Over recent years, the Government has frequently increased the costs incurred by organisations seeking to sponsor individuals under the Tier 2 (General) route. Jessica Walker takes a look at what the exact costs are under the Tier 2 route.
The Government’s aims in increasing costs includes to reduce migration rates to the UK and incentivise organisations to train settled workers. However, the significant costs involved in sponsorship are imposing burdens on a number of employers. We have recently been contacted by a number of small businesses and charitable organisations that need to sponsor workers to fill an immediate skills shortage but have found that the cost of sponsorship is simply too much.
It is important that organisations are aware of the associated costs of sponsorship under Tier 2 at the outset in order to ensure that it is a feasible option for them. Of course, the costs associated with using specialist recruitment agencies can also be significant and in many cases, the costs of sponsorship may be worthwhile vs specialist recruitment agent’s fees.
Tier 2 Sponsorship
Organisations that wish to employ non-EEA nationals will first need to make an application to the Home Office to obtain a Tier 2 Sponsor Licence.
Once an organisation holds a sponsor licence it will then be able to sponsor non-EEA nationals to work in skilled roles which cannot be filled by settled workers.
The initial cost that organisations will therefore face is the cost of the Tier 2 Sponsor Licence application and this fee varies depending on whether an organisation is considered to be a small company or a medium/large company.
An organisation will be considered to be a small company if it meets the definition set out within Section 382 of The Companies Act 2006. To meet this definition, two out of the following three requirements must be met:
- The company must have a turnover of no more than £10.2 million.
- The company must have a balance sheet total of no more than £5.1 million.
- There must be no more than 50 employees.
If an organisation meets at least two requirements, it will be classed as a small company, otherwise it will be required to pay the higher fee when applying for a sponsor licence. An organisation will also automatically be classed as a large company if it is a:
- public company;
- insurance company;
- banking company; or
- an e-money issuer.
The current fee payable for small companies to obtain a sponsor licence is £536 and it is £1,476 for large companies.
Certificate of Sponsorship (CoS) and Immigration Skills Charge
Once an organisation has a sponsor licence, it will need to issue a CoS to any individuals who are to be sponsored. This fee is currently £199.
Whilst this fee has been in place for a number of years, 2017 saw the introduction of the Immigration Skills Charge, as set out within the Immigration Skills Charge Regulations 2017. Whilst this fee is not payable in relation to those who are switching from the Tier 4 to Tier 2 category, it applies in the majority of other circumstances and is set at a rate of £1,000 per year of sponsorship for large companies and £364 per year for small ones.
This fee is payable at the time of assigning a CoS and it cannot be passed along to the worker, it must be paid by the sponsoring organisation.
If a large organisation was to sponsor an individual for three years, a payment of £3,000 would be required at the time of assigning the CoS, in addition to the £199 CoS fee.
The Immigration Skills Charge is designed to encourage British businesses to recruit and train UK employees. However, it will take time for the charge to be used to develop the skills of the settled workforce and will unfortunately therefore not benefit those organisations who have an immediate skills shortage now.
Visa application fee and the Immigration Skills Charge
Whilst the visa application fee and Immigration Skills Charge both apply to the individual applicant rather than the sponsoring organisation, many organisations that have agreed to cover the costs of the entire visa application process will find that a prospective worker will also expect these costs to be covered.
The visa application fee that an applicant will need to pay varies depending on the duration of sponsorship and whether an individual is making their application from within or outside of the UK. The current fee range however falls between £610 – £1,408 and generally increases each April.
In addition to the visa application fee, the Immigration Heath Surcharge is also payable and earlier this year, this increased to a rate of £400 per year. Using the above example again therefore, an individual who is to be sponsored for three years would need to pay £1,200 for the Immigration Health Surcharge when submitting their application for leave.
Tier 2 Sponsorship cost: Conclusion
The above sets out the basic Tier 2 Sponsorship costs involved when sponsoring a non-EEA national but doesn’t take into account any additional costs such as the costs of advertising, obtaining translations or taking relevant tests. It also doesn’t take into account the numerous priority services that are available for an additional fee and which in some cases, an organisation will need to pay in order to meet business needs or specific deadlines.
Whilst the costs are substantial and may prevent many employers from utilising the sponsorship process, the alternative options are currently limited. Organisations do therefore in many cases need to consider whether the business needs justify the cost.