Khan, R (on the application of) v The Secretary of State for the Home Department

In a challenge to refusal of a Tier 2 sponsor licence, the ordinary rationality standard applies. The decision-maker’s specialist expertise does not prevent a decision from lacking a rational foundation.

Under the resident labour market test, the sponsor must show that no suitable settled worker is available. It is insufficient merely to select the strongest candidates and appoint the best candidate from that shortlist. The sponsor must consider whether suitable settled workers exist among the wider applicant pool.

A qualification requirement is not irrational merely because an employer later makes an exception for a particular candidate. However, reliance on inaccurate evidence, misunderstanding material information, or ignoring a material part of the job description may render a decision unlawful.

Exmoor Surgery challenged the refusal by UK Visas and Immigration of its application for a Tier 2 (General) sponsor licence. The application concerned the employment of an Indian national as a business development manager.

The refusal relied on alleged failures in the resident labour market test, an allegedly exaggerated MBA requirement, the surgery’s use of an accountant and outsourced payroll, and the classification of the role under the wrong Standard Occupational Classification code.

The central issues were whether the decision was irrational and whether the Secretary of State was entitled to conclude that the role could be filled by a suitable settled worker.

1. Application dismissed. The court held that the Secretary of State was entitled to refuse the licence under Annex 1(o) of the sponsor guidance because Exmoor Surgery had not shown that no suitable settled worker was available.
2. The ordinary rationality standard applied. The specialist expertise of the Secretary of State in the sponsor-licensing field did not prevent a decision from lacking a rational foundation. The court accepted the approach stated in R (Raj and Knoll Ltd) v Secretary of State for the Home Department [2016] EWCA Civ 770, including the importance of compliance with the sponsor guidance.
3. The resident labour market test required the sponsor to show that no suitable settled worker was available. Selecting the five strongest applicants did not discharge that obligation. After deciding that the migrant was the best candidate within the shortlist, the surgery had to consider whether potentially suitable settled workers existed among the remaining applicants. A settled worker suitable for the advertised role had to be preferred even if the migrant was the better candidate.
4. The challenge to the MBA requirement succeeded. The fact that the employer shortlisted a candidate without an MBA did not establish that the requirement was exaggerated. An employer may formulate a requirement as essential and later make an exception in light of an individual applicant’s experience.
5. The reasoning based on the surgery’s accountant and outsourced payroll was irrational. The job description gave the business development manager overall responsibility for financial matters, while allowing those tasks to be delegated. Outsourcing particular tasks did not show that the role was not genuine.
6. The reasoning on the SOC code was also flawed. UKVI inaccurately stated that the Office for National Statistics had confirmed code 1241. The ONS had indicated that code 3545 would usually be advised based on the information provided, while suggesting that the incomplete job description might fit code 1241 better. UKVI failed to account for the omitted duty to tender for new services and business opportunities. These errors were not cured by the response to the letter before claim.
7. Those errors did not alter the outcome. The lawful and sufficient basis for refusal was the failure to demonstrate compliance with the resident labour market test.

This was a first-instance judicial review. An earlier challenge to refusal of the licence application resulted in a consent order dated 31 October 2016 requiring fresh consideration of a new application. The present claim challenged the subsequent refusal dated 13 December 2016.