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Lynsey Blyth
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Originally published on 18 February 2025, this article has been updated to include further changes introduced in April 2025 regarding new restrictions on the recovery of costs from all categories of sponsored workers.
The Home Office recently updated their guidance for sponsor licence holders. The changes implement Government policy aimed at curbing exploitation in the visa sponsorship system.
The key changes include:
- Clamping down on passing sponsorship costs to employees: New rules restrict which visa/sponsorship-related expenses an employer (sponsor) can recoup from or charge to sponsored workers. This has immediate implications for any clawback agreements between employers and sponsored workers.
- Changes to key personnel requirements: New sponsor licence applications must now have at least one in-house Level 1 user with settled status (with only very limited exceptions), which could pose challenges for some startups and smaller firms.
- Ban on sponsoring in a personal capacity: Sponsors cannot use a sponsor licence to sponsor workers for purely personal or household roles (e.g. a family nanny), outside the scope of their business. Doing so will lead to licence refusal or revocation.
While multiple areas were updated, the most impactful change for sponsor licence holders is the prohibition on passing certain sponsorship costs to sponsored workers. This prohibition initially applied to employers with a Skilled Worker sponsor licence and their sponsored workers (including Health and Care Worker visa holders) from 31 December 2024. This has now been extended to all sponsored work routes from 9 April 2025. This means that certain costs cannot be recouped from workers who are sponsored under the following visa categories:
- Skilled Worker visa
- Health and Care Worker visa
- Global Business Mobility visa
- Scale-up Worker visa
- Charity Worker visa
- Government Authorised Exchange visa
- Minister of Religion visa
- Seasonal Worker visa
- International Agreement visa
- International Sportsperson visa
Below, we focus on these restrictions, their scope, and what they mean for employers in practice.
Ban on passing sponsorship costs to workers
Effective 31 December 2024 for Skilled Worker and Health and Care sponsors, and 9 April 2025 for all other sponsored work routes, employers are prohibited from passing certain fees and costs to sponsored workers. The Home Office guidance now states they will “normally revoke your licence” if an employer recoups, or attempts to recoup, any of the following from a worker they are sponsoring:
- Sponsor licence application fee and any associated administrative costs, including the fee to add a route to an existing sponsor licence. This covers any costs related to obtaining, using, or maintaining the sponsor licence (explained further below).
- Certificate of Sponsorship (CoS) when the CoS is assigned on or after the relevant cut-off date for the applicable route. CoS assignment fees before these dates are not explicitly covered by the new rule, but see our guidance below on transitional considerations.
- Immigration Skills Charge for a sponsored worker. This was already a long-standing rule and continues to apply. Sponsors must pay the Immigration Skills Charge themselves and cannot seek reimbursement from the sponsored worker.
These changes close the “grey area” that previously existed. Until 31 December 2024, only the Immigration Skills Charge was expressly prohibited from being passed to sponsored workers. It was technically permitted for employers to require sponsored workers to pay or pay back other costs, such as the CoS fee and the sponsor licence fee. That is no longer allowed for employers with a sponsor licence. The updated guidance makes clear that if an employer chooses to recruit from overseas, it must bear the core sponsorship costs of the sponsor licence, CoS, and related administrative costs. Employers must not pass these costs onto sponsored workers. Any attempt to charge the worker for these specific costs will be treated as serious non-compliance, likely resulting in revocation of the sponsor licence.
What counts as “associated administrative costs”?
One phrase in the new rules is that “associated administrative costs” cannot be recouped. The guidance advises that this term includes but is not limited to:
- Fees for premium services or priority services for sponsor licence applications, changes of circumstances requests, or assigning, requesting or applying for a CoS
- Fees for legal advice related to applying for, using or maintaining your sponsor licence, or assigning, requesting or applying for a CoS
- Immigration advice or immigration services provided by a third party to a sponsored worker where the worker did not have a genuine choice in whether, or how, to obtain such advice or services, or where you provide such advice or services to the worker directly
Accordingly, associated administrative costs should be understood broadly as any costs the sponsor incurs to obtain, use, or maintain their sponsor licence. We have received confirmation from the Home Office that this means employers cannot ask workers to pay for:
- Premium or expedited services related to the sponsor licence application or management, e.g. the £500 priority service for faster sponsor licence processing, and the £200 priority change of circumstances fee cannot be recouped.
- Legal fees for sponsor licence advice or applications if the employer hired immigration lawyers or advisors to help secure or manage the sponsor licence or CoS, those professional fees are the employer’s responsibility and cannot be passed to sponsored workers.
In short, any expense directly tied to the sponsor licence, compliance, and CoS, including professional support services, should be budgeted as business costs and must not be recouped from sponsored workers.
Ultimately, any cost recovery from workers must also comply with general employment law, so employers should be mindful of both immigration and employment regulations when structuring any clawback provisions.
What about visa application fees and other costs?
Importantly, the Home Office’s new ban does not cover every expense associated with bringing a worker to the UK. Some costs can still be borne by the sponsored worker or repaid to the employer if the employer advanced the cost.
The logic is that certain fees primarily benefit the sponsored worker. The visa grants them permission to work and reside in the UK, whereas the sponsor licence and CoS benefit the employer. According to the updated guidance and our analysis, employers are still permitted to require sponsored workers to pay for or reimburse:
- Visa application fees for the worker’s entry clearance or permission to stay. These fees, which range from £769 to £1,751 depending on the visa duration and in/out of country application, can be paid by the worker directly. If the employer paid the visa fee, it can lawfully recover that amount from the employee.
- Immigration Health Charge, this mandatory charge currently costs £1,035 per year of the visa for adults and is also considered the worker’s personal cost. Employers may have policies to cover it as a benefit, but there is no rule forbidding employers from charging it to the worker or recovering it later.
In conclusion, visa related costs and the Immigration Health Charge fees are not included in the new prohibition. Employers can ask for these costs to be repaid but should be mindful of best employment law practices. Employers should distinguish visa costs (visa application fee, Immigration Health Charge, visa appointment fee, etc…) from sponsorship costs (sponsor licence, CoS, Immigration Skills Charge, etc…). The employer covers the sponsor-side fees, and the employee can cover the visa-side fees. By drawing a clear line, employers can avoid inadvertent breaches and risks to their sponsor licence.
Implications and best practices for employers
These changes have immediate compliance consequences. An employer found to have charged a sponsored worker any of the prohibited fees after 31 December 2024 for Skilled Worker visas and Health and Care visas, and 9 April 2025 for all other sponsored workers will, in most cases, lose their sponsor licence.
Sponsor licence revocation is a very serious outcome. It damages the employer’s ability to hire from abroad for years and impacts current sponsored workers who could be forced to find a new employer or leave the UK if the sponsor licence is revoked.
Therefore, employers should take proactive steps to align with the new guidance:
- Review and update any clawback agreements or repayment clauses in worker contracts immediately. If you previously had workers agree to repay sponsorship costs (for example, repaying the CoS fee or sponsor licence fee if they resigned within a year), such provisions are now non-compliant. This includes agreements made before 31 December 2024 and 9 April 2025 if they would lead to a recovery of costs after these dates. Amend those agreements to remove prohibited fees, or at least make clear the sponsored worker will not be asked to cover those specific items.
- Revise internal policies and documentation related to immigration fees. Ensure your staff handbook, sponsorship policy, and assignment letters reflect that the employer covers the sponsor licence, CoS, and Immigration Skills Charge costs. Any template that previously passed on those fees should be changed.
- Educate your HR and finance teams and anyone involved in recruiting sponsored workers about the new rules. All relevant personnel should know that charging these costs to sponsored workers is off-limits. For instance, if a sponsored worker leaves early, payroll should not deduct the CoS fee from their final payslip even if an old agreement permits it, and HR should not attempt to enforce any such repayment.
- Budget for higher sponsorship costs going forward. With the inability to recoup licence or CoS fees, employers must treat these as a normal cost of hiring international talent. This may impact hiring budgets and cost projections. Plan ahead to absorb the sponsor licence fee, £525 CoS fee, and any associated admin expenses as a cost of doing business. You may also consider whether to cover some employee-side costs (like visa fees or Immigration Health Charge) as a benefit, but that remains optional.
Immigration enforcement action continues across the country at an increased level. Accordingly, employers should protect themselves from compliance action and ensure their sponsorship processes are in line with the latest Home Office expectations.
Should you wish to discuss any of the issues raised in this article, please contact Madni Chaudhary or Lynsey Blyth. Our leading Immigration and Employment law teams are available to guide you through these changes, ensuring your organisation remains fully compliant with the new rules.