New visa sponsorship rules for employers proposed under the Employment Rights Bill

Current sponsorship obligations

The UK's immigration system, regulating the entry, residence, and employment of overseas workers, features a points-based immigration system, which includes specific employment-based routes some of which require employer sponsorship. The most popular of these is the Skilled Worker route, under which workers with an offer of employment from an approved employer in a role that meets specified skills and salary thresholds are granted visas allowing them to take up that role in the UK.

The immigration system is primarily managed and enforced by UK Visas and Immigration (UKVI), who are tasked with ensuring that sponsoring employers meet their obligations to conduct various checks, keep records to demonstrate compliance with complex and evolving sponsorship duties, and notify UKVI in respect of various reportable events.

Breaches of UKVI's sponsorship guidance can lead to sanctions ranging from the issue of an action plan, to revocation of the licence and bans for the Key Personnel named on the licence, but enforcement has historically been inconsistent.

With various sectors struggling to fill key vacancies, the number of sponsors has soared in recent years, however, due to the high costs associated with sponsorship under the Skilled Worker route, many employers will ask their sponsored employees to pay some or all of these costs, leading to concerns from many that unscrupulous employers are abusing their position and exploiting the workers they are sponsoring. The Sponsor Guidance makes it quite clear that the Immigration Skills Charge must not be passed onto sponsored workers under any circumstances, and we have seen correspondence from UKVI suggesting that passing on the fee charged for assigning a Certificate of Sponsorship may suggest that the employer's motivations for sponsoring the worker are not genuine.

Changes proposed in the Employment Rights Bill

The Employment Rights Bill introduces significant reforms aimed at tackling visa abuse and protecting workers. Under these new proposals, employers found guilty of serious or repeated breaches of employment or immigration law could be barred from sponsoring overseas workers for at least two years.

Action plans, which address non-compliance, will now last up to 12 months, providing a longer period of enhanced oversight. The government is also promising to impose additional prohibitions on employers passing on to employees the costs of their sponsorship. We do not yet know the detail of this, so whether it extends to all sponsorship and visa-related costs (including the visa application fee and Immigration Health Surcharge) and whether employers are also to be expected to pick up the costs associated with sponsored employees' families' visa applications. Nor do we know at this stage whether these amendments will say anything in relation to employers using clawback agreements to recover some of the costs associated with sponsorship where a sponsored worker leaves their employment earlier than anticipated.

Another change proposed, which is unlikely to require a statutory footing but instead could be implemented by updating the sponsor guidance, is to subject employers who repeatedly breach their obligations to extended cooling-off periods, preventing them from reapplying for a sponsor licence for at least two years.

These changes reflect the government’s focus on deterring non-compliance and encouraging higher standards among employers relying on international labour.

Best practice

Even though the Bill is not expected to pass into law until mid-2025 at the earliest, UKVI have been significantly increasing their compliance activity since the election, carrying out a much large number of compliance visits and raids on employers suspected of employing illegal workers. The sanctions for non-compliance are already very steep, including penalties of up to £60,000 per illegal worker, so employers and sponsors should review their records and processes relating to foreign-national employees now to ensure full compliance with sponsorship and employment obligations.

These changes signal the government’s increasing focus on tightening the visa system to ensure fairness and compliance. Employers who rely on international labour should take the opportunity to review their sponsorship practices now, safeguarding their access to the skilled worker route and protecting their workforce from exploitation.

We regularly assist sponsors in the development and implementation of systems and processes for complying with their duties. Taking proactive steps now will help employers avoid penalties and retain their ability to sponsor workers.

For more information or advice, please contact Tom Brett Young in our Immigration team on 0121 227 3759. Alternatively, you can fill out the form below.