Businesses urged to budget carefully when recruiting overseas employees

Businesses are being advised to prepare thoroughly – and budget accordingly – when considering hiring staff from overseas. The warning comes from Azets, the UK’s specialist business advisor to SMEs, as costs associated with bringing in foreign workers continue to rise for both employer and employee.

Senior HR consultant Andreja Okambga, part of the HR Consultancy Services team at the accountancy firm, said a number of factors were behind the rising cost.

Increases to the visa application fees effective from 4 October have contributed 20% to overseas employee cost inflation. That cost is set to rise still further when the government implements an announced 66% rise in the immigration health surcharge (IHS) to £1,035 per person per year. 

Andreja Okambga

The implementation date has now been announced as 16 January 2024 (or later pending parliamentary approval). When the surcharge, to access the NHS, was introduced in 2015, it was £200 per person per year.

Employers have also been hit with an increase to the certificate of sponsorship fee, but the skills charge, payable by the employer, has not been increased.

Andreja said a skilled worker immigrating with a partner and two children after the January 2024 IHS increase will be hit with a bill of £23,790 before even considering legal fees or moving expenses such as flights, accommodation, an English language test and a TB test.

The employer will also have to pay £5,239 for the privilege of sponsoring a skilled worker from abroad, and this does not include the costs of maintaining the sponsor licence.

Andreja, an immigration advisor registered with the Office of the Immigration Services Commissioner (OISC), has set out some tips for businesses.

  • Businesses should review their recruitment budgets and policies and re-evaluate their recruitment strategies
  • Budgets will have to be increased to account for the increasing fees, but also considering that more applicants will require help with the fees to be able to relocate
  • Those employers who are able to continue to support applicants with increasing fees should ensure appropriate claw-back agreements are implemented to safeguard the business against the risks and enable them to recoup the investment should the employment not work out
  • Businesses should also accelerate any visa applications in the pipeline to try to get them over the line before the IHS increase in January

Andreja said: “Workers entering the UK to start a sponsored job are typically sponsored by employers for three years initially to mitigate the risks of the employment not working out. 

“Since the fee increases were announced, more workers are sponsored for the full five-year duration from the outset, to avoid the uncertainty of the increasing fees and to try to lock in the whole sponsorship period at the current fees. 

“While that is a much bigger financial undertaking now, it means the overall cost of sponsoring a worker will be lower. 

“Visa application fees are often picked up by employers and I expect this will become a necessity as more and more applicants will be priced out of being able to pay for their own visas. 

“A lot of people don’t appreciate the total cost that a skilled worker in demand in the UK needs to pay for the privilege of working here.”

Latest government figures show that in the year ending June 2023, there were 321,101 work visas granted to main applicants, 45% higher than in the year ending June 2022 and 144% higher than the number in the year ending June 2019, prior to the Covid-19 pandemic. The rise is largely due to increases in the ‘skilled worker’ visas.

According to the Office for National Statistics (ONS), the number of non-UK nationals working in the UK has increased by 344,000 (+9%) in the past year to 4.26 million. Of these, an estimated 1.98 million are non-EU nationals. The total UK workforce is estimated at 30.1 million.

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