The High Court confirmed that a failure to pay salaries, as stated on Certificates of Sponsorship (CoS), and omissions in reporting reduced working hours through the official Sponsorship Management System (SMS) constitute mandatory grounds for revocation, especially where these failings cannot be excused as mere technical oversights.
Facts:
The claimant is a domiciliary care provider. It employs 81 staff, including 71 sponsored migrant workers, under the auspices of the skilled worker route, and has held its licence since May 2021. The legal dispute began after the Home Office received data from HMRC indicating that the claimant was paying certain sponsored workers significantly less than the salaries stated on their CoS. An investigation into two employees, referred to as workers A and B, revealed pay deficits of 15% and 36%, respectively, in relation to their registered sponsorship terms.
When challenged during a compliance check, the claimant provided documentation, including payslips and contracts, but admitted that the workers were indeed receiving lower pay. The employer explained that these discrepancies arose because the employees had requested to work fewer hours due to personal circumstances, such as childcare emergencies and mental health issues, and because deductions were made for transportation costs and loans. However, the Home Office determined that these reasons did not fall within the narrow exemptions permissible under the sponsor guidance. Crucially, the claimant admitted it had failed to report these changes in salary and hours through the SMS, which the Home Office interpreted as a serious breach of the “high degree of trust” placed in licensed sponsors.
The Home Office moved to revoke the licence immediately under the mandatory grounds specified in Annex C1 of the guidance, which mandates revocation when a sponsor pays a worker less than was promised without official notification. In response, the claimant sought a court order to stay the revocation and instead substitute it with a suspension, arguing that the decision was disproportionate and that the Home Office had failed to properly exercise its residual discretion.
Decision:
The High Court refused to grant permission for judicial review or interim relief and upheld the revocation of the sponsor’s licence. The claimant argued that the Home Office should have used its discretion to downgrade the licence rather than revoke it, especially since the breach only affected 2 of its 71 workers. The Judge ruled that, while the Home Secretary has a residual discretion to choose a lesser penalty, she is not obliged to use it if a mandatory ground for revocation is met.
Because the claimant failed to pay the salary stated on the CoS and failed to notify the Home Office of the change, it fell squarely within Annex C1(aa). The Judge noted that the guidance specifically states that the Home Office “will” revoke a licence in such cases, and the defendant was entitled to treat this as a serious breach of duty rather than a minor procedural error.
The Judge found that the Home Office guidance (paragraph S4.31) provides a very narrow list of exceptions where a salary can be reduced, and the claimant’s reasons did not meet these specific criteria. The Court emphasised that, if a worker cannot fulfil the hours required to earn the salary stipulated on their CoS, then the sponsor’s duty is not to accommodate them at a lower pay rate, but rather to cease their sponsorship entirely.
Implications:
This case solidifies a “zero tolerance” approach by the Home Office and the courts regarding salary compliance. The most significant implication is the Court’s confirmation (following Prestwick Care) that the Home Office is not legally required to consider the “collateral damage” of such a revocation. Even if revocation ultimately leads to a business’s total collapse, the Court holds that immigration control is the paramount interest.
This judgement implies that, even if an employer acts with “good intentions” (e.g., allowing a mother to work fewer hours for childcare), doing so without formal Home Office notification is treated as a severe breach of trust and not a minor mistake.
A sponsor can now have their licence revoked for a “non-genuine” vacancy, even if they were not being dishonest. If a worker simply ends up performing different hours or tasks than those stated on the CoS, then the role can be deemed to be “non-genuine” by default.
