Tribunal case exposes sponsor licence pay issue

As immigration and sponsorship rules tighten and pay rates determine whether workers can be employed in the UK, a recently highlighted tribunal case has cast light on whether an employer can lawfully pay a sponsored worker more than a non-sponsored worker doing the same role.

The claimant, Ms Gharabli, was employed by respondent Cedar Hope Care Services, as a support worker from February 2023.

During her employment, Gharabli found that support workers from overseas on Skilled Worker visas were being paid £12.31 per hour, whereas she and other non-sponsored support workers were paid £10.50 per hour. About 80% of the Cedar Hope's staff were working under sponsorship visas.

After she raised this discrepancy Gharabli's pay was increased but, following further events and disagreements with the employer, she eventually resigned with immediate effect in June 2024 citing, among other things, discrimination on the basis of pay.

She also brought claims including direct and indirect race discrimination, direct and indirect religious and belief discrimination, and whistleblowing. Only her indirect race discrimination and whistleblowing claims succeeded.

It is accepted legally that indirect discrimination occurs where an apparently neutral provision, criterion or practice (PCP) is applied to everyone, but has the effect of placing those with a particular protected characteristic at a disadvantage.

In this case, the PCP was the Cedar Hope's pay structure, under which sponsored workers were paid more than non-sponsored workers.

This disproportionately affected the non-sponsored workers because the Home Office salary rules applicable to sponsored workers set a higher minimum rate than the national minimum wage applicable to the wider workforce.

The employer relied on the Home Office minimum pay requirements for sponsored workers as justification for the disparity in pay, arguing that the higher rate was necessary to comply with its immigration obligations as a sponsor. This was accepted by the tribunal.

However, the tribunal decided that immigration compliance on its own was not enough to satisfy the proportionality test and justify indirect discrimination. It noted that Cedar Hope had not submitted any analysis or evidence to show why it would be financially prohibitive for it to match the pay of non-sponsored workers to that of sponsored workers, particularly given that they were carrying out the same job and that most of the workforce was sponsored.

The tribunal decided that the fact that the employer increased Gharabli's pay when she raised a complaint suggested that employer had flexibility to do so and indicated and acknowledged that her sense of grievance was justified. The care home's case therefore failed on justification and Gharabli's claim of indirect race discrimination was upheld.

Stephen Simpson, principal editor at Brightmine, said the case highlighted the need to avoid discrimination under the Equality Act 2010 alongside the need to follow immigration rules. "The two are not always easy bedfellows," he said.

He emphasised: "It is important for employers to be aware that the employment tribunal did not decide that there is a blanket rule that they must always pay the same to sponsored and non-sponsored employees doing the same role."

Simpson said that to defend an indirect race discrimination case, the employer's policy or practice - here, paying sponsored foreign workers more that domestic workers - had to be a proportionate means of achieving a legitimate aim.

In this case, a legitimate aim was identified: paying the imported skilled workers the minimum salary threshold as legally required under immigration rules.

"However, as is so often the case with indirect discrimination claims," said Simpson, "the employer was unable to provide evidence that its approach was a proportionate means of achieving that legitimate aim.

"For example, was the option considered of upping the domestic workers' pay to match sponsored workers' pay? If this option was considered and rejected, where was the evidence that it was financially prohibitive to match pay for both groups, particularly in circumstances where the work is basically the same and the domestic workers are in the minority?"

Simpson advised employers to identify provisions or practices that were "potentially indirectly discriminatory, collating evidence of why the provision or practice is justified and, crucially, recording that evidence in case they find themselves in an employment tribunal."

Law firm Kingsley Napley said: "It is worth noting that this was a first-instance decision and is therefore not binding on future tribunals. The key takeaway for sponsors is that salary-setting decisions made for immigration purposes should be tested through an equality lens."

The tribunal remedy hearing compensated Ms Gharabli to the tune of £14,174, including injury to feelings of £10,000 and financial losses of £2,237.