Court of Appeal Issues Landmark Decision on Sponsor Licence Revocations

Key Ruling Clarifies Home Office Obligations When Revoking Skilled Worker Sponsorship Licences.

The Court of Appeal has delivered a significant judgement that will impact how the Home Office handles the revocation of skilled worker sponsorship licences, particularly for care providers. 
The ruling in the joined appeals of:
Prestwick Care Ltd v Secretary of State for the Home Department and Supporting Care Ltd v Secretary of State for the Home Department [2025] EWCA Civ 184, handed down on 11 March 2025.
Addresses a critical question for sponsors:

Is the Home Office required to consider the wider impact of revoking a sponsor licence?

The Central Question.

At the heart of these appeals was whether the Secretary of State for the Home Department (SSHD) is obligated to assess the potential impact of licence revocation on:

• The sponsor’s business
• Its employees
• Service users (particularly vulnerable individuals in care settings)
• The wider community

Two contradictory High Court judgements had previously reached opposite conclusions on this question, creating uncertainty for sponsors across various sectors.

The Court’s Decision.

Lord Justice Baker, delivering the lead judgement, concluded that: ‘The Home Office is NOT required to consider the wider impact of revocation‘ when deciding whether to revoke a sponsorship licence where a mandatory ground for revocation has been established.

In the Court’s view, it would be “wholly impractical” to require the Secretary of State to analyse potential consequences for other public bodies or determine the impact of revocation on their statutory duties. Lord Justice Baker noted that “the Secretary of State is simply not equipped, in skills or resources, to carry out such an assessment.”

The judgement emphasises that sponsorship is a voluntary scheme conferring business advantages, and any adverse impact on service provision is attributable to the sponsor’s breaches of licence conditions rather than the subsequent revocation.

What This Means for Sponsors.

This ruling significantly clarifies the position for all Tier 2 sponsors, particularly those in the health and social care sector:

1. Mandatory grounds mean mandatory action: Where a mandatory ground for revocation is established, the Home Office can revoke without considering wider impacts.
   
2. Residual discretion exists but is limited: While the SSHD has a “residual discretion” to consider impact if they choose to do so, they are under no obligation to do so.
   
3. No enhanced procedural fairness: The Court rejected arguments that sponsors are entitled to a heightened standard of fairness or additional procedural protections beyond those set out in the Guidance.
   
4. Mitigation measures may still apply: The Home Office may still take steps to mitigate consequences after revocation, such as informing the Department of Health and Social Care of action against care providers or pausing visa cancellations temporarily.

Important Procedural Safeguards for Allegations of Dishonesty.

While the court ruled against sponsors on the central question of impact assessment, it did establish important procedural safeguards in cases where dishonesty is alleged:

1. The burden of proving dishonesty lies with the Home Office.
   
2. The SSHD must clearly indicate suspicions of dishonesty to give sponsors a fair opportunity to respond.
   
3. All circumstances must be considered before inferring dishonesty.
   
4. If dishonesty is found, the reasons must be set out in the revocation letter.

These requirements provide important protections for sponsors facing allegations of deliberate misconduct.

The Implications of This Decision on the Care Sector.

This ruling is particularly significant for the care sector, which relies heavily on sponsored workers. With nearly 9,000 sponsors in the social care sector alone (from a total of 115,000 sponsors in the UK), the judgement brings both clarity and challenges:

• Clear compliance obligations: Care providers must ensure strict adherence to all sponsor duties, as the impact of revocation on vulnerable service users will not save a non-compliant licence.
  
• Taking a preventative approach becomes essential: With the Court endorsing the Home Office’s “light trigger” approach to enforcement, preventative compliance becomes even more necessary.
  
• Representation opportunities remain important: While impact arguments may carry less weight, sponsors should still utilise the opportunity to make comprehensive representations following any suspension notice.

How Sponsors Should Proceed.

In light of this significant ruling, we recommend that sponsors take proactive steps to protect their licences:

1. Review sponsorship processes: Ensure your organisation fully complies with all sponsor duties outlined in the Guidance.
   
2. Maintain meticulous records: Documentation is critical to demonstrating compliance during Home Office inspections.
   
3. Implement regular internal audits: Identify and address potential compliance issues before they trigger regulatory action.
   
4. Train key personnel: Ensure staff responsible for sponsorship understand their obligations and the serious consequences of non-compliance.
   
5. Seek expert guidance: Consider professional advice on sponsorship compliance, especially for mock audits and SMS management.

What This Means Moving Forward.

The Court of Appeal’s decision provides much-needed clarity after conflicting High Court judgements. With many Home Office decisions and court cases having been on hold pending this ruling, we anticipate increased inspection and enforcement activity in the coming months.

Lord Justice Baker’s judgement underscores the fundamental principle that sponsorship is a privilege, not a right, and those who benefit from employing migrant workers must play their part in ensuring immigration system integrity.

For sponsors, particularly in the care sector, this ruling reinforces the importance of maintaining impeccable compliance with sponsorship obligations. With the court confirming the Home Office’s approach to enforcement, the consequences of failing to meet these standards have never been clearer.

For assistance with sponsor licence compliance, mock audits, and SMS management,
contact our specialist immigration team.