In a significant policy shift, the Home Office has introduced new changes to Part 1 and Part 3 of the Skilled Worker Sponsor Guidance, effective from 31 December 2024. These changes impose stricter obligations on sponsor licence holders and aim to eliminate exploitative practices in the sponsorship system, particularly around financial responsibilities.
Key Updates to Sponsor Obligations
1. Sponsor Licence Fees and Administrative Costs
From 31 December 2024, sponsors are strictly prohibited from recovering or attempting to recover any part of the sponsor licence fee or associated administrative costs (including premium service fees) from any worker they sponsor.
- Non-Compliance Consequences:
- Licence revocation for breaches.
- Potential reputational damage and operational disruptions.
2. Certificate of Sponsorship (CoS) Costs
- Sponsors are prohibited from passing on the costs of assigning a Certificate of Sponsorship (CoS) to a Skilled Worker.
- This rule applies to all CoS assigned on or after 31 December 2024.
- Sponsors must cover the fees associated with each CoS assigned to foreign workers.
3. Associated Costs and Prohibitions
Companies sponsoring a Skilled Worker must bear all related expenses, including:
- Skilled Worker visa fees
- Administrative costs
- Certificate of Sponsorship (CoS) costs
- Immigration Skills Charge
- Premium service fees
Passing these costs onto the sponsored worker is strictly prohibited under the updated guidance.
Why Were These Changes Introduced?
Prior to these updates, sponsors were already barred from requiring applicants to pay the Immigration Skills Charge. However, Home Office investigations uncovered widespread instances of companies shifting visa application fees, sponsor licence costs and other related expenses onto sponsored workers. These practices often led to exploitation, particularly among vulnerable groups such as care workers, who were left in significant debt to their employers.
To address these issues, the Home Office has implemented these stricter prohibitions to ensure fairness and compliance. The aim of these changes is to end exploitative practices and protect workers from undue financial burdens.
Consequences of Non-Compliance
Annex 2 of Part 3: Sponsor Duties and Compliance outlines severe penalties for non-compliance, including:
- Revocation of Sponsor Licence:
- If a sponsor assigns a Certificate of Sponsorship to a Skilled Worker and asks the worker to pay any part of the associated cost, or attempts to recoup these charges.
- If a sponsor asks a worker to pay any part of the sponsor licence fee or administrative costs, or attempts to recover these fees.
Revocation can lead to:
- Reputational damage
- Financial loss
- Significant upheaval for existing sponsored workers, who may need to find a new sponsor or leave the UK.
The Bigger Picture
The Home Office’s latest updates represent a decisive step towards fostering a more equitable sponsorship system. By prohibiting sponsors from passing costs onto workers, the government aims to promote ethical employment practices and reduce exploitation in the workplace.
Broader Implications
The Home Office’s statement highlights its intention to “build on these changes in due course, widening prohibitions to other sponsored employment routes.” This signals that businesses across various sectors should prepare for further regulatory updates and ensure compliance to maintain their sponsor licence status.
Preparing for Compliance
To remain compliant, sponsors must:
- Review and revise internal policies and processes.
- Ensure all sponsorship costs are covered by the employer, not the employee.
- Provide clear communication and training to HR teams about the updated rules.
The updated guidance serves as a reminder of the critical importance of compliance for sponsor licence holders. By enforcing stricter prohibitions on cost recovery, the Home Office seeks to address exploitation and ensure fair treatment for all sponsored workers. Businesses must act now to align with these changes, avoiding potential penalties and demonstrating their commitment to ethical employment practices.
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