Significant changes made to guidance on sponsoring workers

The government published a number of significant changes to their guidance for work sponsors on 31 December 2024 and 1 January 2025. The affected guidance includes:

• Guidance for sponsor part 1: apply for a licence
• Sponsor a worker: sponsor guidance part 2
• Guidance for sponsors part 3: sponsor duties and compliance
• Sponsor a Skilled Worker

Although several guidance documents have been updated, in many instances these updates relate to the same changes and are to reflect updates elsewhere in the above guidance documents.

Brief summary of key changes

• New restrictions have been introduced restricting which sponsorship costs an employer is able to pass on to the employee – this will affect clawback agreements between employers and sponsored workers.
• They have added to the list of people who fall within the definition of “you and your” when referring to the sponsor.
• Significant changes have been made to rules regarding the key personnel a sponsor must have – these will affect new sponsor licence applications and could present obstacles to some prospective sponsors.
• New restrictions have been added to the guidance regarding sponsorship in a personal capacity – these mainly relate to the sponsorship of workers in private households (such as nannies).

The changes in more detail

Passing on or recouping of costs

The costs of sponsoring workers in the UK are significant, including not only the costs of sponsorship itself but also the Immigration Skills Charge, visa fees and the Immigration Health Surcharge, as well as any professional legal fees that may be incurred to support the process. It is therefore common for employers to require sponsored workers to meet some of these costs directly, or for employers to recoup some of these costs if the employee leaves their employment before the end of their sponsorship.

However, this can and has led to workers facing poor treatment and exploitation, as they are trapped between the choice of continuing to work in abusive and exploitative situations or to face significant financial hardship if they leave. Addressing this in a written statement to Parliament on 28 November 2024, the Immigration Minister said:  

Over the last 2 years, there have been a growing number of allegations about sponsors seeking to charge workers for sponsoring them, particularly in the care sector. Where these charges are inappropriate, individuals can fall into work-related debt and experience a significant amount of harm. To combat this, we are now taking action to ensure that if a business wishes to recruit internationally, they will be required to pay for certificates of sponsorship, sponsor licences and the associated administration themselves. This will end the intolerable practice of recovering these costs from workers, which has led to the exploitation and unfair treatment of staff, particularly care workers who have been left in debt to their employers. These rules will apply to the Skilled Worker route first and will be in force by the end of the year. We intend to build on this in due course, widening it to other sponsored employment routes.

Previously, the only cost that a sponsor was explicitly prohibited from passing on to the sponsored worker was the Immigration Skills Charge (the principle being that this was a levy on employers who chose to recruit skilled workers from overseas instead of investing in training of the local workforce, with proceeds theoretically intended to fund training and apprenticeships in the UK – although in practice it is not clear how the income is being invested).

It was possible for some other costs to be passed on to workers, although some are more customary than others.

For example, visa fees and the Immigration Health Surcharge are costs that benefit the migrant and that they would need to pay personally. Although many employers will fund these for their employees, they are not required to do so. If they do, it may be reasonable in some cases to recoup some of these costs if the employee left before the end of their sponsorship. 

However, this is subject to employment and contract law considerations of what is reasonable – a diminishing clawback agreement over time would normally be the least that would be expected, due to the employer accruing the benefit of the employee’s work over time, but there may be times when any clawback may be considered unreasonable. For example, if a sponsored worker’s employment was terminated for gross misconduct, recouping costs may be more reasonable than if the worker had done nothing wrong and was made redundant as part of a company-wide downsizing. 

In addition, the Certificate of Sponsorship assignment fee is a cost incurred by the sponsor in the operation of their licence – as an employer cost, it may not be reasonable to pass this on to the migrant in all cases.

The guidance now includes further restrictions on the costs that can be passed on to or recouped from workers. Specifically, a licence will normally be revoked if a sponsor recoups, or attempts to recoup:

• the Skilled Worker sponsor licence fee (including the fee for adding that route to an existing licence) and any associated administrative costs (including premium services) – this applies where a sponsor recoups, or attempts to recoup, these on or after 31 December 2024, even if the costs were incurred before that date;
• the Certificate of Sponsorship fee for a Skilled Worker, where that Certificate was assigned on or after 31 December 2024 – this does not apply to recouping of costs where the Certificate of Sponsorship was assigned before this date; and
• the Immigration Skills Charge for a Skilled Worker or a Senior or Specialist Worker – this was already prohibited and continues to be prohibited.

It is not completely clear what is meant by “associated administrative costs”, although the specific example of premium services is given (which may include priority service for the licence application or annual Premium Sponsor Service). However, it may also extend to professional legal fees of advisers assisting with the sponsor licence application.

The restriction on “associated administrative costs” is not mentioned in relation to the assignment of a Certificate of Sponsorship or visa application, so it may still be possible to recoup priority service and legal costs for those processes from a sponsored worker (subject to such an action being reasonable in employment and contract law).

Employers and their advisers should take care when applying clawback agreements to ensure that they do not breach the new restrictions and apply any transitional protections correctly. They should also ensure that future clawback agreements are in line with the new guidance.

“You and your” – who is a sponsor?

The guidance for sponsors is primarily an instruction manual explaining what current or prospective sponsors need to do. It sets out what “you” need to do to become a sponsor and what “your” compliance obligations are once you become a sponsor. 

For example, the guidance says at L4.26 to L4.28 of Part 1 and in the Annexes in Part 1 that they will or may refuse a sponsor licence application (while Annexes in Part 3 say an existing licence will or may be revoked) if certain circumstances arise in relation to anyone falling under the definition of “you or your” (such as if they had a relevant unspent conviction or relevant civil penalty).

Previously, when speaking to the sponsor as “you” or “your”, this included any:

• owner;
• director;
• key licence personnel (the Authorising Officer, Key Contact and Level 1 Users);
• person involved in the organisation’s day-to-day running.

A new addition has been made to this list in the Glossary to include a “person recorded on your Companies House profile listing as a Person with Significant Control”. 

This change means that advisers may need to ask additional questions of prospective sponsors and advise accordingly.

Key personnel eligibility

Section L4 of the guidance on key personnel (Authorising Officers, Key Contacts and registered level 1 and level 2 users of the Sponsorship Management System) has been largely rewritten. Although much of it remains the same at its core, there are some significant changes and some smaller ones.

The guidance continues to require that key personnel be based in the UK and that they be a paid staff member or an office holder (except for limited situations in which third parties can be appointed to some roles). As before, the guidance also requires that at least one of the level 1 users be an employee, director or partner (slightly narrower than the broader eligibility above for staff members and office holders). 

It also continues to require that at least one of the level 1 users on the licence be a “settled worker” (note that this is based on the definition of “settled worker” in Part 2 of the guidance and not on the usual definition of settled in the Immigration Act 1971). 

However, in a significant change, the guidance now requires that where the licence is applied for after 31 December 2024, the sponsor have at least one level 1 user who is both an employee, director or partner and a settled worker.

For many years, this was the way that licences and key personnel worked in practice, since only a single level 1 user could be nominated as part of the sponsor licence application. Although additional users could be added later, including legal representatives, this meant the first nominated person needed to meet both of these requirements. 

However, since updates to the licence application form began to allow a sponsor to nominate multiple level 1 users in the licence application, it became common for legal representatives to be appointed as a level 1 user from the beginning, alongside the employee, director or partner of the sponsor. Where the nominated representative was a settled worker, this freed up the option for the sponsor’s internal user to be non-settled. This new change to require the sponsor to have a level 1 user who meets both requirements removes this option.

This change only applies to sponsor licence applications made after 31 December 2024. The guidance confirms that if an organisation has a licence which was valid on or before this date, they continue to benefit from the old rules where they needed a level 1 user who was an employee, director or partner and a level 1 user who was a settled worker, but these requirements did not need to be met by the same person. However, in the future, UKVI may align these requirements so they recommend, as a matter of best practice, that sponsors appoint at least one level 1 user who can meet both requirements.

This change could have a large impact on the ability of some organisations to become sponsors in the UK. Although established organisations with enough employees to choose from, or home-grown businesses owned and operated by British citizens or settled people are likely to be able to nominate a person who meets both requirements, some start-ups or overseas businesses just starting out in the UK may not be able to.

There are still options that may assist such businesses (such as sponsorship under the UK Expansion Worker route, or where the Authorising Officer has a specific type of immigration permission such as Innovator Founder), but there are still likely to be cases where a business is caught in a Catch-22 of needing skilled migrant workers to grow their business while also needing to grow their business in order to have eligible key personnel to sponsor skilled migrant workers.

Other further updates to the guidance on key personnel include:

• key personnel must not be legally prohibited from becoming a company director, unless a court has given permission to act as a director or to promote or form a business and as long their sponsorship role doesn’t contravene this permission. Previously a person could be a Key Contact or level 2 user if they were only prohibited from being a director due to being an undischarged bankrupt, but this exemption has been removed in favour of the above;
• any nominated person must have a valid National Insurance number, unless they are exempt from requiring one). Although new to the official guidance, this reflects information and instructions that have been in place on the Sponsorship Management System and communicated by UKVI to ILPA previously; and
• the new sponsorship system (Sponsor UK) that is currently undergoing a limited trial with some sponsors under the Government Authorised Exchange (GAE) route, will not include provisions for level 2 users. Only level 1 users will be transitioned to the new system so sponsors should consider whether to upgrade the access of current level 2 users to level 1. In addition, GAE schemes had previously been able to appoint level 2 users at host employers utilising their scheme.  This will not be possible under the new Sponsor UK system once level 2 users no longer exist (and level 1 users cannot be third parties, except under limited circumstances such as legal representatives).

Sponsorship in a personal capacity

The guidance now confirms at paragraph L1.7 and L1.8 that sponsor licences must not be used to employ or engage a worker “in a personal capacity”. Two examples are given of when this may apply:

• an individual person or household wishes to employ or engage a worker, or workers, in a personal capacity and the sponsor is not otherwise conducting business or providing a service in the UK
• the worker, or workers, will be employed by, or engaged for the personal benefit of, an individual who works for the sponsoring organisation, or a close relative or partner of that individual, and the role is unrelated to the sponsor’s wider activities

There is an exemption in L1.9 for private servants in diplomatic households.

There is a long background to this change. It has always been the case that individuals cannot become licensed sponsors (unless they are sole traders who wish to sponsor someone to work in their business). This has meant that it has been difficult to sponsor many roles that involve working in a private household, such as personal assistants/secretaries, nannies*, carers and cooks. This led to two solutions – they were sometimes sponsored by the employer of someone in the household they worked for, or they were sometimes sponsored by a “family office”, a business established for the purposes of managing the family/household’s affairs. 

UKVI did not like either of these approaches and in recent years this has led to refusals of licences/visas in circumstances where it may have otherwise appeared that the letter of the guidance was being met but UKVI were not entirely satisfied in terms of intentions and genuineness. 

Where a person is not eligible for sponsorship because they would be employed in a personal capacity, there may be other immigration options available. Non-sponsored routes, such as UK Ancestry, Youth Mobility, Graduate and High Potential Individual, as well as dependant/family visas, may allow a person to undertake a wide range of roles in the UK, while the Domestic Worker visa may be suitable for some household roles (albeit this route is extremely limited).

*Nannies also face additional difficulties for sponsorship as the changes in April 2024 to Appendix Skilled Occupations mean that SOC code 6116 for nannies and au pairs no longer meets the minimum skill level for sponsorship, so this SOC code can only be used to extend an existing Skilled Worker visa to work in the same role with the same sponsor.

Other minor updates

The guidance includes updated information for sponsors relating to the evidence of immigration status, following the decision to cease issuing biometric residence permits from 31 October 2024. Information is provided about eVisas, short-term vignettes and ink stamps (such as under the Creative Worker visa concession).

The guidance has updated the title of the Certificate of Sponsorship category on the Sponsorship Management System relating to post-study sponsorship. This reflects an update that was made on the Sponsorship Management System in November. The new title “Student course complete switching to Skilled Worker” is clearer than the previous title “Tier 4/Student graduate switching to Skilled Work”. 

The previous inclusion of the term “graduate” often led to sponsors incorrectly choosing this option for workers switching from the Graduate route, when this route only applied to people switching from Tier 4/Student (and graduate in this context only meant they had finished their course). As this option did not require payment of the Immigration Skills Charge, this led to delays or refusals.

There has also been clarification that a defined Certificate of Sponsorship must be assigned to a worker within 90 days of the date it was allocated to the sponsor, rather than within three months as was stated previously.

Now that sponsor licences no longer need to be renewed every four years, UKVI changed their enforcement practices so that a licence can be B-rated and subject to an action plan twice within rolling any four-year period.  This change was introduced in the October guidance updates but paragraphs C8.22 and C8.24 were inconsistent – this has now been corrected.