We have seen a range of approaches emerge:

• Fee-sharing arrangements: where the employer covers certain costs and the employee covers others
• Salary deductions: where the employer initially pays the fees but recoups the amount over time through deductions from the employee’s salary
• Clawback clauses: where the employer covers the upfront costs but requires the employee to repay a proportion if they leave the business within a set period (typically two years)

The present government has raised concerns that some of these practices could, in the hands of unscrupulous employers, lead to debt bondage, leaving workers open to exploitation and unable to leave roles they no longer wish to hold. At the very least, these arrangements can place employers in a position of undue influence over employees.

In response, the Home Office has introduced changes to the sponsorship guidance and immigration rules, ostensibly to protect workers, by creating a clearer framework for employers to follow when deciding who should bear these costs.

Visa costs employers must pay

Certain visa-related sponsorship costs must always be paid by the employer and cannot be passed on to the worker under any circumstances. Updated Home Office guidance confirms that sponsors must cover all fees directly associated with sponsorship or associated administrative processes, including:

• The Certificate of Sponsorship (CoS) fee (including any legal fees for CoS preparation)
• The Immigration Skills Charge
• Fees for obtaining a sponsor licence or adding a new route to an existing licence
• Priority fees for urgent licence-related actions (such as CoS allocation requests or licence updates)
• Immigration advice provided to a visa applicant where they did not have a genuine choice in whether, or from who, to obtain this advice

This guidance applies to Skilled Worker applications or certificates of sponsorship made or assigned after 31 December 2024, and to temporary worker routes from 9 April 2025.

If the Home Office identifies attempts to recover these costs from sponsored workers, it can treat this as a breach of sponsorship duties, potentially leading to the revocation of a sponsor licence.

Can an employer recoup other costs?

Until recently, employers could freely seek repayment of certain other visa-related costs from employees if they paid them upfront. This includes application fees, Immigration Health Surcharge payments, and priority processing fees for visas.

However, from 9 April 2025, new rules in relation to the recouping of visa costs will apply to CoS issued on or after that date. Specifically, when assessing whether a worker meets the minimum salary threshold for a Skilled Worker visa, employers must exclude any deductions they intend to make for immigration-related costs. These include:

• Visa application fees
• Immigration Health Surcharge payments
• Priority processing fees
• Repayments of loans or investments related to business costs

In terms of how this is calculated, the deductions are averaged over the full sponsorship period, i.e. the length of the Cos, when assessing whether an individual is eligible for a visa.

An exception applies where the deduction is for an optional benefit that the employee genuinely chooses to take up, such as through a salary sacrifice arrangement.

Practical implications for employers

Employers who intend to pay visa application and Immigration Health Surcharge fees on behalf of sponsored employees must now ensure that any planned salary deductions do not cause the salary to fall below the required salary threshold for the skilled worker visa route.

Example:
An employer sponsors an employee for three years with a salary of £45,000. They pay visa-related fees totalling £4,374 (visa fee: £769, Immigration Health Surcharge: £3,105, priority processing fee: £500) and plan to recoup this via monthly salary deductions. This would reduce the employee’s effective annual salary by approximately £1,458.Even after the deductions, the employee’s salary remains above the £38,700 threshold, and thus eligible for visa purposes.

Employers should calculate this carefully before assigning a CoS to ensure they don't all foul of the new provisions.

What about clawback clauses?

The updated rules and guidance do not specifically refer to clawback clauses so there is some debate as to how these provisions will impact the use of them. As the new rules focus on "salary deductions" and many clawback clauses operate by deducting sums from a final salary payment if an employee leaves early, they could potentially fall within the new restrictions.

Does this mean employers must abandon clawbacks? Not quite yet. Crucially, the new rules apply only at the point of deduction. If a claw back is never engaged or a repayment is handled separately — for example, through an invoice rather than a salary deduction — employers may avoid breaching the guidance. However, this may cause issues from a tax/national insurance perspective. However, clawback terms should be reviewed carefully to ensure compliance with the new rules. Employers may need to make clear in the terms that any amounts paid back by an employee will be within the parameters of these rules. Clawback amounts typically taper over time, so it will be difficult to predict at the outset exactly how much will be repaid to make accurate calculations whether it will render an applicant ineligible for a visa. Employers are strongly advised to seek legal advice both when drafting clawback terms and before enforcing them to ensure there are no unintended impacts on their sponsorship duties and licence.

Key takeaways

• Employers must cover core sponsorship-related costs and cannot recover them from workers
• Any deductions for immigration-related costs must be carefully assessed to ensure they do not reduce salary below visa thresholds
• Clawback clauses may still be used but require careful structuring and advice
• A proactive review of current practices and policies is essential to ensure compliance with the updated framework