Modern Slavery and Your Sponsor Licence: What HR Teams Must Be Able to Prove

Key Takeaways

• A modern slavery allegation is settled on the employer's paperwork, not on its intentions. Section 28 of the National Minimum Wage Act 1998 presumes a worker was paid below the minimum wage unless you establish otherwise, so silence in your files counts against you.
• Failing to keep minimum wage records is itself a criminal offence under section 31 of the same Act. Three of the six minimum wage criminal offences concern records, and since 1 April 2021 they must be kept for six years rather than three.
• You must be able to produce the records for one worker and one pay reference period in a single document on request. Clock-in sheets in a binder and a payroll export elsewhere do not meet that test.
• You are not a first responder. The duty to notify in section 52 of the Modern Slavery Act 2015 binds ten named public authorities, and a private employer cannot refer anyone into the National Referral Mechanism. Much employer-facing content online says otherwise and is wrong.
• Three regimes run at once and none waits for the others: the criminal case sits with the police and the courts, your licence with UKVI, and pay with the Fair Work Agency or a tribunal.
• Under sections 1 and 2 of the Modern Slavery Act 2015 the worker's consent is no defence, and the maximum sentence on indictment is life imprisonment.
• The Home Office statutory guidance under section 49 lists an employer who cannot show records of wages paid to workers as an indicator of trafficking for labour exploitation. Weak filing is not read as weak filing.
• Sponsor guidance part 3 never uses the words modern slavery. Labour exploitation reaches your licence through the wider UK law duty at paragraph C1.53 and Annex C2(a) and C2(n), which is why most sponsors never see it coming.
• From 8 October 2026 a Skilled Worker with a positive Conclusive Grounds decision can be permitted to work for any employer. Your reporting duties are unchanged. Your practical hold over a worker who has been exploited is not.
• Records are the whole argument, so the tooling matters. Our HR compliance software holds hours, pay, deductions, proper clock-in and clock-out records, absence and holiday records and disclosures as one auditable record per worker, and a compliance audit finds the gaps while you still have time to close them.

Introduction

Most guidance written for employers on modern slavery is about spotting victims. This post is about something else: what happens to your organisation when an allegation is made, who decides it, and what you will be asked to produce. That is the question an HR or compliance lead actually needs settled.

The answer is uncomfortable in a useful way. An allegation of this kind is not resolved by explaining your culture or producing a policy. It is resolved on evidence, and the law has already decided who must produce it. In any civil dispute about pay the presumption runs against the employer, and where the records that would settle the point do not exist, that is not a neutral gap. It is a criminal offence in itself, and it removes the only answer you had.

Two things follow. You have very little control over the process: you cannot refer a worker into the National Referral Mechanism, you cannot stop a referral, and you will not be consulted about the decision. You have complete control over the evidence, and the evidence decides your position. Hence a post about records rather than awareness training.

Everything below is current as at 10 September 2026 and dated where a rule carries a date. Anything proposed rather than made is labelled as proposed. This post deals with the employer's position. Our sister firm WorkPermitCloud covers the worker's position, including how someone becomes a recognised victim, in its post on changing employer on a Skilled Worker visa after modern slavery.

Three Regimes, Three Decision Makers, One Set of Facts

The most common mistake here is treating a modern slavery allegation as one problem. It is three, decided in three places by three bodies applying three standards. A clean outcome in one is no protection in another, which is why the response your immigration adviser recommends and the response a criminal solicitor would recommend are not the same. You need to know which conversation you are in.

Note that the Fair Work Agency appears twice. Since 7 April 2026 it has replaced the Gangmasters and Labour Abuse Authority and holds powers across the National Minimum Wage Act 1998, the Gangmasters (Licensing) Act 2004, the Employment Agencies Act 1973, the Fraud Act 2006 and the Modern Slavery Act 2015. One inspection can open on unpaid wages and end somewhere very different. Its enforcement statement adds that where serious exploitation falls short of a modern slavery offence, it may prosecute under the Fraud Act 2006 instead.

Why the Records Decide It

This rests on two sections of a statute that has nothing to do with immigration.

The presumption runs against you

Section 28 reverses the ordinary burden of proof. In a tribunal complaint about unauthorised deductions from wages, and in a claim to recover additional pay, it is presumed the worker was paid less than the minimum wage unless the contrary is established. GOV.UK puts it plainly: in civil cases the burden is on the employer to prove that they have paid the minimum wage.

Read that against an allegation of forced labour, which normally includes unpaid or underpaid hours. If you cannot produce hour by hour records tied to what was paid, you are not in a dispute you might lose. You have already lost that issue, and the finding sits underneath everything else being alleged.

Not keeping the records is the offence

Section 31 makes it a criminal offence to fail to keep or preserve the records the regulations require. It stands on its own and does not wait for an underpayment to be proved. GOV.UK lists six criminal offences relating to the minimum wage and three concern records: failing to keep or preserve them, causing or allowing a materially false entry, and producing records known to be materially false. An employer who deliberately fails to pay may face an unlimited fine, and investigators can use search and seize powers under the Police and Criminal Evidence Act 1984.

This is where paper timesheets and verbal overtime agreements fail. Not because paper is forbidden, but because of what the records are required to do.

The record-keeping duties under Appendix D of the sponsor guidance sit alongside this rather than replacing it. Appendix D tells you which documents to hold for each sponsored worker. The minimum wage rules tell you what those documents must prove, and for how much longer you must hold them. A sponsor who has satisfied Appendix D but cannot reconstruct a pay reference period has met one duty and failed the one that decides an exploitation allegation.

You Are Not a First Responder, and You Cannot Refer Anyone

This needs saying plainly, because a great deal of employer-facing content gets it wrong. The duty to notify in section 52 of the Modern Slavery Act 2015 applies to a closed list: chief officers of police, the chief constable of the British Transport Police, the National Crime Agency, county councils, county borough councils, district councils, London borough councils, the Greater London Authority, the Common Council of the City of London and the Council of the Isles of Scilly. Ten entries. An eleventh, the Gangmasters and Labour Abuse Authority, was removed on 7 April 2026 by the Employment Rights Act 2025 when the Fair Work Agency took over its functions. Private employers have never been on that list.

Nor can you make a referral. Only a designated first responder organisation can refer a potential victim into the National Referral Mechanism, and where that person is an adult, the adult must consent. You are not one of those organisations. The Fair Work Agency is, which is worth knowing, but that puts a route in their hands rather than yours.

Three consequences follow, and they are why this section is more than a point of accuracy.

• You cannot discharge your responsibility by making a referral, so a policy promising that you will is a policy you cannot follow. Rewrite it.
• You cannot prevent, delay or influence a referral made by someone else, and any attempt will be read as interference with a criminal process rather than as a compliance step.
• Because you do not control the process, the only thing you can prepare is the evidence. That is the entire scope of what an employer can usefully do, and it happens to be what decides the outcome.

The statutory guidance issued under section 49, currently version 4.7 of 27 August 2026, sets out the indicators and the roles of every organisation involved. Read it once so your managers recognise what they are looking at. It does not give you a role you do not have.

The Risk Register: What Ordinary Practice Looks Like From Outside

Almost nothing below started as exploitation. Each is a normal arrangement put in place for a reasonable reason. The difficulty is that every one also appears, in nearly the same words, on the Home Office list of indicators of forced labour and trafficking for labour exploitation. What separates an ordinary employer from a suspect is not the practice. It is whether the paperwork explains it.

Treat the third column as a shopping list. If you cannot produce that item today, for a named worker and pay period, the row is a live exposure.

One point about the fourth row, because it is the one sponsors resist. Paper is not prohibited. Being unable to produce the record is. If clock-in sheets sit in a ring binder in the back office and payroll sits with an external bureau, you cannot produce a single document for one worker and one pay reference period without a reconstruction, done under time pressure, in front of someone already treating the gap as an indicator.

How Labour Exploitation Reaches Your Licence

Search sponsor guidance part 3 for the words modern slavery and you find nothing. That absence has persuaded many sponsors the two subjects are unconnected. They are connected, but through a general duty rather than a named one.

Paragraph C1.53 imposes a duty to comply with wider UK law other than immigration law, and the first item on its list is complying with UK employment law, including the National Minimum Wage, the Working Time Regulations, pension enrolment where required, and ensuring your workers are aware of their employment rights. Breaching employment law is therefore breaching a sponsor duty, and the annexes take over from there.

Two things stand out. You do not need a conviction to lose a licence: Annex C2(a) needs only a finding that you failed to comply with a duty, and C2(ff) needs only reasonable suspicion of risk. The criminal standard of proof is irrelevant to UKVI. Second, mind the gap between the annexes. A conviction for trafficking for sexual exploitation triggers mandatory revocation under Annex C1(b), while a conviction for forced labour is not listed there and travels through C2(n) instead. The destination is the same. The route matters only if someone tells you labour exploitation is not on the list, which is technically true and wholly misleading. Our guide to sponsor licence suspension, downgrade and revocation sets out what each outcome means.

Hospitality and Restaurants: Where This Actually Bites

Hospitality combines features that turn ordinary habits into evidential problems. None is unlawful. All are hard to evidence after the fact, and several map onto the indicator lists.

Hours that nobody wrote down

Split shifts, staying behind to close, a pre-service briefing, a delivery signed for on a day off. In a restaurant the gap between rostered hours and hours actually worked is normal and often unrecorded. Every hour worked counts, and the burden of showing what was worked and paid is yours. A rota is not a time record. A rota shows what you intended.

Accommodation above the premises

Live-in arrangements are common in hotels and family-run restaurants, and frequently informal. The accommodation offset applies whenever you provide living accommodation, including where a third party is the landlord but your business, its owners or its directors are connected to that landlord or benefit from the arrangement. It applies even where the worker chose to accept the offer. Charges for gas, electricity, water and furniture count towards the total, and any excess over the offset reduces minimum wage pay.

Cash, tips and family businesses

Paying a sponsored worker in cash is a ground on which UKVI will normally revoke, with no de minimis in the wording. Tips create a second problem, because they do not count towards minimum wage pay and must not be used to bridge a shortfall. In a family-run business, wages, loans and household money mix easily, and the resulting records look like what an investigator expects to see in an exploitation case, even where nothing improper has happened.

Agency and casual staff working alongside your sponsored workers

A kitchen typically holds sponsored workers, directly employed staff and agency staff on the same service. Your minimum wage records cover the people you pay, but Fair Work Agency inspection powers extend to premises used in connection with your business, including those of businesses that place and employ agency workers. An allegation about anyone on your site is assessed by looking at how your site runs.

The roles themselves

Chefs, bar managers and bakers lost Skilled Worker eligibility at the skill level change of 22 July 2025, so a hospitality sponsor's remaining roles are narrower and more closely scrutinised than before. Getting the occupation code and going rate right is a precondition of everything above, because a salary that does not match the certificate of sponsorship is both a reporting failure and the start of a pay dispute. Our guide to SOC codes and going rates covers it.

Care Providers, Briefly

Care is where enforcement here has been concentrated, and it has its own rules that are not repeated in this post. Two minimum wage traps are specific to it: travel time between assignments counts as working time, and sleep-in shifts have their own treatment. Both produce underpayment that is invisible on a payslip and obvious in an inspection. Everything else, including the three month rule and the CQC requirement, is in our care sector sponsor licence compliance guide.

What To Do When a Sponsored Worker Discloses Exploitation

The disclosure rarely arrives labelled. It arrives as a request for different shifts, an unexplained absence, a resignation without notice, or a question about whether the worker can leave. Whoever receives it is unlikely to be in HR.

What not to do, in order of the damage it causes

• Do not investigate it as a grievance. An internal investigation into what may be a criminal offence committed by your own managers can amount to interference with evidence and with a witness, and it will be characterised that way afterwards.
• Do not try to establish whether the account is true before acting. That assessment belongs to trained decision makers, and attempting it is precisely what turns a disclosure into an allegation of suppression.
• Do not offer money, a settlement agreement or a confidentiality clause in response. Nothing you can pay is worth what that document will look like later.
• Do not contact the worker's family, their previous employer, or whoever introduced them to you.
• Do not stop paying the worker, change their duties or move their accommodation while the matter is unresolved. Each is a listed indicator on its own.
• Do not delete, tidy or reconstruct any record touching that worker. Preserve everything as it stands, including the messy version, and note the date you preserved it.

What to do

Take advice before you act, from someone who can see all three regimes at once. Preserve the evidence and log the preservation. Record what was said, by whom and when, in the words used, and keep that record away from anyone named in it. Then deal with your reporting duties, which run on their ordinary deadlines and are not suspended because something serious is happening.

That last point catches sponsors out. A disclosure does not pause the sponsor management system clock. If the worker stops attending, the absence reporting duty starts counting regardless of the reason.

Report the facts and nothing more. Sponsor guidance warns that what you report about a worker's non-attendance or non-compliance may be used to cancel their permission or take enforcement action against them. Reporting an unexplained absence is a duty. Volunteering a theory about why the worker left is not, and it will be visible later. Our complete sponsor duties checklist sets out the full reporting picture.

What Changes for Sponsors on 8 October 2026

Statement of changes HC 584, laid on 3 September 2026, adds a provision to Appendix Skilled Worker taking effect on 8 October 2026. A Skilled Worker referred into the National Referral Mechanism who receives a positive Conclusive Grounds decision during their most recent permission may have their work conditions varied so that any work is permitted, including self-employment and voluntary work, with an exception for professional sport.

Three things change for a sponsor and one does not. A worker in that position is no longer economically tied to you for the rest of their permission, so the leverage that makes exploitation sustainable disappears. The Home Office has said why: the explanatory memorandum states the change is intended to incentivise victims to come forward early and to guard against those who seek to weaponise the sponsorship system in order to exploit vulnerable workers. That is the Home Office describing sponsors, in a published document, and a fair guide to how a future case will be read. Third, a worker who leaves is now more likely to leave with an account rather than simply disappear.

What does not change is your duties. Reporting obligations run exactly as set out above, on the same deadlines, and record-keeping duties are untouched. The rule alters the worker's position, not yours.

How the mechanism works, how a decision is reached, who can refer and how this compares with leave granted to confirmed victims of trafficking are all matters for the worker. Our sister firm WorkPermitCloud covers them in its post on changing employer after modern slavery, which is the page to send anyone asking about their own position.

Modern Slavery Statements: Confirmed Law and What Is Only Proposed

This is where employer-facing content most often blurs the line, so it is set out as two columns.

Below 36 million pounds you have no statement duty today, and should plan on the assumption that this will change rather than act as though it already has. Above the threshold, this year's statement is still governed by the current rules in section 54. Watch the Bill's progress rather than the commentary about it.

A Readiness Checklist

Six questions. If you cannot answer one with a document rather than a description, start there.

• Can you produce, in a single document and within an hour, the hours worked and the pay received for one named worker in one named pay reference period from eighteen months ago?
• For every worker you house, can you show the accommodation agreement, the charge, and the offset calculation for each pay reference period?
• Can you show that no original identity document is held anywhere in the business, and that every document copied at a right to work check was returned the same day?
• Is there a written log of every concern raised by a worker, held where the manager complained about cannot see or edit it?
• Can you evidence what you told each sponsored worker about their employment rights, and when, as paragraph C1.53 requires?
• Do your managers know to escalate a disclosure rather than investigate it, and can you produce the training record that says so?

How Can WPC HR Help?

The argument of this post is section 28, not marketing. The burden of proof is on you, the records are the evidence, and most sponsors find the gap at the worst possible moment. Our HR compliance software helps you close that gap. It holds hours, pay, deductions, proper clock-in and clock-out records, absence and holiday records, right to work checks, reporting deadlines and disclosure logs as one dated record per worker, so producing a pay reference period in a single document is a query rather than a project, and the six year retention period looks after itself.

If you would rather know where you stand before anyone asks, a sponsor licence compliance audit is faster. We test your files the way an inspection would, by picking workers and periods and asking you to produce, and what comes back is a priority-ordered list of the rows above that you cannot currently answer. For the worker's side of a live situation, our sister firm WorkPermitCloud acts through its sponsorship duties service.

Get in touch with our team via our contact page.
📞 Call us: 020 8087 2343
📅 Book a free compliance audit: wpchr.co.uk/sponsor-licence-compliance-audit
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Conclusion

A modern slavery allegation is not decided by whether you are a good employer. It is decided by what you can produce, and the law has settled that you must produce it. Section 28 puts the burden on you. Section 31 makes the absence of records an offence in itself. The Home Office indicator list treats an employer who cannot show records of wages paid as a sign of trafficking. Together those three facts make record keeping the defence rather than an administrative virtue.

You are not a first responder, you cannot refer anyone, and you have no role in the decision. That is not a reason to do less. It is the reason to concentrate on the only part you control. From 8 October 2026 a recognised victim on a Skilled Worker visa can work anywhere, which removes the economic hold that made these situations survivable for the employers running them.

The practical test is in the checklist. Pick a worker, pick a pay period from last year, and ask for the single document. Whatever happens next is your real position.

Glossary