What is a legal sponsor in the Netherlands?
Every foreign national (non-EU national) requires a sponsor to be able to legally reside and work in the Netherlands. Sponsorship can be in different forms. Either through a sponsorship by a company (company-sponsored application), sponsorship by a foreign, European, or Dutch national as a (core) family member or through a different purpose such as self-employment, secondment, studies. In 2004, the Netherlands introduced the kennismigrantenregeling, the Highly Skilled Migrant Scheme, to attract foreign nationals who are highly educated and skilled to come to the Netherlands in a fast and quick way.
This article will focus on company-sponsored applications, and particularly on applications by companies which are in possession of a sponsorship license (so-called recognised sponsors, ‘erkend referent' in Dutch).
What is a Recognised Sponsor?
According to the Dutch Immigration authorities (IND), a recognised sponsor is a “company, school or organisation that has an interest in the arrival of a third-country national”. It is divided into 4 categories: study, exchange, research (Directive (EU) 2016/801) and work.
There are certain conditions to become a recognised sponsor: the company needs to be registered in the Commercial register, financially solvable and stable. Background checks of the directors maybe potentially conducted (police clearances can be requested in case of doubts and if it is deemed necessary to do so).
Rights of a Recognised sponsor
Once a company has become a recognised sponsor, a combined application for entry, work and residency can be applied, shorter processing times apply, less supporting documents are required, and online applications are possible with the IND which saves a lot of time. The corporation between the IND and the recognised sponsor is based on self-control and trust. Once sponsorship is granted to a legal entity, it is granted for a lifetime. It can only be revoked in case of severe/frequent incompliances of the responsibilities of a recognised sponsor or in case no foreign nationals are hired.
Duties and Responsibilities of a (Recognised) sponsor
A recognised sponsor has certain legal obligations and responsibilities.
The three main conditions are the following:
- Obligation to provide information
- Obligation to keep and retain records
- Duty of care
- Return of the foreign national
The obligation to provide information implies:
- all relevant changes with respect to the conditions of residency need to be reported (i.e., Departure of a foreign national, change of employer, change of start dates);
- all relevant changes with respect to the conditions of Recognised Sponsorship need to be reported;
- if a statutory obligation cannot be met, this needs to be reported as well (e.g., if the administration has been destroyed by fire).
Relevant information needs to be reported within 28 days after the event, in case of a change of address of the administration, within 14 days. The obligations apply for both the sponsor and the employee. The employee will only be addressed if the sponsor does not adhere to his obligation to provide information.
Obligation to keep and retain records
All documents relevant to the employment relationship and the right to residence need to be saved in the administration for up to five years following the year in which the sponsorship for the relevant employee has been terminated. The legal entity is obliged to make the information at the address that is known with the IND available in hard copy or digitally.
Duty of care
A special requirement applies in cases of Highly Skilled Migrants, which entails that the employer is responsible for careful recruitment and selection of potential highly skilled employees and any intermediaries abroad.
Sponsors need to ensure for the return of their employee after the sponsorship has been terminated. The former employee needs to actually leave the Netherlands or prolong his stay in the Netherlands for a different residence purpose. If the former employee is still in the Netherlands within twelve months after the sponsorship has been legally terminated, and he/she needs to be deported by the authorities, the IND could recover the costs of deportation on the last known sponsor (so-called "administrative cost recovery”).
Highly Skilled Migrants also need to be aware of the rights and obligations they have regarding legal residence and working rights, and the recognised sponsor needs to ensure that they are aware of those rights and obligations that being a Highly Skilled Migrant brings with it.
Growing number of complaints/warnings being issued by the IND towards companies which do not comply with particular duties
Companies that own a sponsorship license in the Netherlands enjoy the benefit of a quicker and more lenient procedure for which no additional fee is charged by the Dutch Immigration authorities. As mentioned, the relationship is based on a trust between the enterprise and the IND. The IND does not check applications thoroughly submitted by recognised sponsors, as the verification lies with the company or the service provider. The IND focuses on compliancy checks afterwards.
However, some companies which fail several times to comply with the duties and responsibilities come on a radar of the IND and are monitored more strictly. Random checks and more documents are requested by the IND in case of doubts/incompliance with certain duties.
In addition, prior to becoming a recognised sponsor, the IND now examines companies with a lot more care, and checks the financial solvability and continuity more often than they used to in the past.
If there is the least doubt that financial numbers are insufficient to prove the financial solvability and continuity of the entity within the last 3 years, the IND will seek advice with to the RVO (Rijksdienst voor Ondernemend Nederland), the Dutch Enterprise agency. The RVO will then further examine the application, and processing times will at least increase by 6 months.
It is advisable for companies to pay special attention to the following:
- Leave of absence or reduction in working hours
- Deduction from salary may lead to drop below applicable salary norm
- (Temporary) working and/or residing abroad
- Be careful of a shift of (main) residence abroad. Can lead to negative effect on Dutch residence permit (+ tax and social security)
- Calculation salary to meet threshold
- Subject to strict requirements on monthly basis
- Allowances/benefits may only be added if: mention in the contract, specified, guaranteed, fixed, paid directly to the bank account of the employee
- Family members of employee
- Who is considered family?
- Accompanying or joining later?
- Documentation (legalised certificates) and processing times.
Sanctions by the IND in case of Non-compliance
If the legal sponsor does not fulfil his obligations, the IND can impose the following sanctions:
A warning - The warning is valid for 24 months. If within this term the same legal obligation is violated again, the IND could impose an administrative fine. In case of a serious violation, no warning will be issued, and a possible consequence could be a withdrawal of the residence permit from the foreign national/sponsorship license.
Administrative fines - Administrative fines vary between a maximum of € 1,500 for natural persons and € 3,000 (100% increase of €1,500) for legal entities, companies, and other organisations.
Criminal offence - In very severe cases, a criminal offence maybe reported and persecuted by the public prosecutor (administrative sanctions are not used in this case).
Revoking the sponsorship license
A company can also lose the recognised sponsorship status or sponsorship status can be temporarily suspended. This can lead to foreign nationals who are in possession of valid residence permit, to lose their status with this legal entity and need to look to change their residence status to a different purpose. Once the recognised sponsorship status is lost by a company, it will no longer be possible to hire Highly Skilled migrants in a quick and easy way, but only through more bureaucratic ways for which processes take longer and more documents will be required.
Expat Management Group and Audits
Expat Management Group ensures that companies comply with the legal requirements. It assists in submitting recognised sponsorship applications whereby a pre-screen and an estimation is made from the entity to determine whether the company is eligible for recognised sponsorship and if a lot of additional documents maybe potentially requested by the Dutch authorities.
Expat Management Group is assisting companies with preparing for audits from the Dutch labour authorities/Inspectorate. Recently we see a growing number of complaints/warnings being issued by the IND towards companies which do not comply with particular duties, such as the duty to inform the IND when an employee leaves the company, or when a new employee starts to work at a new company. In addition, problems also arise with payrolling when companies do not pay the employee what is mentioned in the employment contract, or when certain allowances are being paid in a way which is not in accordance with Dutch immigration law rules.
In principle, inspection visits by the IND are announced in advance, and agreements are made about the necessary preparation the organisation to be inspected must make for the inspection visit to run as smoothly as possible.
The inspection visit consists of at least an interview, and inspection of all documents related to the obligations of the recognised sponsor.
During the visit all facts related to compliance with the obligations are recorded in a report. This will be signed after the interview and of which the recognised sponsor immediately receives a copy.
A Report of Findings is drawn up based on the report, the documents provided and other findings.
Lonneke Kerpershoek, Immigration Manager at Expat Management Group, stresses that the most frequent reason of incompliance are problems with payrolling. According to Ms. Kerpershoek, many companies are just not aware of the impact this has from a legal immigration perspective if certain allowances are withheld or are on shadow payrolls which cannot be easily examined by the Dutch Inspectorate.
Nihat Kurt, Founder and Partner at Expat Management Group, agrees that it is crucial to create awareness of companies regarding their duty to be transparent, and to have their employee files in order, so to be able to show all relevant data if requested by the Dutch authorities on the spot.
Mr. Kurt thinks that the change of policy of the IND is a result of many companies not taking their obligations seriously: “We see that once companies have owned the sponsorship license, they are not yet aware of the duties this brings with it and often when it is too late, they call our offices asking for assistance”.
As random compliancy checks of companies occur more frequently in the last years, companies need to be aware of their duties and obligations to adhere with Dutch immigration law rules. To avoid big financial fines and in the worst-case scenario, losing the recognised sponsorship license, HR departments need to ensure to have all relevant documents on file and are ready to show these to the Dutch authorities in case of an Inspection. Relevant changes need to be reported in time to the IND and a careful selection of stuff is important to comply with the duty of care.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.