As a business, are you exposing yourself to a discrimination claim by not having a Sponsor Licence?

Businesses looking to employ workers need to ensure that those workers have the right to work in the UK. If they do not, for certain categories of work, the business can sponsor an overseas worker to come to work in the UK but only if the business has a Sponsor Licence.

Personnel Today reported at the end of last year that only 3% of UK employers have a Sponsor Licence out of approximately 1.4 million private sector employers in Britain.

There is no legal requirement for a business to have a Sponsor Licence and therefore not holding such a licence will not, of itself, give rise to any claim for discrimination against the business, but what happens if a business without a Sponsor Licence, advertises a role for a Management Consultant on a salary of £35,000 and an individual who lives in Germany (who meets the skills, experience and qualification requirements set out in the personal specification section in the role profile) applies for the role? Is it discriminatory to simply reject them because the business cannot sponsor them because it does not have a Sponsor Licence?

The answer is very possibly, yes.

The Equality Act 2010 protects an individual from discrimination on the grounds of race (which includes nationality) both directly and indirectly.

In the above scenario, it is unlikely that a direct discrimination claim would apply because the individual is not being rejected because they are German but rather, because the business does not have a Sponsor Licence.

However, there is a significant risk that the individual could assert a claim for indirect discrimination.

Indirect discrimination is where an employer applies a ‘provision, criterion or practice’ (a ‘PCP’) to everyone (meaning in this case, all job applicants) which puts persons of a particular racial group at a particular disadvantage compared with other persons who do not share that protected characteristic and where the business cannot objectively justify the application of such a PCP as being a proportionate means of achieving a legitimate aim.

The most relevant case on this issue is that of Osborne Clarke Services Ltd v Purohit [2009]. That case involved a firm of solicitors who received an application for a training contract from Mr Purohit who was an Indian national and who needed a work permit to work in the UK. Osborne Clarke had a policy of rejecting applications for trainees from outside the EEA (given that EEA citizens had the right already to work in the UK before Brexit); the reason for that policy was because (at that time) the immigration rules required an employer to demonstrate that they would not have been able to fill the role with a ‘resident worker’ (the ‘resident labour market test’, which has now gone) and, given the number of the applications that Osborne Clarke received for training contracts, they would never be able to demonstrate that they could not fill a role with a resident worker. Osborne Clarke therefore argued that the discriminatory impact of the PCP (only considering applications from individuals with the right to work in the UK) was ‘justified’ as being a ‘proportionate means of achieving a legitimate aim’ (only employing people with the necessary permissions to work in the UK). The Court rejected this argument and found that Osborne Clarke was indirectly discriminatory on the grounds of race in automatically rejecting any applicant who required a work permit.

In broad terms therefore, there is a risk of a claim for indirect discrimination if a business does not have a Sponsor Licence and therefore automatically rejects any applicant for a role who does not have permission to work in the UK. There may circumstances in which such a rejection may be ‘justified’; for example, where the salary on offer for the role is less than required by the Home Office for the advertised role, or where there is not enough time for the business to apply for and get a Sponsor Licence for a time critical role (the average time to prepare the application and be granted the Sponsor Licence is around 2-8 weeks) but such ‘defences’ assume a ‘considered’ rejection rather than an automatic rejection.

The Home Office guidance on avoiding unlawful discrimination in the recruitment process makes it clear that employers should consider all prospective employees based on their merits and suitability for the role on offer, and not merely reject candidates based on the assumption they may not have a right to work in the UK. The Home Office has published a Code of Practice on how to avoid discrimination in the recruitment process (the “Code”) and that specifically states that employers should:

1. be consistent in how they conduct right to work checks on all prospective employees, including British citizens;
2. ensure job selections are made on the basis of suitability for the post; and
3. ensure that no prospective job applicants are discouraged or excluded, either directly or indirectly, because of known or perceived protected characteristics.

Furthermore, the Code also highlights that employers should not:

1. discriminate when conducting right to work checks;
2. only check the status of those who appear to the employer likely to be migrants; or
3. make assumptions about a person’s right to work in the UK or their immigration status on the basis of their colour, nationality, ethnic or national origins, accent, surname or the length of time they have been resident in the UK.

The Code highlights that the “best way to ensure that you do not discriminate is to treat all applicants fairly at each stage of the recruitment process”.

If employers fail to observe the Code when recruiting for a role, an employment tribunal may take this into consideration when deciding whether there has been discrimination.

The Code also states that employers may refer to the fair recruitment recommendations to avoid discrimination made by the Equality Human Rights Commission (“EHRC”) in Chapter 16 of the Equality Act 2010 Code of Practice the main recommendations of which include the recommendation that eligibility to work in the UK should be verified in the final stages of the selection process rather than at the application stage, to make sure the appointment is based on merit alone, and is not influenced by other factors.

If you have any questions in relation to sponsorship licences or discrimination claims, please do not hesitate to get in contact with Sundeep Rathod, Linky Trott or any other member of the Employment team.

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