face criminal prosecution (and a fine) if that employment ever comes to the attention of the authorities, for instance, by way of a check on HMRC records or because the company files a report.

If the company applies for a Sponsor Licence without disclosing this to UKBA then the Guide indicates that it could be accused of having obtained a licence by using deception.

If “Genuine Employer Ltd” employed an individual who it later transpired had a forged passport and they had not carried out checks in relation to that individual prior to the commencement of their employment and, if that matter is disclosed to UK BA upon application for a Sponsor Licence, then the application may fail, even if they subsequently dismissed that employee, because they have a poor immigration record of not carrying out appropriate checks on their employees.

If in the above scenario “Genuine Employer Ltd” had dismissed the employee and failed to report the matter to UKBA (as recommended in the Codes of Practice), then their application for a Sponsor Licence could fail for not “complying with any good practice guidance that UKBA or any sector body may produce for sponsors”.

If “Genuine Employer Ltd” report to UKBA all instances in which they have discovered a person working without correct permission since 27 January 1997, in order to comply with their duties to report any suspicions that they may have a migrant breaching conditions of his or her leave, or to attempt to cleanse itself to avoid any future allegations that it obtained a Sponsor Licence by deception and did not disclose a poor immigration record, then the company is liable to receiving civil penalties and/or fines and/or prosecution if the key individuals knew of the breaches.

AUTHORISED OFFICERS, LEVEL 1 USERS, SOLICITORS AND OTHER

ROLES

21) The Authorised Officer and Level 1 User (and Key Contact and Level Users) agree to discharge the duties of the Sponsor when they assume the roles. A solicitor acting as Level 1 or 2 User also agrees to discharge the sponsor’s duties.

22) If an individual who takes on such a role, or their solicitor who assumes Level1/2 User status, knows of any past breach of immigration control which has not been reported to UKBA, or any current breach, (even if the employee has been dismissed or their status has been regularised, i.e. the company has obtained a work permit for the previously working-business-visitor) then it is not clear at all how that person can lawfully assume or continue to act in that position. This is because that individual knows "the history and background of the organisation." It knows that the company, albeit innocently, may have in the past employed someone who did not have the correct immigration permission to work for them.

The relevant officer (including the solicitor if they have assumed such a role) must ensure that the company discharges its sponsor licence duties and complies with "any good practice guidance that we or any sector body may produce for sponsors...."

This is an ongoing responsibility. Therefore if they discover at any time during the life of the Sponsor Licence that an employee is working without permission they must report this to UKBA, this may trigger a fine/civil penalty and may cause the employer to lose their Sponsor Licence.

23) If the company does not report such matters and keeps on functioning as a Sponsor Licensee then presumably it can be accused of doing so deceptively. If a solicitor has taken on the Level 1 or 2 User role then the solicitor would have to cease representing an employer who did not report such matters to UKBA.

CONCLUSION

24) When considered in the above context, it becomes difficult to understand how any employer who has at any time since 27 January 1997 employed an individual without the appropriate permission and without complying with the Codes can be legitimately granted a Sponsor Licence.

25) If the employer does not report such matters as part of its Sponsor Licence application and keeps functioning as a Sponsor in the knowledge that it has employed individuals without the correct permission and has not reported them to UKBA, then presumably it is open to a future accusation of deception.

26) In order for a company to make the requisite reports required under the Codes of Practice in order to discharge its duty to comply with “any good practice guidance that UKBA or any sector body may produce for sponsors” it must know of the instances when it has employed an individual without correct permission.

27) If the employer knows that it has employed individuals without the correct permission, then it is potentially liable to criminal prosecution and in all likelihood will not qualify for a sponsor licence anyway.

28) It is difficult to understand how a solicitor who has acted for an employer in any matter where the employer has employed an individual who has not held the appropriate permission can assume Level 1 or 2 User status unless UKBA has been notified of that employment. A solicitor acting as Level 1 or 2 User would presumably have to cease acting in that capacity if the employer did not report such matters to UKBA because the solicitor could not be involved in the employer's continued potential deception.

29) A solicitor who has assumed Level 1 or 2 User status because he is comfortable that he can lawfully discharge the sponsor’s obligations on their behalf (both during theapplication process and after the approval of the licence) under the system must presumably stand down immediately if the sponsor instructs them in relation to any matter which concerns an individual who does not have the appropriate permission to work if the sponsor does not report that matter to UKBA because to advise on such matter would appear to be in direct contrast to their ability to discharge the sponsor duties.

30) As of 31 July 2008 only 344 applications for a Sponsor Licence have been received by UKBA. This would imply that there are wide concerns about the scheme. 12

11 August 2008

(document contains 9 pages)

1 See below duties and obligations of a sponsor

2 Guidance for sponsor applications Tier 2, Tier 4 and Tier 5 of the points based system para 387

3 “ “ para 325

4 “ “ “ “

5 “ “ para 327 (iv) (f)

6 “ “ para 327 (vi) (b)

7 “ “ para 327 (vii)(c)

8 “ “ para 84 (ii)

9 “ “ para 371

10 “ “ para 420 and annex B

11 This is not an exhaustive list

12 Nothing in this document may be construed as legal advice