Fee clawbacks under fire - Key updates for Sponsors

On 31 December 2024, the Home Office updated the Workers and Temporary Workers: Guidance for Sponsors, clarifying the fees that sponsors are prohibited from recovering or attempting to recover from sponsored workers. This update reflects the Labour government’s efforts to fulfill its manifesto pledge to prevent rogue employers from exploiting the sponsorship system for overseas workers. In this brief blog, we will explore the key changes and examine the potential consequences for sponsors who recover or attempt to recover these specified fees from their employees.

Summary of changes

From 31 December 2024, the updated guidance expressly prohibits sponsors from recouping or attempting to recoup:

• The Skilled Worker sponsor licence fee and associated administrative costs;
• The Skilled Worker sponsor licence premium service fees;
• The Certificate of Sponsorship fee; and
• The Immigration Skills Charge for a Skilled Worker or a Senior or Specialist Worker.

The previous version of the Home Office guidance specifically prohibited recouping or attempting to recoup the Immigration Skills Charge from sponsored workers. We had always taken the view the additional fees specified in the updated guidance should not be recovered from sponsored workers and it is helpful the updated guidance identifies the further fees that cannot be recovered. The ‘associated administrative costs’ does leave some ambiguity and it is our view this will include the legal fees associated with the preparation and submission of a Skilled Worker sponsor licence.

What do I need to know?

If a sponsor is found to have recouped or attempted to recoup any of these costs, the Home Office will ‘normally’ revoke the sponsor’s sponsor licence. This will have a detrimental impact on the businesses and all sponsored employees, not just the employees the sponsor has sought to recoup the fees from.

Sponsors should review the clawback agreements they have entered into prior to 31 December 2024 and update their clawback agreements moving forward. If a template clawback agreement is used it should be updated to reflect the prohibited fees.

How can we help?

If you are a Sponsor licence holder and would like to discuss how the changes affect you or would like advise on preparing clawback agreements for sponsored employees please contact our immigration team.