What is a sponsor licence action plan?

09.01.2025

As part of a renewed focus on sponsorship compliance, the Home Office has announced a series of measures it will introduce to crack down on rogue employers who repeatedly flout immigration rules or commit serious employment breaches.

Employers that fail to meet their compliance obligations risk having their sponsor licence revoked, preventing them from hiring overseas workers.

However, the government has also stressed that it will not wait until employers have committed serious breaches of the law before taking action, when there are already signs of rule breaking. With this in mind, the Home Office has decided to introduce longer action plans for sponsors, increasing the time they can be applied from 3 to 12 months, to ensure long-term and sustained compliance with visa rules.

A sponsor licence action plan may be given to sponsors that show signs of non-compliance, such as committing minor visa rule breaches. An action plan binds the business to a set of specific actions to help them improve and correct any issues.

Whilst an action plan is in place, employers may be restricted on how they can use their licence, including limiting or removing the ability to sponsor overseas workers.

The action plan process

If the Home Office finds that a sponsor has committed relatively minor breaches of the sponsorship system, they may decide to ‘downgrade’ the employer’s sponsor licence rather than suspending or revoking it.

If the Home Office downgrades your licence to a B-rating, you must adhere to an action plan which will set out the steps you must take to return to, or achieve, an A-rating. This may include, for example, making improvements to your record keeping, improving your control over staff who assign Certificates of Sponsorship (CoS), or improving communication between your different branches so you know when a sponsored worker has not turned up for work.

There is a fee for an action plan, which is currently £1,476. If the Home Office decides a B-rating is appropriate, you will be notified in writing and asked to pay the action plan fee. You will then have 3 options:

Option 1: You accept the action plan and pay the action plan fee via your SMS account within 10 working days. If you choose this option, you will continue to be a licensed sponsor whilst your action plan is underway.
Option 2: You decline to pay the fee. If you are not sponsoring any workers, you can choose to surrender your licence. To do this, you must submit a declaration via your SMS account within 10 working days. If you decline to pay the fee but do not return the declaration to surrender your licence within 10 working days, the Home Office will revoke your sponsor licence.
Option 3: You do nothing. If you ignore the notification of your B-rating and/or do not pay the action plan fee within 10 working days, your licence will be revoked.

Once you have accepted your action plan and paid the fee, the Home Office will send you your plan and let you know what you need to do next.

During the period covered by your action plan, you will not be able to add branches or a new route to your licence. You will also not be able to assign a CoS to any new workers. However, you may assign a CoS to a worker you were already sponsoring before your licence was downgraded if they need (and are eligible) to apply for permission to stay.

All action plans are set for a fixed period, currently 3 months. At the end of this period, the Home Office will carry out further compliance checks to establish whether you have met all of the requirements in your action plan. There are 3 possible outcomes at this stage:

If you have not met the requirements of your action plan or more serious areas of non-compliance arise, your sponsor licence will be revoked immediately.
If the Home Office finds other areas of non-compliance which are not addressed by the current action plan (but do not warrant immediate suspension or revocation), a new, second action plan will be required, for which you must pay a new fee.
If you have met all the requirements of your plan and the Home Office has no other concerns about you, your A-rating will be restored. The Home Office will review your allocation of CoS where necessary, so you are able to sponsor new workers again if needed.

Next steps

As yet, the guidance for sponsors has not been updated to reflect the longer 12-month action plans that the Home Office intends to introduce. Smith Stone Walters will continue to monitor the situation and provide an update in due course.

In the meantime, if your business requires support with maintaining sponsor compliance, our immigration experts are here to help. To speak to a qualified advisor, please contact us today.