On 31 December 2024 the Home Office issued a number of updates to the sponsor guidance. We consider some of these, and the impact they may have on those that hold, or are looking to apply for, a sponsor licence below.

1. Changes to the costs employers can recoup

It is common practice for employers to have clawback agreements in place due to the ever-increasing costs associated with visa sponsorship. By way of example a five-year Skilled Worker visa can exceed £10,000. As a result, employers often seek to utilise clawback agreements as a means of protecting their investment should employment terminate within a set period of time.

 

Following a commitment made in the written ministerial statement of 28 November 2024 on 31 December 2024, the Home Office updated its guidance to confirm that employers can no longer recover certain sponsorship related expenses from sponsored employees on the Skilled Worker route. Whilst the ban currently only applies to the Skilled Worker route, the ministerial statement does confirm that it will in time also be extended to other sponsored work routes.

The guidance now confirms Skilled Worker sponsors are prohibited from passing on the following costs to sponsored workers:

  • Certificate of Sponsorship (“CoS”) fee for any CoS assigned on or after 31 December 2024; and

  • Skilled Worker sponsor licence fee (including the fee for adding that route to an existing licence) and any associated administrative costs (including premium services) where the sponsor seeks to recoup, or attempt to recoup, that fee or those costs on or after 31 December 2024.

Employers were already prevented from recovering the Immigration Skills Charge.

Frustratingly, no definition has been provided as to exactly what the Home Office mean by “associated administrative costs” It could therefore be the case it also extends to professional legal fees of advisers assisting on sponsor licence applications.

The restriction on “associated administrative costs” is not mentioned in relation to the CoS or visa application. Therefore, whilst unclear whether this prohibition would apply to these two elements, we would advise against seeking to recover any CoS allocation priority costs or legal fees in relation to the CoS or visa application.

Our interpretation of the changes is that it is still permissible for an employer to seek to re-coup other immigration-related costs, such as visa application fees, priority fees for the visa application and the Immigration Health Surcharge if it has paid these fees on behalf of the sponsored worker.

The Home Office has confirmed that should a sponsor breach any of the above this will normally lead to the sponsor licence being revoked. Revocation of a licence may lead to reputational damage, issues with recruitment as well as causing a high level of distress for any existing sponsored workers who will either need to find a new sponsor, an alternative visa option, or leave the UK.

What steps should sponsors be taking now?

With the rise of compliance action taken by the Home Office during 2024, which is likely to continue into 2025, it is vital that sponsors are aware of these updates and do not seek to pass on costs to individuals in breach of these changes.

Therefore, to ensure sponsors are compliant with the changes we would urge you to:

  • Review and update any claw-back agreements or other documents that reference passing on sponsorship costs to workers, including agreements entered into pre-31 December 2024, which continue to have effect after that date;

  • Review any existing employment and immigration policies to check whether any amendments are needed in light of the above;

  • Ensure all employees involved in the sponsorship process are aware of these changes; and

  • Consider how this may impact the organisations budget for immigration.

2. Changes to key personnel requirements

If you apply for your sponsor licence on or after 31 December 2024, you must nominate at least one Level 1 User who:

  • is a director, employee or partner within the organisation; and
  • holds “settled worker” status, as defined in section S1 of Part 2: Sponsor a worker unless you fall into one of the extremely limited exceptions.

Previously these two requirements could be filled by separate individuals.

The change is likely to lead to increased challenges for start-up businesses who will usually have a smaller UK workforce to select from.

3. Definition of “you” and “your” within the guidance expanded

The definition as to what constitutes the sponsor organisation or prospective sponsor organisation has been widened so that it now also includes any person recorded on Companies House as a Persons with Significant Control. This is in line with the Home Office’s aim of ensuring that individuals with significant influence remain accountable for sponsorship compliance.

4. Increasing costs

The Government has also announced proposals to increase certain immigration fees, including the cost to issue a CoS (Next steps for a more efficient immigration system - GOV.UK).

The government has stated that the increase to fees should raise an additional £269 million in revenue, which will in turn, help it achieve its aim of reducing the costs to taxpayers of the UK immigration system.

The proposals would see the:

  • costs of a CoS more than doubling to £525; and
  • Electronical Travel Authorisation (ETA) applications increasing to £16 amongst other proposed increases.

These proposed costs should be factored into any organisational budgets.

If you would like to discuss any of these changes further, please do reach out to our immigration team. We are anticipating another year of immigration changes particularly as we await the upcoming White Paper from the Government and Migration Advisory Committee review.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at January 2025. Specific advice should be sought for specific cases. For more information see our terms and conditions.

Date published

27 January 2025

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