The UK government has introduced significant changes to the rules governing sponsor licences, which employers hiring skilled migrant workers must be aware of. These updates introduce stricter cost regulations, tighter compliance measures, and serious consequences for non-compliance, including the risk of sponsor licence revocation.
If your business relies on hiring international talent, now is the time to review your sponsorship policies and ensure they meet the new legal requirements.
Passing on the Costs of Sponsorship
Concerns about the exploitation of sponsored workers, particularly in the care sector, have prompted the government to clarify which costs must not be passed on to employees.
Until now, the only explicitly prohibited charge was the Immigration Skills Charge, which is payable each time a Certificate of Sponsorship is issued for a worker. This charge is £1,000 per year for most employers and £364 for small or charitable organisations. Passing this cost on to a sponsored employee has always carried the risk of licence revocation.
The new guidance extends this prohibition further. Employers may no longer recoup or attempt to recover the Skilled Worker sponsor licence fee, the cost of a Certificate of Sponsorship for any Skilled Worker assigned on or after 31 December 2024, or any associated administrative costs. The term “associated administrative costs” includes UK Visas and Immigration (UKVI) premium services, which can cost up to £25,000.
A sponsor licence is intended to benefit the employer by allowing them to hire from outside the UK, so it is unsurprising that the Home Office has now made it explicit that these costs should not be transferred to employees. Any employer that attempts to pass on these expenses risks losing their sponsor licence, which would result in their sponsored workers having their visas curtailed.
Legal advice should always be sought before including any cost-recovery clauses in employment contracts.
Changes to Key Personnel Requirements
The new guidance also introduces stricter requirements for those managing a sponsor licence. From 1 January 2025, businesses applying for a sponsor licence must have at least one Level One User who is both a settled worker and an employee, director, or partner of the organisation.
Previously, these two requirements could be fulfilled by separate individuals. Employers that already have two different people meeting these criteria may continue with this structure for now, but the Home Office has warned that they may be required to consolidate this role in the future.
The change applies to all sponsors of workers, including those hiring temporary workers, unless the Authorising Officer on the licence holds a specific immigration status, such as an Innovator Founder or UK Expansion Worker visa. This will particularly affect start-ups and overseas companies looking to establish a UK presence, as they may need to consider alternative immigration routes before obtaining a sponsor licence.
Key personnel on a sponsor licence must now also have a valid National Insurance number unless they are exempt. Additionally, anyone legally prohibited from being a company director is now barred from holding a sponsorship role unless a court has granted them permission.
Employers should review their key personnel to ensure they comply with these new requirements.
Persons of Significant Control and Sponsorship Eligibility
A person with significant control over a business can now impact its ability to obtain and retain a sponsor licence. This means that the financial and legal history of major shareholders or directors could affect whether a company can sponsor migrant workers.
If a person with significant control has been involved in misconduct, insolvency, or regulatory breaches, this could lead to a sponsor licence being refused or revoked. Businesses with multiple directors or complex corporate structures should seek legal advice to ensure compliance.
Restrictions on Sponsoring Workers in a Personal Capacity
It is now explicitly prohibited for an individual or household to sponsor a migrant worker in a personal capacity unless they are conducting business or providing a recognised service.
Employers can no longer use a sponsor licence to hire a nanny, housekeeper, or au pair. Even if a domestic worker has already been sponsored, it will no longer be possible to issue them a new Certificate of Sponsorship. The only exception to this rule applies to private servants in diplomatic households, where sponsorship is permitted under the International Agreement route.
New Requirements for Care Sector Sponsorship
The care sector has faced increased scrutiny following multiple cases of sponsor licence misuse. New rules require care providers with multiple branches to provide up-to-date Care Quality Commission status checks for each branch as well as their head office.
Employers in this sector should be prepared for more rigorous Home Office audits and ensure their compliance procedures are up to date.
Stricter Rules on Recruitment Practices and Licence Refusals
New guidance clarifies that businesses must not use their sponsor licence to act as a recruitment agency supplying staff to third-party organisations. If the Home Office determines that a company is operating in this way, it will be grounds for a mandatory refusal or revocation of its licence.
While sponsors may place workers at third-party sites under specific contractual arrangements, any attempt to act as an employment agency will result in the loss of their sponsorship rights.
Businesses applying for a sponsor licence, adding a new immigration route to their existing licence, or assigning a Certificate of Sponsorship for a Skilled Worker, Scale-up Worker, or Global Business Mobility Worker must also demonstrate that they are offering genuine employment at the appropriate salary and skill level.
Digitalisation of Immigration Documents
Biometric Residence Permits have now been replaced with digital proof of the right to work. Employers should familiarise themselves with the new eVisa system, which is gradually replacing physical documentation. In some cases, short-term passport vignettes and ink stamps will still be used as proof of status.
Employers must ensure that their right-to-work check procedures are updated to reflect these changes.
Planned Increases to Immigration Fees
A draft immigration fees order has been published, which is expected to increase various Home Office charges later this year. The most significant change for sponsors will be an increase in the maximum charge for a Certificate of Sponsorship from £239 to £525.
Fee changes usually take effect at the start of the tax year, so businesses should budget accordingly.
Compliance is More Important Than Ever
HR teams should take immediate steps to review their sponsorship policies, key personnel, right-to-work procedures, and any contractual terms related to sponsorship costs.
The government has already increased enforcement measures, and further penalties are expected under new proposals linked to the Employment Rights Bill. These include:
- Extending enforceable action plans for non-compliant sponsors from three months to one year
- Restricting sponsors found in breach of visa rules from hiring more overseas workers
- Increasing the cooling-off period for revoked licences from 12 months to two years
With greater scrutiny on sponsor licence holders, businesses must take compliance seriously.
When sponsoring migrant workers, it is always worth exploring whether alternative visa routes, such as ancestry visas or the Global Talent visa, could be a better option. As sponsorship costs continue to rise, employers should consider all available options for securing the talent they need.
For tailored legal advice on managing your sponsor licence or preparing for compliance audits, contact our team today.
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FAQS
1. What are the biggest changes to UK sponsor licences in 2024?
- The most significant changes include:
- A ban on passing sponsor licence costs to migrant workers
- Stricter rules for key personnel managing a sponsor licence
- Increased Home Office scrutiny, especially in the care sector
- Higher immigration fees, including a rise in Certificate of Sponsorship costs
- New digital right-to-work checks replacing Biometric Residence Permits
2. Can I still deduct sponsorship costs from an employee’s salary?
No. Employers are now explicitly prohibited from recovering the sponsor licence fee, the Certificate of Sponsorship fee, or associated administrative costs. Doing so could lead to licence revocation.
3. What happens if I pass on the Immigration Skills Charge to an employee?
Passing on the £1,000 per year Immigration Skills Charge (£364 for small businesses) could result in your sponsor licence being revoked. The Home Office treats this as a serious compliance breach.
4. Who can be a Level 1 User under the new rules?
From 1 January 2025, at least one Level 1 User must be both a settled worker and an employee, director, or partner of the business. Previously, these two requirements could be met by separate individuals.
5. How does the Home Office define “settled worker” for Level 1 Users?
A settled worker includes:
- British citizens
- Those with Indefinite Leave to Remain (ILR)
- EU Settlement Scheme pre-settled and settled status holders
- Commonwealth citizens with UK Ancestry visas
6. Can my business act as a recruitment agency under a sponsor licence?
No. The Home Office has clarified that sponsors cannot act as employment agencies that supply sponsored staff to third parties. Employers must supervise sponsored workers directly.
7. What are the new sponsorship rules for the care sector?
Care providers must now show up-to-date Care Quality Commission (CQC) checks for each branch, not just the head office. The Home Office is cracking down on non-compliant care businesses, increasing audits and licence revocations.
8. Can I still sponsor domestic workers such as nannies or housekeepers?
No. The updated rules prohibit sponsoring workers in a personal capacity. Even if a domestic worker was previously sponsored, you cannot issue a new Certificate of Sponsorship for them.
9. What are the penalties for non-compliance with sponsor licence rules?
- Employers who fail to comply with sponsor licence rules face:
- Sponsor licence suspension or revocation
- Work visas being curtailed for sponsored employees
- An extended “cooling-off” period of two years before reapplying for a licence (up from 12 months)
10. How can I prepare for these sponsor licence changes?
- To ensure compliance, businesses should:
- Review sponsorship policies and employment contracts
- Ensure key personnel meet the new requirements
- Audit right-to-work procedures
- Seek legal advice to protect their licence
If you need expert advice on managing your sponsor licence or preparing for a Home Office compliance audit, contact our immigration lawyers today.
