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By James Perrott & Firuza Ahmed on October 2, 2023

POSTED IN EMPLOYMENTFOREIGN WORKERSIMMIGRATIONMAYER BROWN GLOBAL MOBILITYUK

The UK Home Office has announced that, with effect from 4 October 2023, there will be an increase in application fees for a number of UK immigration and nationality routes.  The headline increases are:

  • Work and visit visas – increasing by up to 15%
  • Family visas, settlement and citizenship fees – increasing by up to 20%
  • Student visas – increasing by up to 35%

Background to the fee increases

Since the introduction of visa and settlement application fees in the UK in 2003, the cost to individuals and businesses has risen significantly over the years.  The UK government’s view is that those who benefit the most from the immigration system, that is migrants themselves and those, such as employers, who sponsor migrants, should pay for its costs.  To this end, the fees set by the Home Office are above the actual cost of processing immigration applications as the income generated is also used to fund the operation of the UK’s border control and immigration system as a whole, including the compliance and enforcement functions.  A spreadsheet of the new 4 October fees detailing the actual cost to the Home Office for each category can be found here.

Immigration Health Surcharge

The Home Office has also proposed to increase the Immigration Health Surcharge by 66% from £624 to £1,035 per year.  Although the UK Government has yet to publish the date that this will come into effect, it is likely to be early next year.

Immigration Skills Charge

One piece of good news is that there are currently no plans to increase the Immigration Skills Charge, which currently costs £364 or £1000 per year for each sponsored migrant, depending on whether the sponsor is a small or large employer.

Immigration and Nationality Fees

Below is a table listing some of the main fee changes which are likely to affect employers who sponsor migrants to work in the UK.  The full details of the new fees may be found here.

 ApplicationCurrent feeNew fee as of 4 October 2023Fee change / Percentage increase
Certificate of Sponsorship (“CoS”) – including Skilled Worker and Senior or Specialist Worker£199£239£40 / 20%
Skilled Worker or Senior or Specialist Worker visa application for three years or less (main applicant and each dependant)£625£719£94 / 15%
Skilled Worker or Senior or Specialist Worker visa application for more than three years (main applicant and each dependant)£1,235£1,420£185 / 15%
Skilled Worker or Senior or Specialist Worker in-country extension application for three years or less (main applicant and each dependant)£719£827£108 / 15%
Skilled Worker or Senior or Specialist Worker in-country extension application for more than three years (main applicant and each dependant)£1,423£1,500£77 / 5.4%
Indefinite leave to remain on the basis of five years’ sponsored employment in the UK (also known as settlement)£2,404£2,885£481 / 20%
Naturalisation as a British citizen (adult – this is in addition to the Citizenship Ceremony fee of £80)£1,250£1,500£250 / 20%
Registration as a British citizen (child)£1,012£1,214£202 / 20%
Priority processing of out of country visa applications (non-settlement)£250£500£250 / 100%

To give sponsoring employers an idea of how this will affect them, the overall cost, excluding legal fees, of sponsoring a migrant for five years, where the sponsor is a large employer and the priority service is used, will increase by £475 (from £9,804 to £10,279) while the overall cost of sponsoring a migrant who has a partner and two children accompanying them to the UK for the same period will increase by £1,780 (from £23,619 to £25,399).

Conclusion

Whilst the Home Office states that all fee changes take into account the overall cost to applicants and employers versus the necessity of generating income to achieve the Home Office’s aim of a “largely self-funded” immigration system, there is no doubt that these above inflation fee increases will add to the significant fees burden already imposed on employers and migrants to the UK.  These fee increases may potentially affect the UK’s economic growth if they lead to companies moving specialist roles which they cannot fill from the UK’s domestic labour market to other countries or they result in highly skilled migrants deciding not to relocate to the UK as they consider the immigration costs to be excessive. 

Sponsoring employers may therefore wish to consider the duration of sponsorship.  If a CoS is assigned for the maximum five year period at the outset, although this may save on potential extension application costs, it does result in a significant up-front outlay.  We are therefore increasingly seeing employers sponsoring permanent UK employees for a shorter initial period.  We are also receiving a number of requests to assist in the preparation of clawback provisions to be inserted into the employment contracts of sponsored migrants, which enable employers to claim back all, or a proportion of, the immigration costs if the sponsored migrant leaves their employment before their sponsorship ends.  Care must be taken in the drafting of such terms to ensure that they are not deemed to be penalty clauses since this could result in them being found to be unenforceable.  In addition, it is important to be aware that there are some immigration costs that sponsor licence holders are not permitted to claw back, which includes the Immigration Skills Charge.

Tags: Employer-EmployeeEmploymentFeesImmigrationUK Home OfficeUK ImmigrationVisa

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In this Legal Update, Mayer Brown’s Employment and Benefits Group discusses the impact of the new rules on companies that may need to enforce such rules in other countries, including specific commentary on the laws of: Brazil, China, France, Germany, Hong Kong, Singapore, the United Arab Emirates and the United Kingdom.  In particular, we consider whether such policies are enforceable in those countries and how easily clawback can be achieved. 

You can read the update here.   If you have any questions, or would like to learn more about the topics discussed in this Legal Update, please contact Ryan J. LieblLaura D. RichmanDuncan A.W. Abate, Miriam Bruce, Aline Fidelis, Christopher Fisher, Régine Goury, Julien Haure, Hagen KöckeritzJad A. Taha, Jennifer C.W. Tam, Hong Tran or Guido Zeppenfeld.

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As a reminder, our Pensions team has produced a guide for trustees and employers, which sets out a series of trustee steps for the implementation of EDI in their scheme, the many employer-specific considerations, and how we can support trustees and employers in improving EDI in their scheme.

Listen to this episode here. If you would like to be notified of future OPEN Talks episodes, alongside the existing UK employment law podcast series, please contact us here.

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We have produced a guide for trustees and employers that sets out:

  • A series of trustee steps for the implementation of EDI in their scheme.
  • A number of employer-specific considerations.
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If you have any questions, or would like to discuss any aspect of the Regulator’s guidance or our guide further, please contact Jay Doraisamy.

We recently published the latest episode of OPEN Talks, where Miriam Bruce, partner in the London Employment Group, discusses artificial intelligence (AI), its regulatory landscape and the potential risks for employers using such technology. In rather timely fashion, that week also saw a number of conflicting developments in the AI space that reflect the risks and global legal positions discussed in our podcast (listen here).

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These widely-reported predictions were closely followed by the UK government’s AI-focused white paper, “A pro-innovation approach to AI regulation“. Similar to Goldman Sachs’ report, the paper highlights AI as “critical” technology that can create new jobs and improve the workplace. The government is proposing to implement a new, initially non-statutory and principles-based, framework to bring “clarity and coherence” to the regulatory landscape for AI.

While the white paper is broad and wide-ranging, a key aim of the proposed framework is to build public trust in AI and it acknowledges the need to address wider concerns about bias and discrimination. The government’s initial proposal is for existing regulators to implement the framework and principles. For example, it provides a recruitment-based case study, where it foresees that the Equality and Human Rights Commission, the Information Commissioner’s Office and others will be encouraged to issue joint guidance and help businesses apply transparency measures and bias mitigation standards when navigating the regulatory landscape. (Look out for a wider discussion on the content and impact of this white paper on businesses by our IP team – this will follow shortly.)

Aside from the government’s white paper, and despite steps being taken in the UK, EU and the US to regulate AI, Italy recently became the first Western country to ban ChatGPT, pending an investigation into the software’s compliance with GDPR laws. A number of other countries, including China, Russia, North Korea and Iran, have reportedly already blocked ChatGPT. It remains to be seen whether other Western countries will follow Italy’s lead.   

Given the number of developments in recent weeks (with no sign of a pause…), employers should continue to watch this space, particularly if using AI platforms during recruitment or other stages of the employment relationship. While the race for regulation continues, until there is an established framework governing its development, implementation and use, AI will not be far from the headlines…

In the latest episode of OPEN Talks (our series of short podcasts focused on diversity, equity and inclusion (DEI)), Global PSL, Louise Fernandes-Owen, interviews Christopher Fisher and Miriam Bruce, partners in the London Employment Group.

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In April 2023, the latest round of annual increases relating to the maximum awards available at Employment Tribunals and other statutory rate increases, such as statutory sick pay and the national minimum wage, take effect. Perhaps not unsurprisingly given the current inflationary environment, the increases are significantly higher than in previous years, most notably in respect to the compensatory award for unfair dismissal which benefits from an inflation-based increase of over 12% taking its limit to £105,707 (up from £93,878 in 2022).  

We set out below the key rates and limits that employers should be aware of.  

1.    Increase of limits on tribunal awards

Under the Employment Rights (Increase of Limits) Order 2023, the following new figures will apply from 6 April 2023:

  • the statutory limit on a week’s pay, which is used to calculate statutory redundancy and the basic award for unfair dismissal, will increase from £571 to £643; and
  • the maximum compensatory award for unfair dismissal will increase from £93,878 to £105,707. Note that unfair dismissal compensation remains capped at the lesser of the compensatory award or a year’s pay.

Employers facing potential Employment Tribunal claims with an effective date of termination of 6 April 2023 onwards should therefore be mindful of the significant increase to the compensatory award, in particular, when considering any potential exposure to unfair dismissal claims and during the course of any settlement discussions regarding such claims.

2.     Increases to other statutory rates

Employers should also be aware of the following statutory employment rate increases.

  • from 10 April 2023, statutory maternity, paternity and adoption pay will increase to £172.48 per week (or 90% of the employee’s weekly earnings, if lower) (up from £156.66);
  • from 10 April 2023, statutory sick pay will increase to £109.40 per week (up from £99.35); and
  • from 1 April 2023, the national living wage will increase to £10.42 per hour (up from £9.50).

Employers should ensure that they are ready to implement the changes above from the relevant dates.

See the Social Security Benefits Up-rating Order 2023 and the National Minimum Wage (Amendment) Regulations 2023 for further information.

3.    Increased Vento bands apply from 6 April 2023

On 24 March 2023, the Presidents of the Employment Tribunals published updated guidance on Employment Tribunal awards for injury to feelings and psychiatric injury, which sets out the revised Vento bands of compensation for the 2023/24 tax year, as updated for inflation.

For claims presented on or from 6 April 2023, the new Vento bands will be as follows:

  1. a lower band of £1,100 to £11,200 for less serious cases in which the discriminatory act is an isolated or one-off incident (up from £990 to £9,900 in 2022);
  2. a middle band of £11,200 to £33,700 for cases that do not merit an award in the upper band (up from £9,900 to £29,600 in 2022);
  3. an upper band of £33,700 to £56,200 for the most serious cases, for example, where there has been a lengthy campaign of discriminatory harassment (up from £29,600 to £49,300 in 2022);
  4. with the most exceptional cases capable of exceeding £56,200 (up from £49,400 in 2022).

Given current inflationary pressures, the increase to the upper band is particularly notable, and any employer facing claims where the Vento bands are in play post-6 April 2023 should therefore be mindful of these increases.