With sponsorships on the rise post-Brexit, employers are asking about how they can look to recover fees and create an effective reimbursement agreement.
Many employers are keen to protect their investment when sponsoring a migrant worker and therefore may consider issuing a reimbursement agreement to recover some of the immigration fees from the employee if their employment was to end within a specified period.
We have explored some of the key issues and potential risks involved when looking to recover immigration fees.
The average cost of sponsoring a skilled worker for five years can be in excess of £10,000 and most of the fees incurred are government fees which may include:
- a visa application fee;
- a fee to assign a certificate of sponsorship;
- an immigration skills charge;
- an immigration health surcharge;
- a fee for attending an appointment; and
- a priority processing fee.
In many cases, most of these fees are funded for by the employer, and so sponsoring an employee can result in a significant up-front investment. Therefore, one method in protecting the employer’s investment is to require the sponsored employee to agree to repay some or all the immigration fees associated with their application if their employment was to end within a specific period. This is commonly referred to as a ‘reimbursement agreement’.
These arrangements are getting increasingly common but are not without some risk and so careful thought and drafting is essential.
Key Considerations
Clause in the Contract or a Separate Agreement?
Is the reimbursement obligation going to be embedded as a clause in the employment contract itself or is it going be under a separate agreement that will be issued to the employee?
We would recommend a separate agreement is issued and obtaining the employee's signature to evidence their consent to the agreement, this will ensure it is clear about what fees will be recovered and that the employer has the explicit authority to make a deduction from the employee.
Is it Enforceable?
It is possible that an employee could seek to argue that a repayment obligation is either a penalty or a restraint of trade, rendering the obligation unenforceable and invalid. Whether this argument would be successful remains untested in law and each case would turn on its own facts. We can report that repayment obligations in the (slightly different) context of training costs are enforceable, provided that they are proportionate to the loss suffered by the employer. In any event, the obligation may still have some value to the employer as a deterrent.
Is it Proportionate?
The best way to mitigate against an argument that a reimbursement agreement is unenforceable is to carefully tailor the repayment obligation so that it is proportionate. This could include:
- incorporating a provision, so that the obligation to repay the fees extinguishes after a particular period;
- phasing out the obligation, so that the amount of the fees that needs to be repaid incrementally decreases over time and on a sliding scale basis;
- excluding some elements of the immigration fees; and
- excluding certain reasons for termination, such as redundancy.
Is it Discriminatory?
Employers should be mindful of the risk of an indirect race discrimination claim being brought in respect of a repayment obligation. This would be on the basis that the repayment requirement is likely to have a worse impact on non-British nationals. Indirect discrimination can, however, potentially be justified if there is a good reason for it. The specific point has not yet been tested in the tribunals, but employers should be prepared to explain why the reimbursement agreement is both necessary and proportionate. It is also arguable that a lengthy repayment provision indirectly discriminates against women, older or disabled employees because these groups may be less likely to be able to remain in stable employment and so may have shorter lengths of service. In addition, employers should be wary about imposing repayment obligations on certain sponsored employees but not others, as this raises risks of direct discrimination between different groups.
If you have any questions about this article or require advice on recovering immigration fees or would like a reimbursement agreement, please contact our advice line on 033 33 215 005 or e-mail us on websiteenquiries@wirehouse-es.com
