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In a significant policy shift, sponsors can no longer pass on specific sponsorship costs to Skilled Workers. Businesses who wish to sponsor international talent will now be required to pay for Certificates of Sponsorship, sponsor licences and associated costs themselves.

The cost of sponsorship for a five-year Skilled Worker visa can exceed £10,000 and most of the time, the cost is borne by the sponsor. Businesses have the option of protecting their investment with ‘clawback’ agreements, which seek to recoup immigration-related costs from the worker in some circumstances, e.g. if the employment terminates within a certain period. The UK Government is looking to restrict recoupment activities after a growing number of allegations of work-related debt, exploitation and unfair treatment of staff in the care sector.

The change of policy was announced in Labour’s ministerial statement on 28 November 2024 and the sponsor guidance was updated to implement the changes on 31 December 2024.

The ban currently applies to the Skilled Worker route, but the ministerial statement confirms it will also be extended to other sponsored work routes. We will update you if a timeline becomes available.What costs are prohibited and when does the ban come into effect? 

What costs are prohibited and when does the ban come into effect? 

Skilled Worker sponsors are expressly prohibited from passing on the following costs to workers:

  • The sponsor licence fee or associated administrative costs for applications made from 31 December 2024. This includes a request to add the Skilled Worker route to an existing sponsor licence. Government fees can be in the region of £2,000 if using priority processing services.
  • The Certificate of Sponsorship (CoS) fee for CoS assigned on or after 31 December 2024. The CoS fee is currently £239 per worker. This cost can be substantial, especially for sponsors sponsoring a large number of workers.

The changes align with the existing prohibition that prevents a sponsor from passing on the Immigration Skills Charge (ISC) to workers.

It is still permissible for an employer sponsor to recoup other immigration-related costs, e.g. any immigration application fees, Home Office commercial partner service charges and/or Immigration Health Surcharges it has paid on behalf of a sponsored worker or their dependants. 

What happens if a sponsor passes on prohibited costs to a worker?

Annex 2 of Part 3: sponsor duties and compliance states that the Home Office will normally revoke your licence if:

  • (cc) You assign a Certificate of Sponsorship to a Skilled Worker on or after 31 December 2024 and you have asked that worker to pay some or all of the charge for it, or you have recouped, or attempted to recoup, some or all of the charge for it from them.
  • (dd) You are licensed on the Skilled Worker route and you have asked a worker to pay some or all of the sponsor licence fee and/or an associated administrative cost, or you have recouped, or attempted to recoup, some or all of the fee and/or cost from them – this applies where the application for a sponsor licence (or request to add the Skilled Worker route to an existing licence) was made on or after 31 December 2024.

Revocation of a sponsor licence usually results in reputational damage, financial loss, and significant upheaval for existing sponsored workers who will need to find a new sponsor or leave the UK.

What do you need to do?

You should:

  • Review and update your immigration policy and any related employment policies that refer to passing on sponsorship and other immigration-related costs to workers
  • Review and update any documents such as employment contracts or side letters that refer to passing on sponsorship and other immigration-related costs to workers (including ‘clawback’ agreements)
  • Consider how your budget for immigration is impacted and if this has consequences for the future recruitment of international talent and continued sponsorship of existing Skilled Workers 

If you need further information or advice on next steps, please get in touch with your usual Lewis Silkin immigration team contact.

 

 

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