Umbrella companies acting as Tier 2 sponsors?

All employers who wish to recruit foreign, skilled workers are required to register for a Sponsorship Licence with the Home Office. Workers can then be approved on a Tier 2 (General) visa allowing them to come and work for the employer under the terms set out in the certificate of sponsorship and their employment contract. Tier 2 (General) visas are only for those workers who are from outside the European Economic Area (EEA).

Only licensed sponsors are eligible to issue potential migrant employees with a Certificate of Sponsorship. However, there are certain conditions that need to be fulfilled before a Tier 2 sponsor visa is granted such as; meeting the ‘English requirement’, the salary being at least £20,500 and the Resident Labour Market Test (RLMT) being passed. (This test ensures that the vacancy genuinely cannot be filled by a skilled worker that is already settled in the UK or EEA). Seems simple enough however, what happens when a UK based umbrella employment provider wishes to sponsor a worker that isn’t within the EEA? This is where things can become complicated and risky. 

The sponsored worker could essentially meet all of the visa requirements, yet, the umbrella employer would likely fail under the stringent sponsorship rules. Under the RLMT, the Home Office decides where the job must be advertised, for how long, and what information needs to be included. Umbrella employers do not advertise job opportunities; this is the agency or client’s responsibility. Unless umbrella companies change the way they operate, the resident labour market test will not be passed.

Another issue umbrella company's face is the matter of working for the sponsor. The rules state that the licensed sponsor is where the migrant worker will be employed, in connection with the sponsors business. The sponsor will also decide how the work is performed. Under an umbrella arrangement, the employer will be supplying the services of the worker to the agency or client, and will have reduced supervision and control over the worker and their performance.

Additionally, government guidance for licensed sponsors* specifically states in section 5 that sponsors who supply labour to other parties will have their licences revoked. In light of this, any umbrella company offering sponsorship to Tier 2 visa holders will be bending the rules and disguising the way in which they actually operate.

It is important to note, any agencies or clients using umbrella companies who sponsor migrant workers are at risk of having assignments prematurely terminated. This will have an effect on the client’s time and finances because once the sponsor has their licence revoked the worker will have 60 days to remain in the UK unless another route is found. Once this period is up the client will need to source new workers.

A member of the Recruitment and Employment Confederation (REC) quotes “….we are being increasingly told by the umbrellas and the contractors themselves that this kind of arrangement is becoming commonplace and acceptable.” Here at Orange Genie we would like to emphasise that we do not sponsor tier 2 visas.

If you have any queries or concerns regarding this topic do not hesitate to get in touch. or call us on: 01296 468 483

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