Understanding the Dos and Don’ts of Third Party Working
28th November 2024
- Categories: Business, Compliance, General, HR, News, Sponsor licence, Visas
28th November 2024
Why does third party working matter for sponsors?
In today’s business landscape, third party working is a common practice among organisations. However, when it comes to sponsored workers, navigating this territory requires careful adherence to compliance rules to avoid significant penalties. This blog explores the key guidelines for third party working arrangements, practical tips for safeguarding your sponsorship status and examines a High Court case study to provide real-world insight into the consequences of non-compliance.
Third party working refers to situations where a sponsored worker is working for, or on a contract with, an entity other than their sponsor. While some instances of third party working are compliant with your duties as a sponsor, others are strictly prohibited.
When evaluating the arrangements you have in place with your sponsored worker, the focus should always be on the relationship and supervision you have over the worker’s duties, pay and outputs.
A sponsored worker can be contracted by their sponsor to work for a third party on a time restricted, one off project, as long as the sponsor continues to supervise and take responsibility for the worker.
The sponsor must maintain full control over the worker’s duties and compensation throughout the duration.
A sponsored worker cannot work in a temporary or permanent position at a third party business. For example, sponsored workers cannot work as agency staff.
A sponsored worker cannot be contracted out for long-term, ongoing or routine positions to a third party.
Case Study: High Court ruling on third party working
The High Court considered the case of R (Tendercare Management Ltd) v Secretary of State for the Home Department, which involved the revocation of a care home operator’s Sponsor Licence by the Home Office. This was primarily due to issues surrounding third-party working and record-keeping found during a compliance visit. We will focus on the issues around third-party working and discuss the judgement.
The care home operator had agreements in place with three other care providers to supply care workers to cover any staff shortages. These agreements had been in place prior to the care home operator’s Sponsor Licence being granted, and did not have a specific end date. The nature of the agreements was ongoing and open ended.
The Sponsor Guidance allows sponsored workers to work for third parties on a contract basis only for clearly defined projects or time-limited services. Emphasis is placed on the difference between routine/ongoing work for a third party and work which is done within a specific time and has a specific end date.
In this case, the Home Office considered that the sponsoring organisation’s agreements resembled an employment agency model, where sponsored workers were supplied for general labour, a mandatory ground for licence revocation under Annex C1 of the Sponsor Guidance.
The Home Office further found that the nature of the agreements was also breaching the genuine vacancy requirements, which is another ground for mandatory revocation.
The sponsor is expected to provide written agreements which highlight the nature of the work provided by sponsored workers to third parties. The agreements should also highlight who maintains responsibility for the duties, outcomes and outputs of the sponsored workers.
The court makes a distinction between the words ‘contract’ and ‘relationship’. It is to be noted that a written contract is used to describe the contractual (legal) relationship between the parties, whereas any oral discussions which are not recorded are considered to form part of the relationship and may or may not be contractual.
The care home operator brought it to the Court’s attention that the Home Office failed to utilise any discretion when deciding to revoke the Sponsor Licence. It was argued that the Sponsor Guidance is policy, which should be discretionary.
Recent case law has focused on the level of the Home Office’s discretion when it comes to their Guidance for mandatory breaches.
The Court considered whether the guidance on mandatory breaches amounted to a rule or policy and assessed the legal basis of the guidance and concluded that the guidance is a rule. Therefore, there is no obligation on the Home Office to exercise discretion when reaching a decision.
The High Court upheld the Home Office’s decision to revoke the Sponsor Licence, and it ruled that the agreements amounted to Tendercare acting as an employment agency, contrary to the Sponsor Guidance. The home care provider failed to provide adequate documentation to demonstrate that its sponsored workers were engaged in permissible work assignments under the sponsorship scheme.
This case confirmed that breaches of mandatory sponsor duties will almost certainly result in licence revocation. The Home Office can exercise discretion when deciding to revoke a sponsor licence, however, this discretion will only apply in compelling or exceptional circumstances.
It serves as a reminder to sponsors, especially those reliant on third party placements, to review their practices and ensure compliance with all sponsorship duties to avoid similar penalties.
During a Home Office compliance visit, third party working arrangements are likely to be closely investigated. The Home Office may request access to any relevant third party offices or work locations where your sponsored workers are stationed. Any obstruction of this access can have serious compliance consequences for your licence.
Failure to comply with third party working restrictions can result in serious repercussions. If you are found to be acting as an employment agency and supply one of your sponsored workers to a third party as labour, the Home Office will revoke your sponsorship licence. Non-compliance risks will also damage your business’ reputation and operational disruptions.
Unlike settled workers, sponsored workers are subject to specific rules concerning pay, the roles they can carry out and supervision. A sponsor must have full control over a sponsored worker’s duties, outputs and pay in order to remain compliant with these duties. If a sponsored worker is working for a third party which is not their sponsor, the sponsor loses oversight over the worker and therefore cannot ensure compliance.
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