Home Office Tightens Sponsorship Rules: Key Changes for Employers in 2025

With hours left before the New Year, the Home Office updated its Workers and Temporary Workers guidance for sponsors, making it clear that sponsors could no longer pass on the sponsor licence fee or the cost of assigning a Certificate of Sponsorship (CoS) to sponsored workers, which is usually £239 per worker.

It also announced more stringent rules relating to key personnel, who are permitted to access an organisation's sponsor licence, as well as the sponsorship of individuals for self-benefit, and a requirement for sponsors to genuinely intend on offering roles they have indicated in their sponsor licence applications.

Sponsorship Costs

Historically sponsors have been able to claw back many of the costs related to sponsored worker applications. A fee that has always been payable by a sponsor is the Immigration Skills Charge (ISC) levy. This fee was introduced in an attempt to ensure that employers prioritised settled workers ahead of non-resident workers. The expectation being that if a sponsor had to pay up to £1,000 a year for a sponsored worker, they would only do so if they were genuinely required.

Due to the increasing costs of sponsorship, often reaching tens of thousands of pounds for an applicant and any accompanying dependant family members, sponsors have historically used clawback clauses to ensure that if a sponsored worker were to leave during sponsorship, they would not be at a loss. However, the Home Office has clarified that it is not possible to claw back the CoS fee.

In practical terms, this means that sponsors are now fully responsible for the CoS fee, ISC levy, cost of the sponsor licence, any applications to add routes to a sponsor licence and any premium service fees on approval of the licence. None of these fees should be included in a clawback clause or requested upfront from an employee considered for sponsorship.

Level 1 User Update

In terms of compliance, every sponsor licence is required to have dedicated key personnel including an Authorising Officer, who is the most senior person responsible for the sponsorship of workers and a Level 1 User, who has access to the sponsor management system. The latter role is fundamental to the maintenance of a company's sponsor licence and is the only person able to make updates to a licence.

The changes to the guidance have made reference to who can take on the Level 1 User role. For new sponsor licences submitted after 31 December 2024, a sponsor must have at least one Level 1 User who, in their own right, meets the following requirements:

1. They are an employee, a partner or a director within the sponsoring organisation; and
2. They are a settled worker (including British, Irish, EU, EEA or Swiss nationals in employment with the organisation prior to 30 June 2021 - if their right to work check was carried out correctly, British Overseas Territory citizen, certain Commonwealth citizens and individual with Indefinite Leave to Remain or Settled Status).

No doubt this may cause concern for many smaller sponsors. However, there are transitional arrangements for existing sponsor licence holders.

For sponsor licences granted prior to 31 December 2024, or where an application has been made before the date but is then granted, there must be one Level 1 User who is an employee, a director or a partner in the organisation and at least one Level 1 User who is a settled worker. This requirement can be met by one individual or two.

Where sponsors do not currently have a settled worker as a Level 1 User, it is advisable to identify such an individual for the role as it is expected that the Home Office will introduce the need for settled Level 1 Users in due course.

Further, any existing Level 2 Users should be made Level 1 Users if they meet the criteria as they will no longer have access once the Home Office updates its sponsor system.

Other Updates - Sponsored Workers in a Personal Capacity

The guidance update further confirmed the prevention of sponsoring workers in a personal capacity. An example of this would be where an individual or household wishes to employ workers other than those who conduct business or provide a service in the UK. Also, where they will be employed by or engaged for the personal benefit of an individual who works for the sponsor or is a close relative or partner of the individual and the role is unrelated to the organisation's wider activities.

It added that existing sponsors can no longer sponsor workers in this way or the Home Office can revoke their licence and that the only exception would be specific scenarios including private servants in diplomatic households.

Third-Party Sponsorship

The guidance also reiterated the existing rule that a sponsor licence application will be refused where the Home Office believe that a prospective sponsor is acting or willing to act as an employment agency or business and will supply workers as labour to another organisation.

Should you have any questions regarding the information in this article, please do not hesitate the Rhona Azir and the Immigration team at Fieldfisher LLP.