25th February 2025 | Nelli Shevchenko | Visa Sponsorship costs, UK Immigration Fees, Immigration

The Labour government has made it clear that employers continue to be responsible for upholding immigration law, and this has once again put the spotlight on compliance. In a two-part series from Sherrards focussing on UK immigration and employment compliance, we look at the costs for UK businesses of sponsoring and recruiting overseas migrants, how the business can clearly set out what it requires from its overseas hire and use repayment provisions in employment contracts (“clawbacks”).

In the current competitive talent market, UK businesses strive to attract best and brightest to join their ranks. It often means sourcing suitable candidates from overseas and undergoing a sponsorship process. Before an offer is made, the business must consider various aspects of the hiring process and the associated cost.

One of the fundamental questions in decision for sponsoring is how much it will cost and what if things go wrong?

Indeed, the cost of sponsorship can run into thousands of pounds with fees to be paid upfront before the candidate even starts work. Businesses need to understand what happens if the employee decides not to join before their start date with the business or leaves within a short period of time. With over 100,000 UK business holding a sponsor licence, employers often ask how to make sponsorship process cost-effective and how to protect themselves from losing not only the candidate, but the money paid to get the UK visa.

How much does it cost to sponsor a worker?

  1. Sponsor licence application fee

Firstly, to employ an overseas worker, the business must have a licence in place. The licence is granted by the Home Office, and it is a one-off cost to the business with automatic extensions. Where the company already has a licence, the fee is not required.

A small company pays £536, and a medium or large business pays £1,476 to apply for a sponsor licence. The size of the business is regulated by the Companies Act, and depends on annual turnover, assets and number of employees (50+). Small company fees also apply to charities and schools etc. A decision usually comes within 8 weeks or, within 10 working days for an additional £500.

For a full breakdown of costs, visit the UK Home Office Website.

  1. Certificate of Sponsorship fee

The Certificate of Sponsorship (Certificate) is issued to each individual candidate or employee with their job details confirming the company’s sponsorship. The cost of the Certificate, payable by the business, is currently £239.

In January 2025, Parliament proposed to increase the Certificate fee to £525. We are yet to learn if the increase will happen and if so, when, but our experience is that this will happen very quickly, so may affect up-coming recruitment.

  1. Immigration Skills Charge

On top of the Certificate, the business pays the Immigration Skills Charge (ISC). This is set at £364 per year of sponsorship for small businesses, and £1,000 per year of sponsorship for large businesses.

The ISC was introduced in 2017 as a way of generating extra funds to the Department of Education to invest in skills development and training of local workers. The charge raised £586 million in 2022/23 alone, though some argue a lack of transparency in relation to how the funds are being utilised.  

  1. UK visa application fee

A UK visa application fee needs to be paid by the individual to submit a UK visa. form.

Those hired from outside the UK currently pay £719 (3-year visa) or £1,420 (5-year visa).

Candidates based within the UK currently pay £827 (3-year visa) or £1,636 (5-year visa).

These fees do not include any family dependants.

  1. Immigration Health Surcharge

The Immigration Health Surcharge, set by the Government but paid by the visa applicant is currently £1,035 per year per adult and £776 per year per child and is payable for each year of the visa (in advance with the UK visa application fee).

The fee was dramatically increased in February 2024 rising by some 66% in part, to reflect the increased pressure and the upward costs of healthcare due to the growing migrant population (as stated in the Government’s Explanatory Memo).

  1. Is there anything else to pay during the sponsor license application?

There are various additional, often optional, fees to cover. Depending on the candidate’s location and nationality, the visa application centre fee can be applicable in a range between £50-200. Some applicants may need biometrics and therefore will need to collect in person, attracting additional costs for appointments and courier services.

In addition: legal fees, expedited processing services, or dependants joining the new hire may all add to either the overall cost outlay or delay for the employer. By way of example, the total cost of sponsorship, for an employee with a 5-year visa in a medium-sized company with no additional services or cost will come to total of £11,834, based on the following calculations: £239 + £5,000 + £1,420 + 5,175 = £11,834.

This excludes any legal fees, expedited processing service or other additional charges.

 

Restrictions on UK immigration fee recovery

The cost of a UK work visa application is often a significant expense to the business. It is no surprise then, that some employers will therefore ask their sponsored employee to reimburse some fees associated with the sponsorship process, especially in case of their early departure.

However, companies and other entities must be careful which costs they wish to recover.

They cannot recover the cost associated with the sponsorship itself. This is a cost that must be paid by the businesses who rely on the overseas workers. The Home Office made it clear in the latest 31st December 2024 sponsorship guidance update, that the business cannot ask its sponsored employees to cover or ask for reimbursement of the following fees:

  • Sponsor licence application fee and any other fee associated with maintaining the sponsor licence, including its administration and legal fees related to the licence application – (1) above.
  • Cost of Certificate of Sponsorship – (2) above.
  • Cost of Immigration Skills Charge – (3) above.

A business found in breach of the above conditions, risks a compliance action from the Home Office which may lead to suspension or revocation of the licence. This in turn can have disastrous consequences for the business, whose sponsored workers may lose their right to work in the UK unless they find an alternative sponsor.

What does the Home Office say about refunds?

UK immigration related costs are payable in advance for the full length of requested visa. However, what happens if the employee leaves early? For example, after 2-years on 5-year visa. Can the extra cost be refunded? The answer is partially. The Home Office refunds some of the fees that were paid per year of visa length. Detailed guidelines are set out covering various scenarios where full or partial refunds can be made.

In short, the business may be able to reclaim some of the cost when the:

  • worker decides not to work for the sponsor;
  • application is withdrawn before the decision is made;
  • UK visa is refused;
  • worker leaves the job early; or
  • worker changes their sponsoring employer.

Whether a refund of immigration fees paid out will be possible, will depend upon individual circumstances and specific costs paid as part of the application process.

How can employer manage the repayment?

During the hiring process, it will be useful for the business to be clear, internally and in conversation with its new hire about how the immigration and employment processes will ’dovetail’.

There are a number of points which immediately spring to mind here:

  • Pre-hire deed

During a period of likely negotiation, prior to the employment contract being signed, there will need to be a balance of trust: the employer may be applying for the Sponsor licence and thereafter applying for the certificate and therefore there may be a period of ‘quiet’ whilst forms are filled in and applications are made. The individual needs to remain steadfast in their commitment to join the business in question and communication needs to continue with the new hire – there needs to be comfort on both sides, particularly as the employer will be incurring costs.

To this end, some employers may at this point decide to put a deed in place (a separate stand-alone contract) under which certain immigration and legal costs expended are repayable if the potential hire does not in fact join the business at all. Let’s not forget the time and extent of the recruitment and hiring process to find the ideal candidate. This may act as a deterrent and/or give ‘comfort’ during this time. The extent of enforceability will be determined by jurisdiction and the candidate’s likely ties in future to the UK. It may become commercially unviable to pursue legal proceedings to enforce a deed outside the jurisdiction. Nevertheless, this can be a successful route, particularly if the individual has the mindset of moving to the UK or staying here.

  • Drafting the employment contract:

 

The contract should ideally include the general principle that the employee agrees to repay some or all of the immigration fees (defined) to the employer if they either fail to commence employment or leave the employment within a particular period of time after commencement of employment. The sponsor licence application fee (and associated administrative and legal costs), Certificate fee and Immigration Skills Charge, as explained above, cannot included in this clause as these costs must not be passed on to the migrant.

 

  • Sliding scale of repayments

Either within the contract of employment or sometimes as a separate policy (in a similar form to recoupment of training costs), this will usually set out the rate (often expressed as a percentage of the agreed sum) of the repayment on a sliding scale according to when the employee ceases their employment or if the individual fails to commence employment.

In this way, the longer the employee remains with the employer, the lower the percentage recoupment should be and the more benefit the business will receive from the expense of the immigration fees.

Remember also, that there needs to be power within the contract to allow the employer to make deductions from salary and this needs to be set out at the outset (and is usually a standard clause in the contract of employment).

  • Is repayment required?

There may be times when repayment is not required, and this should also be included in the drafting. Likely to be redundancy or summary dismissal – gross misconduct. Setting out when payment is not required will ensure everyone understands what is expected and required.

That said, there is no contractual provision required to specify the amount that will be deducted but do ensure that contractual provisions authorising deductions are drafted as precisely as possible. This is because if there is any ambiguity, it is likely to be construed against the employer, and the employer will, in any case, need to show that the deduction has occurred. 

  • Other employment law considerations

Employers should remember that the amount of the repayment and its corresponding timescale will be relevant to determining whether the clause is a penalty clause.

Another point to bear in mind is that employers need to ensure that the repayment period is not too long, as it may indirectly discriminate against employees on grounds of age, sex or disability: female, older or disabled workers are often less likely or less able than others to remain in continuous employment for longer periods of time and then a risk arises.

Summary

The business will have spent considerable time and effort during the recruitment process, incurring significant costs, including visa sponsorship fees and other expenses. Having identified the correct hire, it is important both parties move forward into the employment relationship knowing what is expected and required. By utilising sponsorship policies and repayment clauses referred to in this article, employers can safeguard their investment, ensure legal compliance with UK immigration law, and maintain a streamlined hiring process.  

If you would like to find out more please contact the Employment & Immigration team here, or via the details below.