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Changes to sponsorship costs for skilled workers

Employers are no longer allowed to pass certain sponsorship costs onto their sponsored workers.

This change, which came into effect on 31 December 2024, has been brought in by the Government to prevent exploitation and reduce financial burdens on employees.

If your business employs skilled workers under the sponsorship system, here is what you need to know about these new rules and the action you need to take to remain compliant.

What costs can no longer be passed on?

Employers are now prohibited from passing on:

Sponsor Licence Fees – This applies to the cost of applying for a new sponsor licence or adding the Skilled Worker route to an existing licence.
Certificate of Sponsorship (CoS) Fees – The fee for assigning a CoS to a Skilled Worker must be covered by the employer.

These changes align with the existing rule that prevents employers from passing the Immigration Skills Charge onto workers.

However, other immigration-related costs such as visa application fees, Home Office commercial partner service charges, and the Immigration Health Surcharge, can still be reclaimed from the employee.

What happens if you don’t comply?

Failure to comply with these new regulations can have serious consequences for employers.

The Home Office has the power to revoke a sponsor licence, which could:

Damage your business’s reputation
Result in financial penalties and additional costs
Disrupt operations, especially if you rely on skilled workers

Ensuring compliance is essential to protecting your business and workforce.

What should employers do now?

To prepare for these changes, businesses should take proactive steps to update their policies and agreements:

Review and update policies – Internal policies on sponsorship costs should be revised to reflect the new rules.
Update employment contracts – Contracts, side letters, and ‘clawback’ agreements should be reviewed to ensure they do not contain unlawful cost recovery provisions.
Budget for the changes – Employers should assess how these changes will affect recruitment budgets and plan accordingly.

These changes reflect a growing focus on preventing workplace exploitation and ensuring fair employment practices for skilled workers.

While this may increase costs for employers, it also strengthens their reputation as responsible sponsors, helping attract and retain top talent in a competitive job market.

If you need legal guidance on updating your policies or ensuring compliance with sponsorship regulations, contact our team today.

Amanda Hyam

Head of Dispute Resolution and Employment

I have specialised in Dispute Resolution, Civil Litigation and Employment law for more than 15 years. I understand how daunting the prospect of litigation can be and because of this I am always available to discuss concerns.