Can Employers Pay Sponsored Workers More Than Non-Sponsored Workers?

A question that HR teams and in-house lawyers are increasingly grappling with, as UK salary thresholds for sponsored workers have risen significantly over the past two years, is whether an employer can lawfully pay a sponsored worker at a higher rate than a non-sponsored colleague doing essentially the same role. The answer is yes, in principle, but it requires careful thought about both immigration compliance and employment law obligations.

The Background

The Skilled Worker route requires that sponsored workers are paid at least the minimum salary threshold for their role, which is the higher of a general threshold (currently £38,700 for most new entrants, though lower rates apply in specific circumstances) and the going rate for the occupation code. These thresholds were increased substantially in April 2024 and have remained at elevated levels since. For a number of roles, particularly at mid-level and senior levels, the minimum sponsorship salary now exceeds what some employers pay non-sponsored colleagues in equivalent positions.

This creates a practical challenge: an employer may find itself paying a sponsored worker more than a UK-settled colleague doing the same job, not because of any difference in performance or seniority, but simply to meet the requirements of the Immigration Rules.

Is It Lawful?

There is no general legal prohibition on paying sponsored workers more than non-sponsored colleagues. The Immigration Rules do not require parity between sponsored and non-sponsored staff, and an employer is free to pay above the minimum threshold. The question is whether doing so could give rise to employment law risk, and the answer depends on the circumstances.

The principal risk is an equal pay or discrimination claim brought by a non-sponsored worker who is paid less than a sponsored colleague for work of equal value. Under the Equality Act 2010, employees are entitled to bring equal pay claims where they can show that a comparator of a different sex is paid more for equal work. If a sponsored worker happens to be of a different sex to a non-sponsored colleague doing comparable work and is paid more, even solely because of immigration requirements, the employer could face a claim. The employer would need to show that the pay differential is due to a material factor that is not tainted by direct or indirect sex discrimination.

Pay differentials based solely on immigration status are not automatically a material factor defence. Employers should take care to document the reason for any pay difference clearly and to ensure that immigration-driven pay decisions are applied consistently and are not indirectly discriminatory on the basis of nationality, race or any other protected characteristic.

Practical Implications

For businesses that sponsor workers at or near the salary threshold, the simplest approach is to align the pay of sponsored workers with the broader pay structure for their role or grade, so that salary decisions can be justified on internal pay principles rather than immigration compliance alone. Where the sponsorship threshold requires a salary above the usual band for a role, employers should document the reason clearly and keep this under review as salary bands evolve.

Businesses should also be aware that the salary compliance obligations under the Skilled Worker route now extend to individual pay periods, meaning that each payslip must show that the sponsored worker has been paid at or above the required level. This means that any variable pay structure, including bonus, commission or overtime arrangements, needs careful management to ensure that base pay alone satisfies the threshold in every period.

Given the pace at which salary thresholds and the Immigration Rules have been changing, employers with a sponsored workforce should take this as a prompt to review both their pay structures and their immigration compliance processes. Magrath Sheldrick’s immigration and employment law teams work together to help businesses navigate the intersection of sponsor licence obligations and employment law requirements. Please do not hesitate to contact us for advice on your specific circumstances.