The case of R (on the application of Raj & Knoll Ltd) v Secretary of State for the Home Department (2016) is the first case in which a Judicial Review has been requested in respect of the operation of Tier 2 Sponsor Licence decisions taken by the Home Office.
In the proceedings, Raj & Knoll Ltd (the Employer) challenged the Secretary of State’s decision to revoke its Tier 2 Sponsor Licence.
The Employer operated three care homes and employed 65 people, including 11 migrant workers. A License renewal visit revealed that the Employer had not updated its address details on its certificates of sponsorship when it had moved premises and had failed to keep full records of its Resident Labour Market Test, in so doing, it had failed to comply with record-keeping and reporting obligations in accordance with the Part 15 of the Tier 2 and 5: Guidance for Sponsors (the Guidance).
The Home Office sent the Employer a letter setting out the breaches, suspending the Employer's Sponsor Licence and inviting it to make to make representations, including submission of evidence, in response to the issues breached identified.
The Employer responded to the letter, but subsequently received further correspondence confirming that its Sponsor Licence has been revoked on the basis of Part 12 of the Guidance, which obliges Sponsors to tell the Home Office of any changes to their details, and also Annex 5. Annex 5 of the Guidance set out the circumstances in which the Home Office can revoke a Sponsor Licence, it includes failure to send a document or information with the given time limit.
The Employer argued that the Home Office had not requested any documents and that it had tried to change the registered address but that this had not been accepted and, in the alternative, that any breaches were minor and should not result in revocation of its Sponsor Licence.
High Court decision
The High Court found that it was lawful for the Sponsor Licence to have been revoked. It considered that the Employer had neglected to comply with its record-keeping duties and had also failed to correct these problems and respond to the Home Office within the timeframe given to it.
The Court concluded that it was important to read the letters from the Home Office in the context of the Guidance and also the information provided to the Employer during the Licence renewal visit. It therefore did not matter that the letters did not include an express request for documents. When reviewed in context it was clear that the missing document required was that relating to the Resident Labour Market Test. In addition, the Employers' failure to change its address had resulted in further Certificates of Sponsorship being issued with an address which it knew was incorrect. The Court agreed with the Home Office that this was a serious breach of the Employer's obligations which justified revocation and that the relevant process had been followed to affect that revocation. The Employer's application was therefore dismissed.
Revocation of its licence meant that the Employer could not continue to employ migrant workers from outside the European Economic Area. All of its 11 migrant workers would have been directly affected by this decision. The Employer appealed against the refusal of its application.
Court of Appeal decision
The Court of Appeal upheld the initial decision and dismissed the Employer's Appeal. It concluded that the Home Office's decision to revoke the Sponsor Licence was not an unduly harsh sanction. Compliance with the record-keeping obligations was not difficult; the Employer had breached these obligations and had also failed to rectify them. The fact that the decision to revoke the Licence had commercial consequences for the Employer was not a reason to hold the Home Office's decision to a higher standard of review in the Courts.
The Court also concluded that there has been no error in approach when considering the seriousness of the breaches. It was of critical importance to the sponsorship system that the Home Office be kept informed of the location at which sponsored employees worked. It also considered that there was no obligation on the Home Office to make explicit that it had considered its discretion and that it was unnecessary to do so in this case because, given the number and seriousness of the breaches, revocation was obvious.
Advice to Tier 2 Sponsors
This case emphasises the importance of diligent record-keeping processes as the Home Office will not tolerate non-compliance with the Guidance. It is also now clear that this approach will be supported in the Courts.
The High Court Judgment quoted from a case brought against the Home Office in a Tier 4 context that we often find it helpful to relay to employers when advising on compliance issues:
"It must be understood that the grant of [Sponsor] status is a fragile gift, constant vigilance about compliance is a minimum standard required for such sponsors. The burden of playing an active role in the support of immigration control is a heavy one. The [Home Office] is entitled to review purported compliance with a cynical level of supervision.”
As a consequence, it is imperative for Sponsors to ensure that they know what their duties are and also that they comply with them. In particular, Employers in the Care Home, Construction and Hospitality sectors should review their compliance procedures as these are sectors where there have been a high number of compliance issues.
For more information about the steps employers should be taking to ensure that you have appropriate systems in place to enable you to fully comply with your Sponsor Duties, please do not hesitate to contact our Employment team.