Business immigration updates for employers | May 2026

May has seen some important updates for sponsors. Most notably, the expansion of right to work check obligations for sponsors has been reversed, providing welcome clarity and reducing the immediate compliance burden for businesses. The Home Office has also provided clarification on the requirement for sponsors to be "operating or trading" and has introduced a new ground for mandatory refusal of a sponsorship licence application or for revocation of a licence.

We have summarised these and other key updates below.

Home Office updates guidance and reverses expansion of right to work checks for sponsors

The Home Office has updated its three primary sponsor guidance documents (20 May 2026) to include the following changes:

Right to work checks for sponsors reversed

In a welcome development, the Home Office has reversed the changes introduced in April 2026, which had expanded sponsors’ right to work check obligations.

The revised guidance now confirms that sponsors are only required to carry out right to work checks on:

• Workers they intend to sponsor (including non‑employees); and
• Individuals they directly employ (whether sponsored or not)

This replaces the broader April wording, which had suggested that sponsors needed to carry out checks on individuals they “directly engage”, creating uncertainty around this non-defined term.

The previous change was widely seen as premature, given that the legislation underpinning any wider extension of the illegal working regime has not yet come into force. The updated wording therefore restores a more proportionate and workable standard for sponsors with a lead in time, like employers have, to address their current right to work processes ahead of the forthcoming legislative changes expected in October 2026.

New definition of 'operating or trading'

The term 'operating or trading' is an important requirement when applying for a sponsor licence and, recently, the meaning of this term has stretched beyond the point of incorporation to something more, but this has been very unclear and ambiguous. The new definition, introduced in the sponsor guidance glossary, states:

'Operating or trading is not defined in law and, unless otherwise stated in any part of this guidance, has a plain meaning. Broadly, 'trading' can be taken to refer to operations of a commercial kind by which the trader provides to customers for reward some kind of goods or services. 

‘Operating’ includes the activities of both:

• charities and other not-for-profit organisations where they are providing a service to clients, customers or service users
• businesses who are engaged in pre-trade activities with a view to commencing commercial trading activity (as defined above) in the foreseeable future'.

The Home Office has also included two examples of when the definition of 'operating or trading' won't be considered to be met (1) where there is no evidence of financial transactions taking place between the organisation and any customer, client or service user. All or most finance is received through private investors or supplied directly by a related company and (2) There is little or no evidence of providing any services to customers, clients or users outside of your organisation (i.e. contracts/invoices mainly linked to legal entities within the same corporate group ('circular trading').

This is a very helpful update for employers who are considering applying for a sponsor licence and may be in the early stages of business incorporation, so that they can make a more informed decision on the timing of any sponsor licence application to better their chances of success.

New mandatory refusal for sponsors who exist mainly to facilitate entry or residence of a worker

Where the Home Office has reasonable grounds to suspect that a sponsor has been established or exists mainly to facilitate the entry or residence of a worker, they will now be able to refuse a sponsor licence application or revoke a licence based on this new ground.

Practical steps for employers

• Revisit any right to work process changes made following the April update, and scale these back where appropriate.
• Ensure right to work checks remain fully compliant and consistently applied for employees and sponsored workers.
• Prepare for future expansion of the regime (as flagged in the draft Code of Practice and wider legislation), particularly if your business relies on contractors or platform workers.
• Monitor further updates to sponsor guidance and right to work policy, as similar requirements are likely to be reintroduced in a more formal legislative framework.
• Those considering applying for a sponsor licence should carefully consider the new 'operating or trading' definition and decide whether they have sufficient evidence to meet this new definition.

Sponsor priority services

UK Visas & Immigration (UKVI) has expanded capacity under its post-licence ‘Priority Change of Circumstances’ service, which allows sponsors to expedite changes to their sponsor licence, most commonly:

• Increasing undefined Certificate of Sponsorship (CoS) allocations
• Adding new visa routes to an existing licence
• Amending key organisational details (e.g. branches, ownership changes)

The UKVI aims to process priority requests within five working days, compared with standard processing times of up to 18 weeks for some licence changes.

However, the number of priority slots has only modestly increased, from 100 per day to 120 and which is still very limited relative to demand. The slots are still allocated on a first‑come, first‑served basis, often filling within minutes.

Skilled Worker retention data – what it tells employers

The Migration Advisory Committee (MAC) has published a detailed analysis of long‑term retention and departure patterns for migrants on the Skilled Worker route (including Tier 2 (General), Skilled Worker and Health and Care Worker visas) between 2014 and 2024.

Based on approximately 916,000 migrant journeys, the report provides useful insight into how long migrants stay in the UK, and how this varies by sector, salary and demographic, offering a more evidence‑based view of workforce stability under the sponsorship system.

Key findings

1. Retention rates have increased over time:

Five‑year stay rates rose from 74% (2014 entrants) to 85% (2019 entrants), suggesting that the Skilled Worker route is increasingly supporting longer-term workforce participation, rather than short-term migration.

2. Significant variation by sector:

Retention rates differ materially across sectors:

• Human health and social work show the highest retention (88% overall).
• Nursing roles in particular show very high retention (c.94%).
• Education has comparatively lower long-term stay rates.

3. Salary does not correlate straightforwardly with retention:

Contrary to what might be expected:

• Migrants earning under £40,000 show the highest retention rates.
• Those earning over £125,000 are more likely to leave the UK over time.

This suggests that higher-paid migrants may be more globally mobile, while lower-paid roles may offer greater long-term stability for employers.

4. Retention varies by age and application route:

• Migrants aged 45+ have significantly lower retention (c.65% after five years).
• Those applying from within the UK (e.g. switching visa routes) are more likely to remain long term than those applying from overseas.

5. Nationality trends reflect mobility patterns:

• Migrants from African and Southern Asian countries demonstrate higher long-term retention.
• Migrants from higher-income countries (e.g. US, China) are more likely to leave.

What this means for employers

The MAC's findings are interesting and it is clear from the data that sponsored employees often represent a stable, long-term talent pool.