Your employer can verify your entitlement to work by calling the UKBA's
sponsorship and employers' helpline.
Show your employer
this UKBA document which states the following:
1. It is often not possible to decide an application for an extension of leave until after the period of leave has expired. To prevent applicants from becoming overstayers through no fault of their own, section 118 of the Nationality, Immigration and Asylum Act 2002 introduced an amended section 3C into the Immigration Act 1971. Section 3C automatically extends the leave of a person who has made an application for further leave to remain during a period of extant leave. Technically, the leave is "treated as continuing".
To benefit, a person must have existing leave to enter or remain at the time when their valid application is made. Section 3C then prevents such an applicant becoming an overstayer during the period in which their application for a variation of leave remains undecided and, thereafter, while an appeal against any refusal could be brought or is pending.
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6. Where an applicant's leave has been extended by sections 3C or 3D and the applicant wishes to work or set up in business pending a decision on the application, our advice should be that the section extends the time limit and maintains any conditions attached to the original limited leave.
regards