Care home operator’s sponsor licence revoked for supplying sponsored workers to third parties

As the crackdown on sponsor licence compliance continues, in R (Tendercare Management Ltd) v Secretary of State for the Home Department [2024] EWHC 2154 (Admin) the High Court has considered another case involving the revocation of a care home operator’s sponsor licence.

In contrast to previous revocation cases, which primarily involved exaggerated or incorrect job descriptions of sponsored workers, the fundamental issue in this case was the supply of sponsored workers to other care providers. There were also issues with the care home operator’s recording of sick leave.

The revocation was challenged on nine grounds, which the court considered under three main groups: the relationship between the care home operator and other care providers (the ‘agency issues’), record keeping (the ‘migrant tracking issues’) and the Home Office’s approach to revoking the licence (the ‘discretion issues’).

The agency issues

The Home Office revoked the sponsor licence on 26 October 2023 after inspecting the care home operator’s premises and interviewing members of its staff. It found that the care home operator had agreements with three other care providers to supply care workers when they were short of staff.

Although the sponsor guidance permits work on a contract basis, the workers “must be contracted by the sponsor to provide a service or project within a certain period of time.” These agreements had been ongoing for years, without any scope or end date, and several sponsored workers stated during interview that they thought they were actually employed by the other care providers.

The sponsor guidance explicitly prohibits this type of arrangement:

If we find you are supplying the worker, or workers, as labour to another organisation to undertake a routine role or you do not have full responsibility for their duties, functions and outcomes or outputs, we will revoke your licence.

The care home operator successfully argued that it still retained control of its workers duties and functions while they were contracted to other care providers, but this didn’t matter. The issue was the open-ended, ongoing, nature of the agreements. This amounted to mandatory revocation under Annex C1 of the sponsor guidance, which states that the Home Office will revoke a licence if:

You are, or you are acting as, an employment agency or business and you have supplied a worker you are sponsoring to a third party as labour.

The Home Office also concluded that this arrangement was a breach of the genuine vacancy requirement, which is another ground for mandatory revocation. The agency grounds were therefore dismissed.

The migrant tracking issues

The Home Office compliance visit also uncovered issues with the care home operator’s record keeping as there was no system in place to monitor the reasons for absence from work.

Attendance at work was monitored by shift leaders with rotas and timesheets but the timesheet records did not provide any indication as to the reason for absence. There was no system for recording sick leave, aside from sick pay records held by the accountant.

The care home operator argued that the sponsor guidance does not prescribe a certain system that must be used to record and retain evidence of absences. Sponsors are however obliged to stop sponsoring a worker if they are absent from work for more than four weeks, unless a valid exception applies, one of which is sick leave. The court concluded:

it follows, therefore, that there must be a system in place which permits the sponsor to record and identify both the quantum of the absences and the reasons.

The migrant tracking grounds were therefore dismissed. Although failure to implement an effective process necessary to fully comply with your sponsor duties is not a mandatory ground for revocation, it comes under Annex C2 of the sponsor guidance listing circumstances in which the Home Office will normally revoke a licence.

The discretion issues

The care home operator’s final grounds relate to the Home Office’s discretion in sponsor licence revocation. It contended that guidance is policy, to which there is residual discretion, which was not exercised in the care home operator’s case.

The issue of the Home Office’s residual discretion in mandatory revocation cases has been at the core of recent case law. What discretion, if any, exists under the guidance for a mandatory breach?

The court answers this question by first considering whether the guidance on mandatory breaches has the character of a rule or of policy. The judgment conducts an interesting assessment on the legal basis of the sponsor guidance, under which the entire sponsorship system is predicated. The court ultimately concludes “so far as the guidance expresses itself to be mandatory and is clear as to the decision which it compels, it is in the nature of a rule”.

If the sponsor guidance stipulates certain rules which, if not adhered to, will result in that licence being revoked, the court says that there is no obligation on the Home Office in such cases to proactively investigate and make findings about the potential impacts of a decision to revoke a licence:

The arrangement between the Claimant and the Defendant is in the nature of a conditional licence. The Claimant knew, or can be taken to know, what the specified consequence of a ‘mandatory’ breach would be. The ‘deal’ is clear at the outset, and the Claimant accepted the deal.

This follows the precedent that was cemented in One Trees Estates. The claim for judicial review was thereby dismissed on all grounds.

Conclusion

The judgment confirms that a mandatory breach of sponsor duties will almost certainly result in licence revocation. The Home Office is still open to decide for cogent reasons not to revoke, but this residual discretion is reserved for the most compelling or exceptional cases.

The increase in the number of sponsor licence revocations and suspensions in the second quarter of 2024 suggests that these cases are few and far between. The latest Home Office statistics reveal a 137% increase in revocations of skilled worker sponsor licences and a 70% increase in suspensions.

This serves as a salient reminder that the Home Office now holds sponsor compliance at the top of their agenda. Sponsors must be proactive with compliance, and ensure effective systems are in place to adhere to their sponsor duties. The likelihood of the Home Office turning up at your door is higher than ever, and the consequence of even a small oversight could be fatal.