The Court of Appeal has rejected a Home Office interpretation of sponsor-licence rules that would have required employers to pay sponsored workers at least one-twelfth of their stated annual salary in every month. The ruling is significant for care providers and other sponsors whose employees work variable hours and receive uneven monthly pay.
What was the dispute about?
In R (on the application of Treal Care (UK) Limited) v Secretary of State for the Home Department [2026] EWCA Civ 1420, handed down on 5 November 2026, the Court of Appeal considered the proper interpretation of the Home Office’s sponsor guidance on salary payments to skilled migrant workers.
Treal Care (UK) Limited supplies care staff to the NHS, local authorities and clinical care groups. It was granted an A-rated sponsor licence in December 2021, allowing it to sponsor up to 75 migrant workers through Certificates of Sponsorship (CoS). By 2024, the company employed around 85 people, approximately 75 of whom worked under a CoS.
Following a compliance visit in March 2024, the Home Secretary suspended the licence in August and requested further information. On 1 October 2024, the licence was revoked. The decision relied on two alleged breaches: that three sponsored employees had not received the salaries stated in their CoS, and that the roles were not genuine vacancies.
Treal Care challenged the decision by judicial review. On 16 July 2025, Simon Tinkler, sitting as a Deputy High Court Judge, quashed the revocation. The Home Secretary appealed, but did not challenge the High Court’s conclusion on the genuine-vacancy issue. The appeal therefore focused on the salary issue.
Why was the sponsor licence revoked?
The three employees’ Certificates of Sponsorship each recorded a gross annual salary of £22,400. The Home Office relied on Annex C1, paragraph (aa) of its Workers and Temporary Workers: guidance for sponsors. This identifies a ground for revocation where a sponsor pays a worker less than the amount stated on the CoS and has not notified the Home Office of the change, or the reduction is not otherwise permitted.
The High Court examined the pay records for May to August 2024 and treated the three employees’ circumstances separately:
- Ms A: Her pay over the four-month period annualised at £22,190, marginally below the stated £22,400. However, she had taken unpaid leave in May and July, and the Home Office had not properly accounted for that absence. Her June pay met the required level and her August pay annualised above £22,400. The calculation used by the Home Office was also inadequately explained.
- Ms O: Her pay over the relevant period annualised at £22,693.56, above the required salary. Earlier shortfalls arose because training hours had not been passed to payroll, but Treal Care corrected the position with a lump-sum payment before the revocation decision. The Home Office did not identify a particular period in which she remained underpaid.
- Ms L: She had been paid less after working reduced hours while caring for her seriously ill son. Treal Care had mistakenly understood that compassionate leave permitted the salary reduction and later paid the amount she would have received had she not been on leave.
The High Court found the conclusions concerning Ms A and Ms O irrational and inadequately reasoned. Although Ms L had been underpaid at the date of the decision, the court considered the wider basis on which the revocation had been made and quashed it.
What did the Court of Appeal decide?
The appeal was heard on 6 October 2026 by Lord Justice Peter Jackson, Lord Justice Green and Lord Justice Fancourt. Giving the leading judgment, Lord Justice Peter Jackson dismissed the appeal.
The Home Secretary argued that where a CoS specifies an annual salary and the worker is paid monthly, the sponsor must pay at least one-twelfth of the annual amount each month. If a monthly payment fell below that figure, the sponsor would have to report the change; failure to do so could trigger mandatory revocation.
The Court of Appeal rejected that interpretation. It held that paragraph (aa) does not impose a rigid monthly payment rule, particularly where workers have uneven hours. A worker might work fewer hours in one month and more in the next, with the payments varying accordingly. It would not make sense to conclude automatically that the annual salary commitment had been breached merely because one month’s payment was lower.
“The question of compliance with an annual salary commitment … requires a rounded assessment”
Lord Justice Peter Jackson, summarising the central issue in the appeal
The court emphasised that it is for the court to determine the meaning of the published policy. The guidance did not say that one-twelfth of an annual salary must be paid in each and every month, and that requirement could not be treated as an inevitable consequence of the sponsorship scheme.
How should uneven pay be assessed?
The court held that paragraph (aa) calls for an assessment over a period of time. The period selected must have a fair relationship to the period stated on the CoS. The Home Secretary has a broad discretion to select an appropriate assessment period, subject to ordinary public-law requirements.
Decision-makers may examine monthly figures individually, but they must consider those figures together with all the available information. A conclusion cannot fairly be based on one month in isolation where the wider payment history points to a different picture.
The court also considered the wider framework. The sponsor guidance permits salary to be expressed by hour, day, week, month or year, and contains provisions dealing with unpaid absences. In addition, the Immigration Rules had been amended with effect from 8 April 2026 to address sponsored workers whose regular weekly hours vary. Paragraph SW14.3A allows relevant calculations to be made over a regular cycle of up to 17 weeks, including unpaid rest weeks in the average.
These provisions supported the conclusion that uneven working patterns require a broader assessment rather than an inflexible monthly test.
Does the Home Secretary retain discretion?
The Home Secretary also argued that there was no residual discretion once the conditions for a mandatory ground of revocation had been met. The Court of Appeal rejected that submission.
Lord Justice Peter Jackson explained that a policy must not be applied so rigidly that it fetters the decision-maker’s discretion. The opportunity for sponsors to explain an apparent shortfall or remedy it would have little purpose if any mathematical underpayment automatically required revocation, regardless of its circumstances or significance.
The court referred to the explanatory material accompanying the 2026 Immigration Rules amendment, which contemplated that where underpayment is identified, the sponsor would be notified and given an opportunity to explain or remedy the issue at an early stage.
The normal approach should therefore be to examine the payment data, seek an explanation where a shortfall appears, consider any remedial action alongside the figures, and then reach a rounded decision. The process must be structured and proportionate, rather than mechanistic.
What does the judgment mean for employers?
The ruling provides important clarification for organisations sponsoring migrant workers who are paid according to variable shifts or uneven working patterns. A lower payment in one month will not, by itself, establish that the sponsor has failed to meet an annual salary commitment.
Employers should nevertheless maintain accurate payroll and working-time records, ensure that the salary and working arrangements recorded on each CoS are correct, and comply with any applicable reporting duties. Where pay varies, clear records explaining the working cycle, unpaid leave, training hours, adjustments and any corrective payments may be important when a compliance concern is raised.
For the Home Office, the judgment confirms that sponsor-licence decisions must be based on the policy as written and on a fair assessment of the relevant evidence. A broad discretion to manage the sponsorship scheme does not amount to an unrestricted power to revoke a licence without adequate reasoning.
The Court of Appeal also rejected the argument that the revocation should stand under section 31(2A) of the Senior Courts Act 1981 because the outcome would highly likely have been the same. The original decision had relied on two grounds and three employees, and the court could not know what the Home Secretary would have decided if the only established issue had concerned Ms L and her compassionate circumstances.
Lord Justice Green and Lord Justice Fancourt agreed with the leading judgment. The appeal was dismissed.
Frequently asked questions
Does a sponsored worker have to receive one-twelfth of their annual salary every month?
No. The Court of Appeal held that the sponsor guidance does not impose an automatic requirement to pay one-twelfth of an annual salary in every month, particularly where the worker’s hours and pay vary.
How should the Home Office assess salary where working hours vary?
It should select an appropriate assessment period that bears a fair relationship to the salary period on the CoS and consider monthly figures in the context of all available information.
Can an employer explain or correct an apparent underpayment?
Yes. The court said the normal course is to seek an explanation where a shortfall is identified and, where appropriate, allow remedial action. Any explanation or correction should be considered alongside the payment data.
Did the Home Secretary win the appeal?
No. The Court of Appeal dismissed the appeal, leaving in place the High Court’s decision to quash the sponsor-licence revocation.
Which judges heard the appeal?
Lord Justice Peter Jackson gave the leading judgment. Lord Justice Green and Lord Justice Fancourt agreed.