Up to 95 per cent of SME businesses risk sponsor licence revocation for migrant workers and many are also at risk of instant Home Office closure, new research finds.

Just months before the UK is scheduled to leave the EU in March 2019, less than 25 per cent of SME companies are aware of the serious sanctions in place for non-compliance to strict ‘right to work’ rules for overseas workers from fines to prison sentences for Directors, or even instant closure – not to mention the potential impact to a business’s reputation. The majority, 53 per cent, incorrectly thought fines might amount to just £50 per illegal worker when in fact these can be £20,000 per illegal employee and a prison sentence of up to five years for directors.

The survey reveals that less than half of SME businesses know what documents should be kept on file for sponsored overseas workers and 96 per cent of company sponsors are not reporting all the required changes in circumstances for sponsored workers. It also found that none of the SME companies in the study were advertising job vacancies correctly under sponsorship rules, when required, for recruiting for a non-EEA citizen, as well as making other key errors in business compliances, checks and audits.

The report, commissioned by immigration law firm Migrate UK, surveyed 1,000 businesses who currently hold a Tier 2/Tier 5 licence to sponsor overseas workers.

Caught short

The findings reveal businesses are not carrying out sufficient internal compliance audits to ensure internal policies, procedures and guidelines follow the required ‘duties’ of a sponsor to ensure they meet the Home Office’s stringent compliance checks.

Whether a business is caught intentionally using illegal overseas workers, or has broken the law innocently for failing to have their paperwork in order, in July 2016 the Home Office introduced harsher punishments from increased prison sentences to ‘on the spot’ closure for companies who are unable to meet the strict provisions of the new Immigration Act 2016.

Employers who hold a Sponsor Licence to employ a non-EU worker have an obligation to keep specific records. For example, all attendance and absences from work, evidence of a market test (where required), professional accreditations, and copies of pay slips. While they are not subject to the same penalties under Right to Work checks, just the smallest discrepancy in an employees’ data can lead to a Sponsor having their licence suspended or revoked.

SMEs also unaware of paperwork needed for British workers

While at least 55 per cent of SME businesses were found to need training on what official documents must be held for non-British/non-EEA workers, the research found that businesses were also unaware of the paperwork they should keep for British workers, including an up-to-date copy of a passport photo page, or a British birth certificate including the name(s) of a least one parent or adoptive parent – and less than half of SMEs had any ID of non-settled workers on file at all.

The impact of Brexit

Jonathan Beech, managing director, Migrate UK says, ‘SME businesses are already seeing a growing skills problem in the UK, particularly in the IT, finance and engineering sectors, relying heavily on skills from outside the UK which will decline if companies fail to get their ‘house in order’ and prevent a loss of talent before the UK exits the EU.

‘While we’re being contacted by more prepared businesses who are running Brexit projects and asking us how we can help them in the lead up, as our research found, too many companies are sleepwalking towards the challenges ahead.

‘With a new UK immigration system said to be due in place by March 2019 when the free movement of people between the EU and the UK ends, it is likely that EEA citizens will need some kind of clearance to enter the UK to work, and sponsorship is one way they could do this. Losing a licence post-Brexit will be even worse news as skills shortages become even more acute.

‘Employers wishing to retain both EU and non-EEA workers need to get fully prepared ahead of Brexit. HR files should be kept for all workers, endorsed and with passport copies. Internal audits must be carried out to ensure all correct paperwork is in place should the Home Office make a visit. Finally, while informing EU nationals that their status has not yet changed, they should be aware of their ability to apply for a Registration Certificate of Permanent Residence if they want to safeguard their future in Britain.’

Further reading on sponsor licence

Does your business turn over between £50,000 and £500,000? If so, you are eligible for the new Small Business Grants initiative from SmallBusiness.co.uk. We’re giving away £5,000 every month in a free-to-enter competition. Apply now by clicking here. Good luck!

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