Benefits
The benefits of sponsor licensing in the UK have long been lauded by some, even before the end of free movement. It now represents pretty much the only way to gain demand-driven access to the best skilled workers globally. And, in many ways, it is a great time to become a sponsor. The skill level requirement for roles has been lowered since 2020, and more flexibility has been introduced (eg, it is currently not mandatory to advertise a role in the UK for a fixed period before sponsoring).
Sponsorship also aids retention as, while it is possible for a sponsored worker to change role/sponsor from within the UK, it is not always easy for them to achieve. Plus, there may be a greater level of loyalty towards the organisation if it has enabled the worker to be in the UK.
At what cost?
So, the potential benefits are clear; however, sponsorship comes at a cost. Recent governments have consistently raised the costs associated with obtaining a sponsored work visa – with the most recent increases coming into effect on 4 October 2023 – and there’s no reason to suspect that trend will be reversed.
For an employer that is neither charitable nor ‘small’ there will invariably be an upfront immigration skills charge to pay. This is currently £1,000 for each year of the visa being sponsored (ie, £3,000 for a three-year visa). That’s on top of the £1,500 (approximate cost) that the employer will have paid to obtain or renew their four-year licence. There’s also a small admin fee per sponsorship of around £240. That won’t sound too bad for some organisations, particularly if it means avoiding a hefty agent’s fee. But it’s when you add the visa applicant’s costs that things can become eye-watering.
Sharing the burden
The employer’s costs cannot be shared with the employee. That’s a breach of the sponsor guidance, which could cost you your licence. However, the worker’s costs can, and offering to support with these can be a powerful tool in securing the candidate. Plus, it could increase the prospect of you retaining the individual for longer.
This is known as a clawback and is, in principle, legal. We often see them in respect of training costs covered by an employer. The underlying principle is your recovery of some of the loss to your expected return on the investment made in the worker.
The same principles apply when it comes to visa sponsorship. If you invest around £7,000 in the visa application for a three-year visa, but the worker leaves at the end of year one, then you’ve essentially not seen two thirds of your anticipated return.
The ‘good’ clawback
So how do you make a ‘good’ clawback arrangement? It’s dangerous to over simplify here. If your clawback is challenged before a court, the judge is likely to make a detailed factual assessment of whether the provisions are reasonable in the particular circumstances. However, some key ingredients include:
- Communicating clearly and in writing, and at the offer stage. If a worker says they did not know about, or did not understand the arrangement, you may fall at the first hurdle when seeking to enforce.
- Explaining why you are using it. This isn’t just to be considerate to the worker. It lays the groundwork for justification later.
- Being sophisticated when designing the clawback. A blunt instrument won’t stand up to scrutiny. So, consider identifying the expected return to the organisation over the period of the visa, and make the amount of the clawback linked to when the worker leaves.
What’s the impact?
Done correctly, an offer of support for visa application costs combined with a sophisticated clawback can:
- make the difference in securing the candidate;
- set you apart from your competitors in the jobs market;
- increase the likelihood of retention of the worker; and
- give you the potential to recover a significant part of your investment if the worker leaves prematurely.
So, with recruitment still a challenge for many UK-based employers, perhaps it’s time to revisit the cost-benefit analysis of work visa sponsorship?
For more information about any of the issues covered in this update, or if you need advice on work visa sponsorships please contact Adam Williams, Partner in Employment and Immigration.
This article was first published on People Management’s website.
