It already costs thousands of pounds to sponsor an overseas national and UK immigration fees are among the highest in the world. Kerry Garcia examines the recent government announcement to increase immigration fees and the Immigration Health Surcharge – payable by migrants in return for access to the NHS – to help fund the pay increases for public sector workers.
The government has announced that it proposing to increase UK immigration fees in relation to work and visit visas by 15% and increase student visas, assigning certificates of sponsorship, settlement, citizenship, other permission to stay, entry clearance applications and priority services by 20%.
Furthermore, the standard Immigration Health Surcharge fee would increase from £624 to £1035 per year of the visa and the lower fee, payable by students and those under the age of 18, would increase from £470 to £776 per year of the visa. These increases would also apply to dependants.
The cost of student and priority service applications submitted from outside and inside the UK would be the same, whereas it is currently cheaper to apply from within the UK in relation to several immigration categories. We therefore assume that there will be a higher increase in fees for those applications submitted from within the UK.
There is currently no indication as to whether the Immigration Skills Charge will be increased. This is payable by the employer for Skilled Worker and Senior/Specialist Worker applications, unless an exemption applies. The current rate is £1,000 per year of the visa (i.e. £5,000 for a five-year visa), per sponsored employee for medium or large sponsors, or £364 per year of the visa for small or charitable sponsors.
Sponsoring overseas nationals
If the increases go ahead, at a time when many employers are finding it difficult to fill vacancies and are increasingly relying on sponsoring overseas nationals, this will have a significant impact on businesses. There are therefore several considerations we recommend employers weigh up to mitigate some of the issues arising from the imminent fee increases.
Firstly, it’s not yet been announced when the higher UK immigration fees will come into effect but it would be sensible to submit immigration applications as soon as possible to try to avoid the fee increases. Immigration fee regulations are normally laid before Parliament at least 21 days before they take effect, but in certain circumstances, the 21-day period may be departed from.
UK immigration fees
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Indeed, in the case of sponsored employees, if it’s possible to apply before the fee increases, employers should consider sponsoring the employee for five years from the outset, rather than three years, so that they do not have to pay the higher fees to extend immigration permission after three years.
Given how expensive sponsorship is, it’s worth considering whether to include a clawback provision in the employee’s contract requiring the employee to pay back some or all of the fees if the employee leaves earlier than planned. However, employers should take advice.  Importantly employers may not recover from the employee the cost of assigning the certificate of sponsorship or the cost of the Immigration Skills Charge, so these costs must be excluded from any clawback provisions.
UK immigration fees increase
Against the current economic backdrop, employers will need to review the impact these fee increases will have on their recruitment budgets and whether they need to obtain authorisation for an increased budget.
Given the increased costs, employers should explore if there are any alternative options to sponsoring non-UK/non-Irish nationals, such as training more settled workers as this may now be a more cost-effective, long-term solution. It will also be increasingly important to consider retention strategies to motivate existing employees to remain.
Finally, employers should check whether any exemptions apply in relation to any of the UK immigration fees or other costs. For example, lower application fees currently apply if the sponsored employee will be undertaking a role on the shortage occupation list. Also, employers do not have to pay the Immigration Skills Charge if they are sponsoring a national from an EU country under the Senior/Specialist worker route if the person normally works in the EU for an EU business but is temporarily transferring to work for a linked entity in the UK for less than 36 months.
Are there other risks?
In addition to the more obvious impact of strained recruitment budgets and a possible greater reluctance to sponsor overseas nationals, the increases may have some unintended consequences. It appears that the increases will apply not only to those coming to the UK but also to those already in the UK looking to extend their leave.
As employers will be aware, they must undertake a compliant right-to-work check before the person starts work. Not only is this a sponsor duty, but it also enables the employer to obtain a statutory excuse against a civil penalty if it later transpires the individual does not have the right to work in the UK.
To maintain that statutory excuse the employer must also carry out right-to-work checks at the point at which an employee’s leave is due to expire. Â This will likely become even more key as, given the fee increases, Â there may be a higher risk that employees do not extend their immigration permission because they cannot afford to do so.
It’s key for employers to have systems in place to check that employees have applied to extend their leave and still have the right to work. Employers may wish to consider whether to offer a loan or financial assistance to employees.
Moreover, employers who have initially sponsored someone for a few years may be reluctant to extend sponsorship given the costs and, if they do not do so and the individual is unable to switch into another immigration category, they would need to terminate the employee’s employment. This could give rise to claims for unfair dismissal and/or indirect race discrimination so it’s important to take advice first.
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In the meantime, employers should start preparing for the UK immigration fee increases and keep a watching brief for any further announcements.
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