The new ‘earned settlement’ system – what do employers need to know?

The proposal introduces an “earned settlement” model, where settlement (or Indefinite Leave to Remain (ILR)) becomes a “privilege” which is to be “earned” through “contribution” to the UK.

Currently, migrant workers can typically settle in the UK after completing five years of lawful residence. Under the proposed system, this will change substantially. We have set out the key proposals in the consultation below.

New Mandatory requirements for settlement

New strict mandatory conditions will apply to all applicants for settlement:

• Clean criminal record and full compliance with immigration rules
• English language proficiency at B2 level
• Passing the Life in the UK test
• No outstanding debts to the government, NHS, or HMRC
• Evidence of economic contribution (e.g., annual earnings above £12,570 for three to five years – subject to consultation)

This potentially has significant implications for individuals such as dependants who have entered the UK under visas with no requirements that they take up employment or earn any money in the UK. These proposals seem to suggest they will never be eligible for settlement unless they get a job.

The English language requirements are also likely to prove problematic for many applicants as the B2 standard is fairly difficult to meet.

Longer “baseline” qualifying period

• The standard baseline residency requirement for most immigration routes will increase from five years to ten years. This will apply to most sponsored workers in roles at RQF Level 6
• Dependants of British citizens and BNO holders will remain on the existing five-year route. (The consultation specifically refers to dependants of “British citizens” rather than dependants of individuals who are settled here, which suggests there might be preferential treatment for individuals falling in the former category as opposed to the latter)

Factors proposed to shorten the baseline qualifying period

• High earnings:
  • A salary of £50,270 p.a. for 3 years could reduce the baseline period by 5 years (effectively meaning settlement could be achieved in 5 years)
  • A salary of £125,140 p.a. for 3 years could reduce the baseline period by 7 years (effectively meaning settlement could be achieved in 3 years)
• Employment in public service roles (e.g., NHS or teaching): reduction of 5 years. (Note, care workers would not fall within this category)
• Advanced English proficiency (C1 level): reduction of 1 year
• Volunteering and exceptional community contributions: reduction of 3 to 5 years

Applicants will only be able to pick their “best” discount; they cannot be used cumulatively.

Factors proposed to lengthen the baseline qualifying period

• Lower Skilled work routes: For roles below RQF Level 6 (including many Health and Care visa holders such as care workers), proposed increase by 5 years to 15 years.
• Use of public funds:
  • Claiming public funds for up to 12 months: increase of 5 years (effectively meaning settlement would be achieved in 15 years)
  • Claiming public funds for more than 12 months: increase of 10 years (effectively giving a 20 year requirement for settlement)
• Illegal entry or overstaying: increase of up to 20 years (effectively meaning settlement would take 30 years)

Transitional Arrangements?

One of the key questions yet to be resolved is whether there will be any transitional arrangements for migrants already in the UK when the changes take place. This forms part of the consultation questions, so ostensibly remains up for discussion.

Notwithstanding this, the projections regarding the impact of these proposals, are clearly based on these new rules applying to anyone who does not already have settlement as at the point any changes are introduced. Whilst this is the most likely outcome, this may yet change if the responses to the consultation against this proposal are compelling.

Implications for Employers

• Longer sponsorship commitments: Under the proposed system, the qualifying period for settlement could increase significantly. Sponsored workers in lower-skilled roles, particularly those under RQF Level 6, may need up to 15 years before they can apply for settlement.

This means employers will face extended obligations to maintain sponsorship compliance, including reporting duties and ensuring visa renewals over a much longer timeframe. For businesses, this translates into higher administrative costs and a need for robust HR systems to manage immigration compliance over the long term.

(Of course, this assumes that continued sponsorship of such lower skilled roles is permitted given the proposed changes to the Temporary Shortage List and sponsorship of care workers expected to become effective in 2026 and 2028 respectively.)

• Higher compliance burden: The earned settlement model introduces additional mandatory requirements that must be met, along with additional requirements that may impact on the length of residency required.

Employers may need to demonstrate that sponsored workers meet salary thresholds, maintain lawful status, and integrate successfully. This could involve providing evidence of earnings, English language proficiency, and even contributions to the community.

Employers should expect more frequent audits and requests for documentation from the Home Office, making compliance a critical part of workforce management.

• Impact on recruitment and retention: Skilled Worker roles below RQF Level 6 will be severely impacted, reducing the appeal of UK employment compared to countries offering shorter settlement routes. Employers may experience higher turnover, increased recruitment costs, and greater reliance on temporary staffing solutions.
• Dependants: Under the new system, dependants will no longer automatically qualify for settlement alongside the main applicant. Each family member must meet the earned settlement criteria independently. Importantly, they will not be eligible unless they meet the mandatory earnings threshold. This could deter skilled workers with families from accepting UK roles, further complicating recruitment efforts.

Why This Matters

Settlement is often a key factor for employees considering long-term relocation. These changes could significantly affect your ability to attract and retain talent, particularly in sectors reliant on international recruitment.

Responding to the Consultation

• The consultation is open until 12 February 2026. Employers are encouraged to respond and share views on fairness, clarity, and potential impacts.
• We are collating responses from our clients, and engaging with key stakeholders and industry bodies on these issues. Please send any comments you would like us to put forward to Homeofficeconsultation@wardhadaway.com
• Consider engaging with your industry bodies to ensure sector-specific concerns are represented.
• Likely Government response to the consultation expected around March 2026, with a projected implementation date of April 2026.

 Next Steps for Employers/Employees

• Review your workforce planning and sponsorship strategy in light of these proposals.
• Individuals who are eligible for settlement should consider making applications now so as to benefit from the current rules.
• We can assist with applications for settlement under the current rules with costs starting from £1,750 plus VAT per application.
• When we have clarity over the new rules we will offer a fixed price “Settlement Eligibility Review” to help individuals and their employers understand how the rule changes impact them, further details will be shared in due course.

Please contact your usual Ward Hadaway immigration adviser, or a member of the team, to find out more.