Salary Changes for Sponsored Workers: What Employers Need to Consider Before Reducing Pay

A sponsored worker’s salary can sometimes be reduced.

It should not be reduced simply because the employer is entitled to change the employment contract.

For a Skilled Worker, salary is part of the basis on which immigration permission was granted. A reduction can therefore create a sponsorship question even where the employee has agreed to the change and the arrangement is entirely lawful from an employment perspective.

The consequences depend on why the salary is changing, which Skilled Worker salary option applied when the worker obtained their current permission, whether the revised salary continues to satisfy that option, and whether the change is one the sponsor guidance allows without a fresh immigration application.

Some reductions can be reported through the Sponsorship Management System and take effect without a new visa application.

Others require the sponsor to assign a new Certificate of Sponsorship and the worker to obtain new immigration permission before the lower salary can begin.

If the revised salary no longer meets the Skilled Worker requirements at all, the employer cannot simply continue sponsorship.

That is why a sponsored worker’s salary should be checked before the payroll instruction is given, not after the first reduced payslip has been produced.

Salary is an immigration condition as well as an employment term

For an ordinary employee, a salary change is principally an employment and commercial matter.

For a sponsored worker, another layer sits behind it.

When the Home Office granted the worker permission, salary formed part of the immigration assessment.

For Skilled Workers, that assessment can involve:

• the applicable general salary threshold
• the going rate for the occupation
• the worker’s salary points option
• hourly-rate requirements
• whether a transitional arrangement applies
• whether the job falls within a health or education salary framework
• whether another permitted salary discount applies

The figure recorded on the Certificate of Sponsorship therefore has immigration significance.

That does not mean the salary can never change.

It means the sponsor needs to understand what the new figure does to the worker’s existing immigration position.

“I would treat a sponsored worker’s salary as a controlled employment term. The business may have perfectly legitimate commercial reasons for changing it, but before payroll acts we need to know whether the worker can remain sponsored on the revised figure and whether another immigration step is required.”

Abdul Jabbar, Principal Immigration Adviser

Do not begin with the current £41,700 threshold

This is one of the easiest mistakes to make.

The current standard Skilled Worker salary requirement is generally at least £41,700 per year and the applicable going rate, whichever is higher.

That figure is important.

It is not the complete answer for every existing Skilled Worker.

Different salary options exist.

A worker may have qualified because their job was on the Immigration Salary List.

They may have qualified as a new entrant.

A relevant PhD may have affected the salary points calculation.

Healthcare and education jobs can operate under different salary rules.

Some workers continue to benefit from historic or transitional arrangements because of when they first entered the Skilled Worker or predecessor Tier 2 system.

So when an employer is considering a salary reduction, the correct question is not:

“Will the worker still earn £41,700?”

It is:

“Which salary rules led to this worker’s current grant of permission, and does the revised salary continue to satisfy them?”

That is a much more reliable starting point.

The same salary option matters

Current Skilled Worker sponsor guidance contains an important protection for existing workers.

A sponsor can reduce a Skilled Worker’s salary without assigning a new CoS and without requiring the worker to make a new immigration application where, after the reduction, the worker would continue to score the required salary points under the same salary option that led to their current permission.

That last part matters.

Suppose a worker originally qualified under one salary option.

The employer cannot necessarily reduce their salary because the worker might now qualify under a different option.

Changing the basis on which the worker qualifies can require a new Certificate of Sponsorship and a fresh immigration application before the reduced salary takes effect.

The employer therefore needs to understand the worker’s existing immigration basis, not simply calculate whether some route to 20 salary points exists today.

An example of the same-option principle

Consider a worker who obtained Skilled Worker permission under a salary option requiring a particular minimum general salary and percentage of the occupation going rate.

Their salary has since increased.

The employer later proposes a modest reduction.

If the revised salary still satisfies the same option on which their current permission is based, the sponsor guidance may allow the reduction without a new immigration application.

The salary change must still be reported.

Now consider a different worker.

Their existing permission is based on one salary option, but after the proposed reduction they would no longer qualify under that option.

They might qualify under another option because their circumstances have changed.

Perhaps they have since completed a relevant qualification.

That does not mean the employer can simply reduce the salary and report it.

Where a different salary option needs to be relied upon, the worker may need a new immigration application first.

The distinction is subtle, but commercially important.

Salary reductions generally need to be reported

Where a sponsored worker’s salary is reduced for a reason not connected with an absence, the sponsor must report the change through the Sponsorship Management System.

For permitted Skilled Worker reductions that do not require a new immigration application, the Home Office currently requires the report within 10 working days of the change.

The sponsor should state the revised salary.

Reporting is therefore part of the process.

It is not the legal test.

An employer should not think:

“We can reduce the salary because we can report it.”

The correct sequence is the reverse.

First establish whether the reduction is permitted under the worker’s immigration position.

Then identify whether a new CoS and application are required.

Then make the employment change in the correct order.

Then make the relevant Home Office report.

A new Certificate of Sponsorship may be needed before reducing pay

This is where salary changes can become more significant.

If the reduction is not permitted under the worker’s existing immigration position, but the revised salary would still qualify for Skilled Worker sponsorship on another lawful basis, the employer may be able to proceed through a new sponsorship process.

Current guidance requires the sponsor to assign a new Certificate of Sponsorship and the worker to make a successful application for new permission before the employer starts paying the reduced salary.

The order is important.

The business cannot reduce the salary first and ask the worker to regularise the immigration position afterwards.

The existing permission was granted on the previous sponsorship basis.

The new employment arrangement needs to be authorised before it takes effect.

What if the reduced salary no longer qualifies at all?

Then the sponsor cannot continue as though nothing has happened.

If the revised salary no longer satisfies the relevant salary, hourly or going-rate requirements and no permitted exception applies, the sponsor must stop sponsoring the worker.

That change also needs to be reported through the SMS.

This can create a difficult commercial position.

The business may have genuine financial reasons for reducing salaries across a department.

The worker may be willing to accept the reduction.

Employment law may permit it.

But immigration law can still make the arrangement impossible under Skilled Worker sponsorship.

Consent from the employee does not change the salary requirement.

Business-wide pay cuts are not automatically safe

This is particularly relevant during restructures or difficult trading periods.

Suppose an employer asks all senior staff to accept a 10 per cent temporary salary reduction.

From a workforce perspective, the arrangement may appear fair because everyone is being treated consistently.

For sponsored workers, individual immigration assessments are still required.

One employee may remain comfortably above their applicable Skilled Worker salary requirement.

Another may fall below the going rate.

A third may qualify under a transitional provision.

The commercial policy is collective.

The immigration consequences can be individual.

A business-wide percentage reduction should therefore not be applied to sponsored workers without checking each affected person.

Reducing hours can also be a salary issue

Employers sometimes view reduced hours differently from reduced salary.

For immigration purposes, the two can be closely connected.

If an employee moves from full-time to part-time working, their annual salary may fall.

The Home Office salary rules also interact with working hours in ways that require careful calculation.

The general salary threshold and occupation going rate are not always treated identically when working patterns change.

A worker can therefore remain well paid on an hourly basis and still fail a required annual salary threshold.

Or the annual figure can appear sufficient while the relevant hourly calculation creates a problem.

The employer should assess the actual proposed hours and actual proposed salary together.

Simply pro-rating everything by the same percentage is not always safe.

Working more hours does not necessarily solve the problem

The same caution applies in the other direction.

For Skilled Worker sponsorship, the general salary threshold is calculated using actual gross earnings subject to the relevant rules, including a maximum number of weekly hours for particular calculations.

The going rate is based on a stated standard working week and is adjusted for the worker’s actual weekly hours according to the Immigration Rules.

Increasing hours may therefore affect the required salary.

An employer should not assume that asking someone to work more hours makes a marginal salary arrangement compliant.

The calculation needs to be done properly.

Temporary reduction for health reasons

Current sponsor guidance contains a specific exception for a temporary salary reduction linked to a temporary reduction in hours, or a phased return to work, for individual health reasons.

For the exception to apply:

• the arrangement must be supported by an occupational health assessment
• the salary reduction must coincide with the temporary reduction in hours or phased return
• the worker’s hourly rate must not fall below any applicable hourly-rate requirement from their most recent grant of permission

This can provide useful flexibility where an employee is returning from illness or otherwise requires a medically supported temporary adjustment.

It is not a general route for reducing a sponsored worker’s salary because the employee is unwell.

The facts need to fit the exception.

The change must also be reported.

Absence-related reduced pay is a separate category

A worker can also receive reduced pay during certain types of absence without the ordinary salary reduction rules applying in the same way.

Current Skilled Worker guidance recognises temporary salary reductions associated with specified permitted absences.

These can include:

• statutory maternity leave
• statutory paternity leave
• parental leave
• shared parental leave
• adoption leave
• neonatal care leave
• sick leave
• agreed absence to assist with a national or international humanitarian or environmental crisis
• legally organised industrial action
• jury service
• attendance at court as a witness

These situations need to be distinguished from an ordinary contractual reduction in salary.

A worker receiving statutory maternity pay is not in the same position as an employee whose basic salary has permanently been reduced because the business wants to lower its wage bill.

The sponsor rules recognise that difference.

The four-week unpaid or reduced-pay absence rule

Outside the permitted exceptions, a sponsored worker should not normally be absent from work without pay or on reduced pay for more than four weeks in total during a calendar year, calculated according to their normal working pattern.

Where a valid exception applies, the position can be different.

This is another reason salary and absence should not be considered separately.

A payroll figure may fall because the employee’s contractual salary changed.

Or it may fall because the employee was absent.

Those are different sponsorship issues.

Before deciding what needs to be reported, the sponsor should understand why the worker received less money.

Salary increases are usually simpler

An ordinary increase in salary generally does not create the same level of concern.

Sponsors do not usually need to report a salary increase simply because the worker has received a pay rise, subject to specific route-based exceptions.

That makes sense.

The principal immigration risk is generally that the worker is being paid less than the amount on which their permission depends.

The employer should still keep accurate payroll and employment records.

A pay increase may later become relevant to an extension, settlement application or another immigration assessment.

But routine annual increases do not usually require the same pre-implementation immigration analysis as reductions.

Bonuses do not necessarily cure a low basic salary

This is an area where careful salary calculation matters.

The Skilled Worker Rules specify what can and cannot count towards salary for immigration purposes.

Not every payment appearing on a payslip can be used to satisfy the required threshold or going rate.

Certain guaranteed gross basic pay can count.

Some allowances or additional payments may not count in the way an employer expects.

Discretionary bonuses, benefits in kind and other remuneration cannot simply be added to basic salary without checking the relevant Skilled Worker salary calculation rules.

A sponsor considering a salary reduction should therefore calculate qualifying salary under the immigration framework.

It should not assume that the employee’s total annual reward package solves the problem.

Salary sacrifice and deductions can complicate the picture

Employee benefit arrangements can also require thought.

The sponsor guidance contains detailed provisions concerning salary deductions and salary sacrifice.

The immigration analysis can depend on the nature of the deduction, whether it is temporary or recurring, what the arrangement relates to and how salary is treated under the applicable rules.

This is particularly important where an employee voluntarily participates in an arrangement that reduces the cash salary appearing on payroll.

From an employment-benefits perspective, the arrangement may be entirely ordinary.

For sponsorship purposes, the employer still needs to know which amount the Home Office will treat as qualifying salary.

A worker cannot waive an immigration salary requirement through contractual agreement.

HMRC data means salary discrepancies are visible

The Home Office does not have to rely exclusively on information supplied through the Sponsorship Management System.

Current sponsor guidance states that UKVI makes regular checks with HMRC to establish whether sponsored workers are being paid appropriately.

This changes the practical risk around salary management.

Suppose the CoS says £50,000.

Payroll has shown £42,000 for nine months.

The sponsor has made no salary report.

That discrepancy can exist within government data even if nobody has visited the business.

There may be a lawful explanation.

If so, the sponsor should know it and retain the relevant evidence.

If there is no lawful explanation, the absence of a compliance visit does not make the problem invisible.

Salary should reconcile across four places

For a sponsored worker, I would ordinarily expect to be able to reconcile at least four things:

The Certificate of Sponsorship

What salary did the sponsor tell the Home Office it would pay?

The employment terms

What did the employer contractually agree?

Payroll

What is actually being paid?

The applicable Immigration Rules

What does the worker need to be paid to remain lawfully sponsored?

Those four things do not always need to contain identical numbers.

There can be legitimate reasons for difference.

But where they differ, somebody should understand why.

“The most useful salary review is not simply checking payroll against the £41,700 headline figure. I want to know what salary option the worker qualified under, what the CoS recorded, what they are now being paid and whether the proposed change still works under that same immigration basis. That is the point at which the real answer becomes clear.”

Abdul Jabbar, Principal Immigration Adviser

A promotion can involve salary as well as role

Salary changes often accompany promotions.

That means two immigration questions may arise at once.

Is the new salary compliant?

And is the new role still within the worker’s existing sponsored occupation?

An increase in salary does not cure a role change that requires a new Skilled Worker application.

Likewise, a promotion remaining within the same occupation code can still create an issue if working arrangements change in a way that affects the salary requirements.

Employment changes should therefore be reviewed as a whole.

It can be misleading to separate “salary review” from “job change” when both happen on the same effective date.

Settlement planning can also be affected

An employer may be focused on whether the worker can continue being sponsored today.

The employee may be thinking about settlement.

The Skilled Worker settlement rules contain their own salary requirements.

A salary reduction that remains permissible for ongoing sponsorship may therefore still have consequences for a future settlement application, depending on the worker’s circumstances and the rules in force when they apply.

The employer is not responsible for planning the worker’s personal immigration future.

But where a sponsored employee is approaching settlement and a substantial salary change is contemplated, it may be sensible for the worker to understand the immigration consequences before agreeing to the change.

This is especially relevant where the employee assumes that continued employment automatically means continued eligibility for settlement.

Can the employer reduce pay during probation?

There is no special Skilled Worker exemption simply because the employee is in a probation period.

If the worker was sponsored at a particular salary and the employer later wants to reduce it, the ordinary Skilled Worker salary reduction rules apply.

A clause in the employment contract allowing salary review after probation does not override the Immigration Rules.

This should be considered when structuring offers.

If the employer genuinely intends to pay one salary for six months and another thereafter, the sponsorship should be assessed against the actual employment arrangement from the start.

Using an inflated initial salary merely to obtain immigration permission would create obvious compliance concerns.

Can an employee voluntarily ask to work fewer hours?

Yes, but the immigration position still needs checking.

A sponsored worker may have entirely legitimate personal reasons for wanting reduced hours.

Childcare.

Health.

Study.

A change in work-life balance.

The fact that the request came from the employee does not remove the sponsor’s obligations.

If reduced hours produce lower salary, the employer needs to establish whether the revised employment remains permitted.

Where it does, the change can be managed through the appropriate sponsorship process.

Where it does not, employee consent cannot make it compliant.

What if the reduction is temporary?

Temporary does not automatically mean permitted.

A temporary salary reduction for three months may still require sponsorship action.

The specific exceptions for absence and medically supported reduced hours need to be distinguished from an ordinary temporary commercial pay cut.

For example, a company-wide six-month pay reduction because of cash-flow difficulties is not transformed into a permitted health-related exception because it will eventually end.

The employer should assess the temporary arrangement in exactly the same disciplined way as a permanent one.

What should happen before payroll makes the change?

For a sponsored worker, I would want five questions answered.

Why is the salary changing?

Absence, working hours, promotion, health, restructuring and commercial pay reductions can lead to different immigration analyses.

What immigration permission does the worker currently hold?

The existing Skilled Worker salary option or transitional basis matters.

What will the revised salary and hours be?

Use the real figures.

Can the worker remain eligible under their existing immigration basis?

If not, could they qualify through a fresh application before the change takes effect?

What needs to be reported?

If the change is permitted, the correct SMS action and deadline should then be identified.

Only after those points are understood should payroll implement the new salary.

What if payroll has already reduced the salary?

Do not assume the only task is filing a late SMS report.

Establish what actually happened.

When did the reduction begin?

Why was it made?

What was the worker previously paid?

What are they now being paid?

Which Skilled Worker salary option underpins their current permission?

Would the reduced salary have been permitted without a new application?

If not, does the revised salary qualify under another Skilled Worker option?

How long has the position continued?

The answers determine the seriousness of the issue.

A permitted reduction that was reported late is a different compliance problem from a salary reduction that could not lawfully have taken place under the worker’s existing permission.

The remedy should follow the facts.

Do not retrospectively rewrite payroll records

If a compliance problem is identified, the records should remain accurate.

A sponsor should not alter historic payslips or create evidence suggesting a salary was paid when it was not.

Where there has been an underpayment caused by error, correcting the financial position may form part of the response.

That should be documented honestly.

False records create a different and potentially much more serious issue.

The aim is to establish compliance, not the appearance of compliance.

Frequently asked questions

Can I reduce the salary of a sponsored Skilled Worker?

Potentially.

The employer must first establish whether the worker will continue satisfying the relevant Skilled Worker salary requirements under their existing immigration basis.

Some reductions can take place without a new immigration application. Others require a new CoS and successful application before the lower salary begins.

Do salary reductions need to be reported to UKVI?

Yes, salary reductions generally need to be reported through the Sponsorship Management System.

For a permitted Skilled Worker salary reduction that does not require new permission, the current reporting period is 10 working days.

Can I reduce a Skilled Worker’s salary below £41,700?

Possibly, depending on the salary option, occupation and worker’s circumstances.

£41,700 is the standard general threshold, but different Skilled Worker salary options and transitional provisions can apply.

The worker’s individual immigration basis needs to be checked.

Can a worker switch to a different salary option after a pay cut?

Potentially, but the employer may need to assign a new Certificate of Sponsorship and the worker must successfully obtain new immigration permission before the lower salary starts.

The sponsor cannot simply rely on a new salary option retrospectively.

What if the new salary no longer meets Skilled Worker requirements?

The sponsor cannot continue sponsoring the worker on a salary that does not meet the applicable requirements unless a permitted exception applies.

Where continued sponsorship is not possible, the sponsor must stop sponsoring and report the position.

Can pay be reduced during sick leave?

The sponsor guidance allows reduced pay in certain permitted absence situations, including sick leave, subject to the detailed rules.

A separate exception also exists for a temporary reduction in hours or phased return for individual health reasons supported by an occupational health assessment.

Can a sponsored employee go part-time?

Potentially.

The proposed hours and salary must be assessed against the worker’s Skilled Worker requirements before the change is made.

Part-time employment does not automatically disqualify a Skilled Worker, but the applicable salary rules still need to be met.

Do salary increases need reporting?

Ordinary salary increases generally do not need to be reported solely because the salary increased, subject to specific route-based exceptions.

Will UKVI know if payroll is lower than the CoS salary?

The Home Office states that it makes regular checks with HMRC concerning sponsored-worker pay.

Sponsors should assume that material salary discrepancies can be identified.

Salary changes should be decided before they reach payroll

A salary reduction is not necessarily a sponsor compliance problem.

Sometimes it is entirely permitted.

Sometimes it requires a new immigration application first.

Sometimes the revised salary means sponsorship cannot continue at all.

The difficulty is not that the rules prohibit change.

It is that the immigration consequence depends on the individual worker’s existing permission.

That is why generic payroll policies are insufficient for sponsored staff.

The company can decide that every senior employee will take a temporary 8 per cent reduction.

Immigration law still asks what that does to each sponsored worker.

The practical control is simple.

Flag sponsored employees before salary changes are implemented.

Understand the worker’s existing Skilled Worker basis.

Calculate the revised salary properly.

Decide whether the change can proceed under the current permission or requires a new application.

Then make the employment change and report it correctly.

That is considerably easier than discovering six months later that payroll and the sponsorship record have been describing different employment.

Considering a salary or hours change for a sponsored worker?

If your organisation is considering reducing a sponsored worker’s salary or hours, or a change has already taken place and you are unsure of the sponsorship consequences, you can request a Free Case Assessment.

Tell us about the worker’s current immigration permission, existing salary and hours, and the change being considered.

We can then consider whether Knightsbridge Immigration can assist.

Free Case Assessment