The Telegraph recently published an article outlining internal Home Office forecasts of a dramatic increase in the in the number of ‘in-country’ skilled worker visas being granted. It is estimated that the number granted is set to double from 204,000 in 2023/24 to 584,000 in 2028/9.

There is no disputing that the number of businesses applying for sponsor licences has increased in direct response to Brexit. In Q4 of 2019 immediately prior to Brexit, the Home Office published sponsorship transparency data showing 1,641 new Tier 2 sponsor licence applications. By Q2 of 2023, the number of new sponsor licence applications is listed at 10,446. It makes sense that with more sponsors comes more sponsored workers.

The latest estimates have led to calls for tougher restrictions on the skilled worker route. The implication is that the sponsor route is easy way for employers to access cheap foreign labour as an alternative to training and employing settled workers. But is the sponsor route really an easy option for employers?

In order for an employer to become a registered sponsor, they require to submit various items of documentary evidence to the Home Office to prove that they are a genuine and trading business. Prior to granting a licence, and at any stage when a licence is in place, the Home Office can attend at the business premises to conduct an audit where they will look at things such as the HR practices of a business, recruitment processes and ‘right to work’ compliance. These audits can be organised in advance or can be completely unannounced. Once a licence is in place, a sponsor is bound by various reporting and compliance requirements. Failure to adhere to these can result in downgrading or revocation of a licence.

In order for an employer to sponsor a migrant worker under their licence, they will have to declare, amongst other things, that the salary meets the minimum threshold for the role. The salary will vary depending on the role and the individual circumstances of a migrant. For example, an electrical engineer would need to be paid at least £39,300 per annum (based on a 37.5 hour week), an IT project manager salary would need to be at least £39,100, a business development manager at least £35,100 and an HR officer at least £26,200.

In order to sponsor a worker, an employer will usually require to pay an Immigration Skills Charge. This is £364 per year for a small business or £1,000 per year for a medium to large business. Many employers will also cover the visa application fees and Immigration Health Surcharge which is shortly due to increase to £1,035 per year.

In practice, this could mean an upfront cost of over £12,000 (or over £7,000 for a small business) to sponsor a foreign migrant for a five-year period. This in addition to compliance and reporting requirements means that sponsorship is often not the easiest option, nor is it a means of securing cheap labour. The costs alone serve as a sort of natural resident labour market test where an employer when faced with a foreign migrant and a settled worker both qualified to do a job will often  select the most cost-effective option.

There will of course be circumstances where the best person for the role will require sponsorship and holding a sponsor licence will enable a business to secure the best candidate for the role regardless of nationality.

In short, applying for and maintaining a sponsor licence is not an easy or cheap option for employers, but can be a very useful tool depending on business need. The experienced immigration team at Burness Paull are here to assist with sponsor licence queries, from applications, to applying for and assigning Certificates of Sponsorship and general compliance. We can also support individual workers with visa applications. Please get in touch to find out how we can help.

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