Recovering immigration costs from employees

Recovering immigration costs from employees

The Home Office have clarified which immigration-related costs employers can and cannot recover from Skilled Workers, in an updated version of the sponsor guidance published on 31 December 2024.

Because of the costs associated with a Skilled Worker visa application – such as the visa application fee and Immigration Health Surcharge, both of which have recently increased (in October 2023 and February 2024 respectively) – some employers agree to cover these costs upfront. There are also fees that an employer will inevitably have to pay upon sponsoring a Skilled Worker, being the Certificate of Sponsorship (“CoS”) assignment fee (which also increased in October 2023) and the Immigration Skills Charge. Further, if the employer or employee instructs solicitors to assist with the visa application, then there are legal fees that will also need to be paid.

Employers who agree to pay these costs upfront may look to include clawback provisions in the Skilled Worker’s employment contract, for two main reasons. Firstly, well-drafted clawback provisions can enable employers to recover a proportion of the visa costs from a departing employee, providing the employer with the security of some recourse to recover these significant costs if the employee leaves employment sooner than expected. Secondly, the mere presence of the clawback clause can help to deter an employee from moving to an alternative employer, given the potential cost to the employee of making the repayments.

Clawback provisions are complex, however, and there is a risk that they may be seen as penalty clauses, and therefore unenforceable, if they are not drafted carefully. We would therefore always recommend obtaining legal advice before drafting or seeking to rely on any clawback provisions.

As an alternative to clawback clauses, some employers simply pass visa costs onto their Skilled Workers regardless – whether as an immediate obligation or as part of a staggered repayment plan.

The Home Office have always made very clear that the Immigration Skills Charge cannot be recovered from employees by employers and we have consistently advised clients that they also should not seek to recover the cost of CoS assignment or costs associated with obtaining the sponsor licence.

Recent Government rhetoric had indicated that the Home Office might look to expand this category of irrecoverable fees. In a statement published on 28 November 2024, the Home Office confirmed that “new powers will ensure employers who recruit internationally will be required to pay associated costs themselves, which is fair and reasonable for employers that do not recruit from the domestic workforce.” This generated some concerns that employers might be required to cover costs beyond the Immigration Skills Charge – such as the Immigration Health Surcharge or visa application fees. This would make the cost of sponsoring workers unaffordable for some businesses, as well as significantly increasing the risk of sponsored employees leaving for new employers, absent the deterrent effect of clawback provisions.

However, the sponsor guidance on sponsor duties and compliance was updated on 31 December 2024, and these threatened changes have not come to pass. Instead, the Home Office have simply clarified that the CoS assignment fee and the costs of applying for a sponsor licence (or for a route on a pre-existing licence) also cannot be recovered from employees, much as with the Immigration Skills Charge. While this was not specified in the sponsor guidance until now, it was commonly understood that these fees were not recoverable, and this update therefore has not done much to change the scope of what is recoverable in practice.

However, the updated guidance does also confirm that attempting to pass these fees onto an employee will be grounds for revocation of the sponsor licence – making it clear just how important it is that employers do not seek to recover such fees.

This is sure to be something that Home Office audits, which are increasing in both frequency and rigour, will be on the lookout for. However, whether the approach of threatening revocation for such actions will be effective is another matter. Of course, employers are likely to to be further discouraged from passing such costs on, given the risk of losing their sponsor licence, but what of the employees to whom such costs are passed? If a sponsored employee reports this misbehaviour to the Home Office, and the Home Office then revoke the sponsor licence, the employee in question will have their sponsorship cancelled and their visa curtailed and may need to leave the UK if they cannot find alternative sponsored employment. Many employees in this position may therefore be incentivised to swallow the cost passed onto them by their employer – another example of the potential for exploitation within the sponsorship system.

If you would like our assistance with sponsoring a worker or with preparing clawback provisions, please do get in touch at [email protected]