How Much Does it Cost a UK Employer to Hire a Skilled Worker in 2021?

One of the realities of Brexit for British employers is that it is no longer possible to recruit staff from the EU at no cost. Prior to 2021, under free movement, EU nationals were free to travel to the UK, stay as long as they wished, and take up work without needing to secure permission beforehand. In the post-Brexit world, recruiting any overseas national, regardless of their country of origin, incurs a cost for both employee and employer. As such, businesses planning to recruit from overseas to fill vacancies for which there are insufficient local skills need to weigh up the costs and benefits of doing so. In this article, we will explain the costs involved in recruiting an overseas candidate under the Skilled Worker visa immigration route in 2021.

The cost of securing a sponsor license

All businesses in the UK, whether public or private entities, have to apply for and secure a sponsor license before they are able to recruit overseas nationals. Many businesses make the mistake of just looking at the cost of applying for a licence, but there may be several other costs which you should consider. The application fee itself for a sponsor licence is currently set at £536 for charitable and small businesses and £1,476 for medium and large businesses. Your business will be classed as small if it has (two of these must apply):

• an annual turnover of £10.2 million or less
• total assets worth £5.1 million or less, or
• 50 employees or fewer

If you are also planning to apply for a temporary worker sponsorship license, the application fee will be an additional £536 regardless of the size and type of business.

In addition, we recommend looking at any costs to your business of preparing for your licence application, including:

• Any IT system/s you implement to help adhere to your sponsor license duties. Remember, you will be expected by the Home Office to keep records on right to work checks, recruitments and interviews you have conducted, and information on your sponsored workers, including their qualifications and occupational registration, attendance, and up to date contact details. As such, you will need a way of recording this information in a timely, secure, and up to date manner.
• Hiring additional staff to help manage the sponsorship process
• Any legal advice you seek during the application process

The cost of sponsoring an overseas worker

Another cost that businesses should be aware of is the immigration skills charge. The immigration skills charge is paid each and every time you recruit a new overseas member of staff and issue a Certificate of Sponsorship. The immigration rules state, “You might have to pay an additional charge when you assign a certificate of sponsorship to someone applying for a Skilled Worker or Intra-company Transfer visa. This is called the ‘immigration skills charge’”. The Home Office require that the charge be paid if the worker is applying from outside of the UK and is coming to the UK to work for six months or more, or if they are applying from within the UK to come for any length of time. There are some other exceptions, however. You will not need to pay the immigration skills charge if the employee is coming to the UK on the Intra-company graduate trainee visa route or if they are switching from a UK study visa. In addition, if the sponsor is hiring an overseas worker in one of the following occupations, they will not need to pay the charge:

• chemical scientists (2111)
• biological scientists and biochemists (2112)
• physical scientists (2113)
• social and humanities scientists (2114)
• natural and social science professionals not elsewhere classified (2119)
• research and development managers (2150)
• higher education teaching professionals (2311)
• clergy (2444)
• sports players (3441)
• sports coaches, instructors or officials (3442)

The current immigration skills charge is £364 (for small or charitable sponsors) and £1,000 (for medium or large sponsors) for recruitment of up to one year. If you are recruiting an international worker for the maximum duration of five years, you can expect to pay:

• £1,820 (5 x £364) for small and charitable sponsors
• £5,000 (5 x £1,000) for a medium or large sponsor

In addition to the immigration skills charge, you will also need to pay £199 each time you issue a new Certificate of Sponsorship. There is no charge, however, if the worker is from one of the following countries:

Austria, Belgium, Croatia, Republic of Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Luxembourg, Malta, Netherlands, North Macedonia, Norway, Poland, Portugal, Slovakia, Spain, Sweden or Turkey.

Other costs to consider

In addition to the salary and other remuneration to be paid to the sponsored worker, you may decide to assist them with their immigration healthcare surcharge and other costs such as flights and accommodation when they first arrive. While the sponsored worker themselves is legally responsible for paying their own healthcare surcharge, as this can be extremely costly, and in some cases prohibitive if they have a family who is joining them in the UK (the cost is £624 for each adult per year), some employers assist with this. Indeed, the cost of the healthcare surcharge can run into many thousands of pounds for a family, and this has to be paid upfront as part of the application process for a Skilled Worker visa.

Another cost to bear in mind is that many businesses engage the services of third parties specialising in immigration law to carry out periodic sponsor licence mock audits. This ensures that when they receive a planned or unplanned visit from a Home Office compliance officer, they can be assured of being compliant with their legal sponsor duties. The cost of losing a licence for any business, whether permanently or temporarily, can be considerable.

In conclusion

Becoming a licensed sponsor to allow you to recruit from overseas needs to be considered from all perspectives. It is all too easy to underestimate the cost of sponsorship, but by taking the time to understand this fully, you can ensure that a sufficient budget is set aside to allow you to recruit the skilled personnel you need.