UK: Right to Work Checks U-Turn and Updates for Employers with Sponsor Licences

Key Sponsor Guidance Updates

• Sponsors don’t need to conduct Right to Work (RTW) checks on non-sponsored workers they “directly engage” rather than employ. The guidance does, however, state that sponsors must perform checks on all sponsored staff – whether employees or not and all unsponsored employees.
• Expansion in sponsors’ record-keeping duties to include records of RTW checks on all employees.
• The Home Office will likely revoke a sponsor licence if a sponsored worker doesn’t have relevant RTW permission.
• Sponsor licence applications may be refused and revoked when it is presumed they are primarily constructed to bring someone to the UK.
• New details on how to satisfy the Home Office that an organisation is operating or trading to qualify for a sponsor licence.

Reversal of RTW Guidance for Sponsors

Updates in March and April 2026 to sponsor guidance stated that sponsors must conduct RTW checks where they were employing or “directly engaging” a worker (whether sponsored or not). This appeared to suggest a duty for employers with sponsor licences to carry out RTW checks for all workers, including non-direct employees (e.g. self-employed, contactors, secondees, etc).

The May 2026 Home Office update reverts to the original pre-March 2026 position whereby sponsors are not required to perform checks on unsponsored workers who are not employees.

The guidance still states that sponsors must perform checks on all sponsored staff (whether employees or not) and all unsponsored employees.

We expect more changes to RTW checks for everyone – not just employers with sponsor licences – when legislation in the Border Security, Asylum and Immigration Act 2025 is enacted, perhaps as soon as autumn 2026.

The legislation broadened the scope of RTW checks and the large civil financial penalties they protect organisations from to include employment “and other working arrangements.” How this will be implemented remains to be seen.

RTW Record Keeping

These recent changes also widen the scope of sponsors’ record-keeping duties to include retaining evidence that they have carried out RTW checks on any worker they employ (whether or not they sponsor them) and any worker they sponsor (whether or not they are employees).

The guidance now warns: “checks must show that any worker you are employing or sponsoring has the legal RTW in the UK and to do the work in question.”

Sponsors now have a duty to retain RTW evidence for their entire sponsored or employed workforce, rather than just the sponsored workforce as was the case before.

The Home Office has also updated its guidance to reflect that from May 20, 2026, the eVisa will now be the only proof of immigration status (e.g., no vignette too) given to workers granted permission in most circumstances.

Loss of a Licence if Workers Don’t Have Relevant Permission to Work

Home Office guidance for sponsors on their duties and compliance contains new clarifications.

A clarification on “relevant permission to work” is added to remind sponsors that if they sponsor a migrant, even one who is not an employee, and they are found to be working in a capacity that they do not have the RTW in, the sponsor is likely to lose their licence.

So, for example, if an organisation sponsors someone to work as a senior solicitor in a partnership, and they are actually working in another role the Home Office would “likely” revoke the sponsor licence.

Refusing a Sponsor Licence Application if it’s Primarily to Bring Someone to the UK

There has always been a requirement that a sponsored role is a genuine position. Updates now clarify how the Home Office will be assessing applications for sponsor licences. Under the “suitability” section of its guidance, the following advice is added:

The following is an example of where we are likely to consider that your organisation has been established mainly to facilitate the entry or residence of a person who would not otherwise have permission to work in the UK or do the work in question:

Example

A foreign national (who does not have permission to enter or stay in the UK) registers a business with Companies House while resident outside the UK. They employ a UK-based worker and appoint that worker as a Level 1 User for the purposes of applying for a Skilled Worker sponsor licence and assigning a CoS to the foreign national. In this scenario, it is considered unlikely that the company would otherwise exist if it were not for the foreign national’s wish to enter the UK.

As before, any sponsor licence application (whether UK or abroad) benefits from as much evidence as possible that there is a genuine business involved.

The guidance warns that if the Home Office has reasonable grounds to suspect “your organisation has been established, or exists, mainly to facilitate the entry or residence of a person who would not otherwise have permission to work in the UK or do the work in question” it may also revoke a sponsor’s licence where it already has one.

Demonstrating That a Sponsor is Operating/Trading

In an update to how the Home Office assesses eligibility for a sponsor licence, the following has been added to the guidance:

If you have no operating or trading presence in the UK (or, in the case of UK Expansion Worker, if you have no UK footprint), we will refuse your application. If we find you have no operating or trading presence in the UK after granting a licence, we will revoke your licence…

Below are two examples of where are likely to conclude that you do not have an operating or trading presence in the UK. These examples are not exhaustive:

Example 1: no significant trade activity

You apply for a sponsor licence. Excluding payments made to HMRC and utility, leasing, insurance and other related bills, there is no evidence of financial transactions taking place between your organisation and any customers, clients or service users. All or most of the finance your organisation is receiving is being supplied directly by a related company or private investors, rather than through trading activity. In this scenario, we are unlikely to be satisfied that you are actively trading as a business for the purpose of holding a sponsor licence.

Example 2: trading with related entities (‘circular trading’)

You apply for a sponsor licence. Although you have provided invoices and contracts for services, these are wholly or mainly between entities linked to you by common ownership or control, or which share common personnel involved in the day-to-day running of the relevant entities. There is little or no evidence of providing any services to customers, clients or users outside of your organisation (or those entities). In this scenario, we are unlikely to be satisfied that your business is engaging in meaningful operating or trading activity and is instead engaged in a system of ‘circular trading’ to move money through linked businesses for the purpose of acquiring a sponsor licence.

The glossary to the guidance has also been updated to introduce a new definition of operating or trading:

Broadly, ‘trading’ can be taken to refer to operations of a commercial kind by which the trader provides to customers for reward some kind of goods or services.

‘Operating’ includes the activities of both:

• Charities and other not-for-profit organisations where they are providing a service to clients, customers or service users
• Businesses who are engaged in pre-trade activities with a view to commencing commercial trading activity (as defined above) in the foreseeable future

Key Takeaway

Sponsors have always been required to show that they are a genuine operating and trading business. However, the above additions to guidance shed light on how the Home Office may view certain applications from pre-revenue businesses who cannot yet evidence the above, as well as other organisations that do not generate revenue. For example, depending on the circumstances, a UK-based subsidiary that only provides services to a parent company abroad could be considered either circular trading or non-significant trading activity.

*Vanessa Ganguin is a Partner (Consultant) in Littler’s London office.