From December 2024 and January 2025, significant changes have been introduced to the UK Sponsor Licence Guidance, and claw-back clauses in employment contracts have been in the spotlight. These changes are critical for employers sponsoring skilled workers under the UK immigration system, as non-compliance could result in severe penalties, including the suspension or revocation of your sponsor’s licence.
A claw-back clause allows employers to recoup certain costs associated with sponsorship and visa applications if an employee leaves their role prematurely. While these clauses can protect your company’s financial investment, the updated guidance introduces strict limitations to ensure fairness and compliance with UK immigration law.
Key questions to consider:
- Are your claw-back clauses clearly defined and legally enforceable?
- Are you aware of the costs you can and cannot recover from employees?
- Is your company prepared for a Home Office audit?
Employers would need to clearly define which costs can be recovered through a claw-back clause. Employers would typically include claw-back provisions for:
- Relocation expenses
- Sign-on bonuses
- Recruitment fees
- Specific training costs
- Visa and immigration costs
- Professional membership fees
Employers must ensure that these costs are reasonable and directly related to the employee’s role, and employment contracts must clearly set out the circumstances in which claw-back provisions apply, the specific costs that can be recovered, and the timeframe and method of recovery.
The newly updated guidance now explicitly prohibits employers from recouping the following costs from employees:
- Immigration Skills Charge (ISC)
- Certificate of Sponsorship (CoS) fees
- Sponsorship licence fee and ‘associated administrative costs’
These costs are considered to be the responsibility of the employer and cannot be passed on to the employee, even indirectly. The main concern revolves around associated administrative costs. According to the official guidance and the Sponsorship Management System, these costs definitely include priority service fees, which employers are not allowed to recover. In addition, following consultation with the Home Office, legal fees associated with sponsorship must also be covered by the employer.
In the case of newly established companies, even if the founder or entrepreneur initially pays for the legal and administrative costs personally, the application for a sponsorship licence and the associated fees must ultimately be paid by the company. This ensures compliance with government regulations and helps to avoid potential audit issues.
Employers need to review their existing employment contracts and sponsorship policies to ensure they comply with the updated guidance. Failure to do so could result in the suspension or revocation of their sponsorship licence. In addition, clear and transparent communication with both current and prospective skilled workers is crucial. Employers should provide detailed information on claw-back clauses and their implications, and ensure that employees fully understand their rights and obligations.
At Quastels, we specialise in corporate immigration and employment law, and offer tailored solutions to help employers navigate these changes with confidence. Our services are designed to ensure your business remains compliant while protecting your investment in global talent.
For further assistance or to arrange a compliance review, please contact our team. We are here to help you navigate these changes and ensure your sponsorship practices remain robust and compliant. Let us help you protect your business and your employees.
