Government announces new proposals on Earned Settlement and work-based migration

Earned Settlement

The Government's proposals on Earned Settlement will mean that foreign nationals seeking permanent residence in the UK will encounter a system that is fundamentally different from the current time-based requirements, under which many applicants qualify for settlement after five years. The new application process for indefinite leave to remain will be based on a number of factors including character, contribution and integration.

The starting point will be a 10-year route to settlement, which may be shortened or extended depending on an individual's circumstances. However, some of the more controversial proposals announced last year have been dropped or softened, including the proposed 15-year pathway for workers in 'medium-skilled' occupations below RQF level 6.

For employers, the proposals will be important when recruiting and retaining sponsored workers. An employee's occupation, earnings and immigration history could determine whether settlement is available after three, five, ten or even 20 years.

Transitional arrangements

One of the most controversial issues arising from the consultation was whether the new system would apply to sponsored workers already in the UK.

The Government has confirmed that there will not be a blanket exemption for sponsored workers who are already here. Instead, transitional protection will apply to specific groups:

• Workers in occupations below RQF level 6: the proposed 15-year settlement pathway has been dropped. These workers will normally fall within the new 10-year pathway, although they may qualify sooner under an accelerated route.
• Care workers: special protection will apply to care workers who entered, or switched into, the skilled worker route before publication of the Immigration White Paper on 12 May 2025. They will retain a five-year settlement pathway where they have met the applicable salary (£25,000), sponsorship, and employment requirements. Those unable to qualify at the five-year point will be able to apply for a further five-year Health and Care visa, restricted to genuine employment in the sector. Further protection is also proposed for workers affected by sponsor licence revocation. From 1 February 2027, affected workers will have up to 120 days to secure a job offer and a further 60 days to resolve their immigration and employment position.
• Health and education workers: workers in occupations below RQF level 6 which are 'pay scale' roles under the Immigration Rules, such as nursing auxiliaries (SOC 6131), will retain a five-year route if they came to the UK before 12 May 2025 and continue to meet their visa requirements. Those arriving after that date will normally move to the 10-year pathway, unless they qualify for an accelerated route. Health and education workers in eligible pay scale occupations at RQF level 6 and above will be able to settle after five years under the standard process set out below.
• Pre-April 2024 Skilled Workers: the Government has also addressed Skilled Workers benefiting from salary transitional arrangements introduced following the April 2024 changes. For affected workers in roles below RQF level 6 who may now need ten years to reach settlement, visa extensions on their existing terms will be permitted until 2035.

Mandatory character and suitability requirements

• Criminality: an adult applicant with a criminal record in the UK will be refused settlement. Minor matters appearing on a criminal record, including conditional cautions, court-imposed fines and community sentences, will also be taken into account.
• Government debt: applicants will be required to have no outstanding Government debt, including NHS debt, unpaid tax, National Insurance contributions, and litigation debt owed to the Home Office.
• Immigration breaches: specified breaches committed as an adult will place an applicant on a 20-year settlement pathway, irrespective of earnings or other positive contributions. This will include matters such as overstaying, breaching conditions of immigration permission, deception in an application and conduct intended to frustrate immigration controls.

Mandatory contribution requirements

The starting point under Earned Settlement will be ten years, but earnings can significantly shorten the qualifying period. The three and five-year pathways are treated as accelerated routes.

Dependants and other factors

Dependants' earnings: the consultation proposed that dependant partners should earn settlement in their own right. The Government has softened this approach. Eligible couples will be able to combine earnings to meet an initial household economic contribution threshold of £25,142. This may be met by one partner or through their combined earnings.

Dependants' settlement timeline: a dependant partner who arrives with the principal applicant will continue to be able to settle at the same time, provided the relevant requirements are met. A partner joining later will generally need to complete the same qualifying residence period in their own right. Dependant children under 18 (and certain children over 18) will continue to be able to settle with their parents.

Public funds: applicants seeking settlement after three, five, or ten years will generally be expected not to have accessed specified public funds during the previous five years. Those continuing to access public funds may instead face a 20-year pathway, subject to the other mandatory requirements.

British connection: recognised British connections will continue to provide a five-year route. For example, a person married to a British citizen could qualify after five years even without meeting the higher earnings threshold for the five-year economic contribution route. The Ancestry route will also remain a five-year pathway.

Volunteering: the proposal to allow volunteering to accelerate settlement has been dropped following concerns about verification, safeguarding, and the risk of vulnerable people being pressured into unpaid activity.

Mandatory integration requirements

The English-language requirement for settlement will increase from B1 to B2. Existing exemptions for children, people aged 65 or over and those unable to meet the requirement because of a physical or mental condition will remain.

The proposed C1 English-language accelerated route has been dropped. Applicants will continue to be required to pass the Life in the UK test.

Other key updates: non-sponsored routes

• The existing 10-year Long Residence route will close, which will be particularly significant for people relying on time spent across different immigration routes to reach settlement.
• Qualifying residence will need to be accrued on routes which lead to settlement. Time on routes such as Graduate, Visitor, and Youth Mobility Scheme will not count.
• Specific commitments remain for a small number of groups. The Hong Kong BN(O) route will continue to lead to settlement after five years, subject to its requirements. The Ukraine visa schemes will not provide a route to settlement.

Timeline for implementation

The Earned Settlement measures remain policy proposals. The detailed operation of the new system will be set out in the Immigration Rules, which are expected in December. The Home Secretary has indicated that the system will become operational during 2027.

For employers and HR teams, the immediate priorities are to:

1. Identify affected sponsored workers, particularly those in roles below RQF level 6.
2. Distinguish between pre and post-12 May 2025 cohorts, rather than assuming the same settlement timetable applies to everyone.
3. Identify workers who may qualify for a three or five-year accelerated pathway.
4. Review employees relying on Long Residence, particularly where their UK residence includes Student or Graduate permission.
5. Prepare for employee questions, as settlement eligibility is likely to become increasingly relevant to retention and workforce planning.

Policy proposals in the budget

The 2026 Budget also included a number of immigration announcements with implications for employers.

Skilled Worker route

Changes to Skilled Worker salary thresholds are expected from spring 2027, drawing on the Migration Advisory Committee's recommendations on salary thresholds. These include:

• Retaining the general salary threshold at £41,700 for non-healthcare roles
• Reducing occupation-specific going rates for non-healthcare roles to the 25th percentile of Annual Survey of Hours and Earnings
• Introducing a single new entrant rate of £33,400
• Potentially varying the period for which the new entrant discount applies
• Abolishing the PhD discount
• Aligning the general threshold for pay scale occupations with the bottom of Band 5 of the Agenda for Change pay scale, potentially increasing the current £25,000 threshold to £29,970, while continuing to determine occupation-specific thresholds by reference to the relevant national pay scale

For some occupations, lower going rates could make Skilled Worker sponsorship more accessible following recent increases in salary requirements. However, this should not be viewed as a general reduction in salary thresholds. Employers should therefore wait for the new figures before assessing the impact on individual roles and recruitment budgets.

Global Talent route

UK Research and Innovation (UKRI) will work with organisations across the UK to identify additional R&D-intensive businesses in Industrial Strategy sectors which could act as host organisations under the endorsed funder pathway by spring 2027.

For employers, this could make Global Talent an increasingly attractive alternative to Skilled Worker sponsorship, particularly for R&D-intensive businesses. As the route does not require traditional employer sponsorship, it can offer greater flexibility, although the practical impact will depend on which organisations become eligible.

High Potential Individual route

The High Potential Individual (HPI) route enables recent graduates from eligible leading global universities to live and work in the UK without employer sponsorship. The visa is valid for two years for graduates of Bachelors and Masters degrees and three years for PHD holders.

The route will be expanded from the world's top 100 institutions to the top 150, with the number of applications permitted also increasing proportionately. This could expand the pool of international graduates available to employers without sponsorship, although its impact will depend on how the application cap operates.

Graduate route

The Graduate route enables individuals who have completed an eligible UK course to remain and work without employer sponsorship. The visa is currently granted for two years, but is due to reduce to 18 months for applications made on or after 1 January 2027, while the three-year period for PhD graduates is retained.

The Budget has now indicated that graduates from high-compliance universities with strong labour market outcomes will continue to benefit from a two-year visa. Further detail will be needed on what constitutes a "high-compliance university" and how "strong labour market outcomes" will be assessed.

Tax treatment of the Immigration Skills Charge and Certificate of Sponsorship fee

The Government will introduce legislation in Finance Bill 2026-27 so that an employer's payment of an Immigration Skills Charge (ISC) or Certificate of Sponsorship (CoS) fee is not treated as a taxable benefit in kind. The change will apply to payments made on or after 28 October 2026.

This should provide employers with greater certainty over the tax treatment of mandatory sponsorship costs. HR and payroll teams should note, however, that it does not reduce the sponsorship fees themselves.

Extended visa curtailment for the highest-skilled workers

The Government will introduce a curtailment period of up to six months for the highest-skilled workers, giving them longer to find a new job. The period available will depend on how long the individual was employed in their previous highly paid role, with the change expected during 2027.

The increase from the current 60-day period could give employers a larger window in which to recruit eligible highly skilled workers who have recently left sponsored employment. The practical benefit, however, will depend on how the new arrangements operate.

Taken together, these announcements signal a significant period of change for work-based migration. While much of the detail is still to follow, the direction of travel is clear: settlement will become more closely linked to an individual's circumstances and contribution, while changes to the work routes will affect how employers recruit and retain international talent. Employers should start considering the potential impact on their workforce now rather than waiting for the new rules to take effect.