ENTITY Sponsor Licence MN

Section M. Sponsor Licence Costs

The cost of sponsoring overseas workers can involve several separate Home Office charges. Employers should distinguish between the cost of obtaining and maintaining the sponsor licence, the cost of assigning Certificates of Sponsorship and worker-specific charges arising when an individual is sponsored.

The total cost will depend on factors including the size and status of the sponsoring organisation, the immigration route being used, the length of sponsorship and whether any exemptions apply.

Home Office fees are subject to change. Employers should therefore check the current fee schedule when making an application or assigning a Certificate of Sponsorship rather than relying on historic figures.

1. What does a sponsor licence cost?

A fee is payable when an organisation applies for a sponsor licence.

The applicable fee depends on the organisation’s circumstances, including whether it qualifies as a small sponsor or charitable sponsor for Home Office fee purposes or falls within the higher fee category.

The sponsor should determine the correct category before submitting its application.

Payment of the application fee does not guarantee that the licence will be granted.

2. Small and charitable sponsors

Lower sponsor charges apply in certain circumstances to organisations qualifying for the relevant small or charitable sponsor category.

Whether an organisation qualifies should be assessed against the applicable Home Office criteria.

Employers should not assume that being relatively small in commercial terms automatically places the organisation within the lower sponsor fee category.

3. Certificate of Sponsorship fee

A separate fee is generally payable when a Certificate of Sponsorship is assigned.

The applicable CoS fee depends on the sponsorship route.

This charge is separate from the original sponsor licence application fee.

An organisation recruiting multiple sponsored workers should therefore budget for sponsorship costs on a per-worker basis as well as for the licence itself.

4. Immigration Skills Charge

The Immigration Skills Charge (ISC) is an additional sponsor-side charge that applies to specified sponsorship under the Skilled Worker and Senior or Specialist Worker routes, subject to the applicable exemptions.

Where the charge applies, the amount depends on factors including:

• whether the organisation falls within the small or charitable sponsor category; and
• the length of the worker’s sponsorship.

The ISC can therefore represent a substantial part of the overall cost of sponsoring a worker for a longer period.

5. When is the Immigration Skills Charge paid?

Where applicable, the Immigration Skills Charge is paid as part of the Certificate of Sponsorship process.

The amount is calculated by reference to the relevant period of sponsorship and the sponsor’s applicable charging category.

The organisation should therefore identify the ISC implications before finalising the proposed sponsorship period.

6. Immigration Skills Charge exemptions

The Immigration Skills Charge does not apply in every sponsored worker case.

Exemptions apply in specified circumstances under the relevant regulations and sponsorship arrangements.

Whether an exemption applies should be checked against the particular worker, route and role before the CoS is assigned.

Sponsors should not assume that an exemption applying to one sponsored worker necessarily applies to others.

7. Can the Immigration Skills Charge be passed to the worker?

No.

A sponsor must not seek to recoup the Immigration Skills Charge from the sponsored worker.

This should be taken into account when drafting employment contracts, repayment agreements and immigration cost clawback provisions.

The ISC is a sponsor cost.

8. Can the Certificate of Sponsorship fee be passed to the worker?

Sponsors also need to comply with Home Office restrictions on recovering specified sponsorship costs from sponsored workers.

In particular, the sponsor should not seek to recoup a Certificate of Sponsorship fee from a sponsored worker where the sponsor rules prohibit this.

Cost recovery arrangements should therefore distinguish carefully between charges that legally fall on the sponsor and immigration costs that the employer may choose to fund on the worker’s behalf.

9. Worker immigration costs

The worker’s immigration application can involve separate charges that are not part of the sponsor licence itself.

Depending on the route and circumstances, these can include:

• immigration application fees;
• the Immigration Health Surcharge, where applicable;
• biometric or application-service costs where applicable;
• priority processing charges where used; and
• costs associated with dependants.

Whether the employer agrees to pay some or all of these costs is a separate commercial and contractual question, subject to any applicable legal or sponsor restrictions.

10. Sponsor licence priority service costs

Where available and where the applicant is eligible, an organisation may be able to use the Home Office pre-licence priority service to seek faster consideration of a sponsor licence application.

A separate fee applies.

Availability can be limited and use of the priority service does not guarantee that the sponsor licence will be granted.

The organisation must still satisfy all applicable sponsor requirements.

11. Post-licence priority services

The Home Office also operates priority arrangements for certain eligible sponsor licence requests after a licence has been granted.

These can allow specified sponsor management requests to be considered more quickly on payment of the applicable fee, subject to eligibility and availability.

Not every sponsor request can be expedited through the service.

12. Action plan costs

Where an existing sponsor is downgraded from an A-rating to a B-rating and required to follow a Home Office action plan, a fee is payable for the action plan.

This is a compliance-related cost rather than a routine sponsor licence charge.

The possibility of action-plan costs is another reason why sponsors should invest in maintaining effective compliance systems.

13. Internal compliance costs

The direct Home Office fees are only part of the cost of operating a sponsor licence.

Employers should also consider the internal resources required for:

• sponsor licence administration;
• SMS management;
• right to work checks;
• record keeping;
• sponsored worker monitoring;
• reporting;
• staff training;
• internal audits; and
• responding to Home Office compliance activity.

For organisations sponsoring significant numbers of workers, these governance costs can be material.

14. Professional adviser costs

Some organisations also use immigration advisers to assist with matters such as:

• sponsor licence applications;
• Certificate of Sponsorship assessments;
• sponsored worker applications;
• sponsor compliance;
• internal audits;
• Home Office compliance visits;
• suspension and revocation; and
• corporate transactions.

Professional fees are separate from Home Office charges.

Using an adviser does not transfer responsibility for sponsor compliance away from the licensed organisation.

15. Budgeting for sponsored recruitment

The cost of sponsorship is best assessed on a worker-by-worker basis.

A practical calculation can be structured as:

Sponsor licence cost

Organisation-level cost

Certificate of Sponsorship fee

Worker-level sponsorship cost

Immigration Skills Charge

Where applicable

Worker immigration application fee

Where funded by employer

Immigration Health Surcharge

Where applicable and funded by employer

Priority or application services

Where used

Professional fees

Where applicable

=

Total sponsorship and immigration cost

This gives employers a more realistic picture than considering the sponsor licence application fee alone.

16. Cost clawback agreements

Employers that fund immigration costs sometimes use contractual repayment provisions requiring employees to repay specified costs if they leave within a defined period.

Any such arrangement should identify precisely which costs are covered and should not require repayment of charges that sponsor rules prohibit the employer from passing to the worker.

Employment law considerations can also arise in relation to the drafting and enforcement of repayment provisions.

Employers should therefore avoid using a blanket provision requiring the worker to repay every sponsorship and immigration cost incurred.

17. Fees change over time

Sponsor and immigration fees are regularly reviewed and can change.

For that reason, organisations should check the current Home Office fee schedule at the point the relevant transaction takes place.

This applies particularly to:

• sponsor licence application fees;
• Certificate of Sponsorship fees;
• Immigration Skills Charge amounts;
• priority service fees;
• immigration application fees; and
• Immigration Health Surcharge amounts.

A master sponsor licence guide can become inaccurate quickly if historic fee figures are presented as permanent costs.

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Section N. Legal Framework

The UK sponsor licence system operates within a wider framework of immigration legislation, the Immigration Rules and Home Office sponsor guidance.

A sponsor licence is not governed by a single standalone piece of legislation. The legal and regulatory framework instead combines the Immigration Rules governing sponsored workers with detailed Home Office guidance governing the organisations that sponsor them.

Sponsors therefore need to consider both the requirements applying to the individual worker and the separate requirements applying to the organisation as a licensed sponsor.

1. Immigration Rules

The Immigration Rules set out the requirements that individuals must satisfy when applying for permission under sponsored work routes.

For a Skilled Worker, for example, the applicable Rules determine matters including:

• sponsorship requirements;
• eligible occupations;
• salary requirements;
• points requirements;
• English language requirements;
• validity requirements; and
• other conditions applying to the route.

Other sponsored work routes have their own requirements.

Holding a sponsor licence does not override these rules. A worker must still qualify under the immigration route through which they are being sponsored.

2. Sponsor guidance

The Home Office publishes detailed guidance governing organisations that hold or apply for sponsor licences.

For Worker and Temporary Worker sponsors, the guidance is divided into a number of parts dealing with different aspects of sponsorship.

The guidance covers matters including:

• applying for a sponsor licence;
• sponsor eligibility and suitability;
• key personnel;
• Certificates of Sponsorship;
• sponsor duties;
• reporting;
• licence management;
• compliance;
• downgrading;
• suspension;
• revocation; and
• organisational changes.

Sponsors should use the current version of the guidance when making sponsorship decisions because the guidance is amended periodically.

3. Appendix A — supporting documents

Appendix A to the sponsor guidance sets out the supporting document requirements for sponsor licence applications.

The documents required depend on factors including the type of organisation and the routes for which it is applying.

Appendix A is therefore particularly important when preparing an initial sponsor licence application.

An applicant should identify the requirements applying specifically to its organisation rather than relying on a generic sponsor licence document checklist.

4. Appendix D — record keeping

Appendix D to the sponsor guidance specifies records that sponsors must retain in relation to sponsored workers and sponsorship activity.

These record-keeping requirements form an important part of ongoing sponsor compliance.

Sponsors should ensure that the required records are:

• obtained;
• retained for the applicable period;
• kept in an acceptable format; and
• capable of being provided to the Home Office when required.

Appendix D should therefore be incorporated into the organisation’s sponsored worker file and document-retention processes.

5. Immigration Skills Charge legislation

The Immigration Skills Charge operates under separate legislation governing when the charge is payable and the circumstances in which exemptions apply.

The charge applies to specified sponsorship under relevant work routes rather than simply because an organisation holds a sponsor licence.

Sponsors should assess whether the charge applies when assigning the relevant Certificate of Sponsorship.

6. Prevention of illegal working

Sponsor licence compliance also interacts with the UK’s prevention of illegal working regime.

Employers are responsible for ensuring that employees have the right to undertake the work for which they are employed.

A sponsor licence does not replace the requirement to carry out prescribed right to work checks.

The employer should therefore distinguish between:

Sponsorship compliance

Is the organisation complying with its duties as a licensed sponsor?

and

Right to work compliance

Has the employer established the individual’s right to undertake the work in accordance with the prescribed checking regime?

Both can apply to the same sponsored worker.

7. Wider UK law

Licensed sponsors are expected to comply with wider UK law.

This can include, depending on the organisation and circumstances:

• employment law;
• National Minimum Wage requirements;
• working time requirements;
• tax obligations;
• health and safety law;
• regulatory requirements; and
• other laws relevant to the organisation and its workers.

Non-compliance outside immigration law can therefore have sponsor licence implications in appropriate circumstances.

8. Sponsor guidance and Home Office decision-making

The sponsor guidance is central to the way the Home Office administers and enforces the sponsorship regime.

It specifies circumstances in which UKVI may or must take particular action against a sponsor.

This distinction can be important.

For example:

Mandatory provision

Where the specified conditions are established, the guidance requires the stated consequence.

Discretionary provision

The Home Office has a decision to make within the framework of the applicable guidance and public law.

When responding to enforcement action, the organisation should therefore identify the precise provision on which the Home Office relies rather than treating all sponsor breaches as having the same consequence.

9. Changes to the legal framework

Immigration Rules and sponsor guidance change regularly.

Changes can affect matters such as:

• eligible sponsored routes;
• occupation requirements;
• salary thresholds;
• Certificate of Sponsorship procedures;
• sponsor duties;
• reporting requirements;
• fees;
• compliance standards; and
• enforcement policy.

Sponsors should therefore avoid relying indefinitely on procedures established when the licence was first obtained.

Internal policies and training should be reviewed when material changes are introduced.

10. Which rules apply to historic events?

Where a compliance issue concerns an event that occurred in the past, it can be necessary to identify the requirements that applied at the relevant time.

Sponsor guidance is updated periodically.

The current guidance should not automatically be assumed to describe the requirement that applied when an historic event occurred.

In an enforcement case, the analysis can therefore require:

Date of alleged conduct

↓

Guidance applicable at that time

↓

Requirement in force

↓

Facts

↓

Potential breach

↓

Applicable enforcement consequence

This can be particularly important where the Home Office relies on historic sponsor conduct.

11. Sponsor licensing and individual immigration permission

The legal framework maintains an important distinction between the sponsor and the sponsored worker.

The sponsor is responsible for its licence and sponsor duties.

The worker is responsible for satisfying the requirements of their immigration route.

The two systems interact through the Certificate of Sponsorship:

Sponsor licence

Organisation authorised to sponsor

↓

Certificate of Sponsorship

Sponsor confirms relevant worker and role information

↓

Immigration Rules

Worker must satisfy route requirements

↓

Home Office decision

Permission granted or refused

A valid sponsor licence and CoS therefore do not guarantee that an individual immigration application will succeed.

12. Home Office enforcement and public law

Sponsor licence decisions are administrative decisions made by the Home Office.

There is no general statutory appeal against decisions such as sponsor licence suspension or revocation.

However, Home Office sponsor decisions remain subject to public law principles.

Depending on the circumstances, an unlawful decision can potentially be challenged by judicial review.

Relevant issues can include whether the Home Office:

• applied the correct policy;
• followed a fair procedure;
• considered relevant evidence;
• made a material factual error;
• acted rationally; and
• otherwise acted lawfully.

Judicial review does not operate as a general reconsideration of the merits of the sponsor’s case.

13. Maintaining legal and policy awareness

Sponsor compliance should therefore include a process for monitoring relevant changes to the sponsorship regime.

A practical governance model is:

Immigration Rules

What requirements apply to sponsored workers?

↓

Sponsor guidance

What requirements apply to the organisation?

↓

Appendices

What evidence and records are required?

↓

Right to work regime

What employment checks are required?

↓

Wider UK law

What other legal obligations affect sponsorship?

↓

Updates

Have any of these requirements changed?

This helps prevent sponsor systems from becoming outdated.

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