On 13 July 2023, the UK government announced major increases in immigration fees and charges. As part of the announcement, the government declared that these increases (born by overseas nationals) would play a key role in funding the public sector pay rises. Beca Hayes and Alex Christen outline how these increases might affect your business.
The government has announced plans to increase:
The government has also announced several additional changes:
At the time of writing, there has been no proposal to increase the Immigration Skills Charge which is the charge paid by employers for the privilege of sponsoring people in the UK. This is already at £1000 per year per sponsored employee for medium and large businesses and the government would have to think carefully about any increase.
No date has been set for the introduction of these increases, but they are expected to be imminent in line with current economic pressures.
These changes will impact on the budget assessments for UK businesses employing foreign nationals. By far the biggest increase is in the Immigration Health Surcharge, which has seen an increase of around 66%. This is paid for by the individual in the first instance, but in many cases, the employer offers to reimburse the individual for this cost. Employers should be mindful of promises they have made to sponsored employees on refunding these costs and either reassess their position or budget accordingly. Some employers are already using “claw back” clauses for sponsored employees, which binds an employee who is sponsored as a Skilled Worker under the points-based system to repay some, or all, of the fees paid by their employer if they leave their employer within a certain time frame. This certainly provides some financial protection for employers; however, caution should be taken when drafting these types of clauses as in some cases they can be unenforceable.
There are also limits on the types of fees that can be clawed back in this way. For example, if a sponsor tried to claw back the cost of the immigration skills charge from a sponsored employee, this gives grounds for the Home Office to revoke their sponsor licence. Also, such clauses have come under criticism as they are viewed as trapping the employee and preventing them from leaving the country or obtaining another job in the UK.
Employers should draft any claw back clauses with great care to ensure they are fair, reasonable, and enforceable.
If you are currently using, or seeking to employ foreign nationals, you will need to reassess your business’ budgets and application strategies considering the proposed increases to immigration fees. If you can no longer afford to sponsor employees and you are considering ending their employment as a result of these costs, you should consider what protection the employees have from unfair dismissal or discrimination and seek employment law advice.
We recommend lodging any immigration applications sooner rather than later, to avoid additional costs.
If you have questions about the increases to immigration fees and how they might affect your business, or if you would like us to review your claw back clauses, contact our team of expert immigration lawyers.