In May 2025 the government published a White Paper which included proposed radical reforms to the UK’s immigration system. Included in this White Paper was a proposal for the introduction of an ‘earned route’ to settlement.

The government has now published a consultation document on its proposals for reforms to the eligibility criteria which individuals will need to meet in order to ‘earn’ settlement in the UK. The consultation paper, A Fairer Pathway to Settlement: statement and accompanying consultation on earned settlement, includes a proposal (which is currently still subject to consultation) for the changes to apply retrospectively to individuals already in the UK on a pathway to settlement.

If you’d like to help shape the proposals, the government is inviting feedback through a consultation open until 12 February 2026.  Reports suggest that the amended rules could take effect from as early as April 2026.

In many cases, individuals who become eligible for settlement prior to the new changes taking effect would benefit from making an application as soon as they are able to under the current rules, as the proposed new rules will create greater hardships in a number of significant areas.

If you employ sponsored workers, you’ll have entered into sponsorship arrangements in the belief that the associated costs (and administrative responsibilities) would be time limited to a period of 5 years (until the individual could then apply for settlement and no longer require sponsorship). However, in many cases, you may now find that your sponsored workers are no longer eligible for settlement after the 5-year period.

You’ll then face the difficult decision of continuing sponsorship until the new eligibility thresholds are met (which will vary depending on the individual’s personal circumstances) or terminating sponsorship (and therefore employment) after the initial sponsorship period and facing the associated risks and liabilities as well as resourcing issues.

What is settlement and how does it benefit employers?

Settlement, (also known as ‘indefinite leave to remain’) is an immigration status which gives an individual the right to live and work permanently in the UK. It’s also a necessary stepping stone to obtaining British citizenship, which is the desired end goal for many migrants coming to the UK. Settlement can be lost in some circumstances, such as if the individual spends a significant period outside the UK (often a continuous period of 2 years is the cut-off).

For employers, individuals with settlement can be employed indefinitely, in any role regardless of skill and salary level, and without the need for sponsorship. Many employers who initially sponsor migrant workers to work in skilled roles will do so only until the individual becomes eligible for settlement.

Once eligible, the employer may choose to assist the individual with a settlement application which benefits the business because the significant costs associated with sponsorship – namely the Immigration Skills Charge of £1,000 per year for large employers (to increase to £1,320 per year from 16 December 2025), the Immigration Health Surcharge of £1,035 per year and hefty visa fees of between £769 and £1,751 are no longer payable. Further, the monitoring and reporting obligations applicable to sponsored migrant workers no longer apply.

Employees on non-sponsored work visas also form part of the workforce of many employers, including those in the UK as students, graduates, partners of British nationals / settled migrants, and dependants of migrants on work visas.

What are the current settlement rules?

Currently, different eligibility criteria for settlement apply to different visa routes, however in the majority of cases, individuals on visas can become eligible for settlement after 5 continuous years’ residence in the UK under the particular visa route (or an eligible combination of routes). Other criteria apply, such as passing the Life in the UK test and meeting English language thresholds, but the residence requirement is considered the main gateway to unlocking eligibility for settlement.

What changes are being proposed?

Under the proposed new rules, there will be a major shift away from length of residence being the determining factor for eligibility for settlement, and the baseline qualifying period for settlement will increase from the current 5 years (in the majority of cases) to 10 years under most visa routes.

The system will operate on a ‘time adjustment’ model, meaning that the baseline qualifying period will be capable of being increased or decreased depending on a number of factors and the individual’s personal circumstances.

The new system will be based on four pillars, designed to ensure that applicants make a meaningful contribution to UK society. These are:

1. Character: applications will be refused where requirements relating to good character and conduct are not met, e.g. where the applicant has a criminal conviction or has demonstrated non-compliance with immigration requirements. Although these considerations already apply under the current rules, the thresholds will be much higher under the new regime.
2. Integration: applicants must demonstrate ‘meaningful engagement’ with British society.
3. Contribution: individuals who make a ‘sustained and measurable’ economic contribution to the UK will be rewarded.
4. Residence: individuals will not normally qualify on the basis of residence alone, but the new system will continue to recognise lawful, continuous residence as one of the eligibility requirements.

Under the proposed new system for ‘earned’ settlement, certain mandatory requirements will need to be met by all individuals in order to be granted settlement, these being:

1. Suitability: the applicant must not have a criminal conviction, have no current litigation, NHS, tax or other government debt.
2. Integration: the applicant must be able to evidence English language proficiency to level B2 under the Common European Framework of Reference for Languages (up from the current level B1) and have passed the Life in the UK test (which is a current requirement, although the test itself will change).
3. Contribution: the applicant must have had annual earnings above £12,570 for a minimum of 3-5 years (subject to consultation), or an alternative amount of income. Whether dependants will be required to meet this requirement independently of main applicants is still subject to consultation.

All migrants will have a baseline residence period applied to their eligibility for settlement, however, in most cases, the individual’s circumstances may allow for adjustments (upwards or downwards) to be made to the baseline period.

Factors which will reduce the baseline period include where the individual:

• Can evidence an English language competency at level C1 of the Common European Framework of Reference for Languages (higher than the required B2) (minus 1 year, so 9-year residence requirement).
• Has earned a taxable income of £125,140 for 3 years prior to applying for settlement (minus 7 years, so 3-year residence requirement).
• Has earned a taxable income of £50,270 for 3 years prior to applying for settlement (minus 5 years, so 5-year residence requirement).
• Has been employed in a specified public service occupation at RQF Level 6 or above (i.e. degree level) for 5 years (minus 5 years, so 5-year residence requirement)
• Has worked in the community (minus 3 to 5 years, so 5 to 7-year residence requirement – the exact reduction is still subject to consultation). It isn’t yet clear exactly what would qualify as community work for these purposes, though volunteering is included.

Individuals will only be able to rely on one adjustment criteria (the one which provides the largest reduction).

Factors which will increase the baseline period include where the individual:

• Has received public funds during their settlement qualifying period (plus 5 to 10 years, so 15 to 20-year residence requirement).
• Arrived in the UK illegally or entered on a visit visa (plus 20 years, so 30-year residence requirement).
• Overstayed their permission for 6 months of more (plus 20 years, so 30-year residence requirement).

How will these changes impact our employees?

The government has confirmed that individuals who already hold settled status will not be impacted by the proposals, however those on the path to settlement may find the changes apply retrospectively and impact their eligibility. It’s also confirmed that EU nationals who have obtained or are eligible for settlement under the EU Settlement Scheme will not be impacted by these changes (due to the UK’s obligations under the Brexit Withdrawal Agreement).

• Some individuals may find they become eligible for settlement earlier that anticipated, such as high earners with a taxable income in excess of £125,140 who may qualify for settlement in 3 years.
• Others will find that their road to settlement is much longer than they had initially anticipated, including workers in lower paid roles, or roles which are skilled at below degree level, and individuals who have an adverse immigration history (e.g. if they initially entered the UK illegally, or have overstayed in the UK for 6 months or more).

What proactive steps can we take to protect the business and our employees from the proposed changes?

The incoming changes to settlement eligibility will impact you if you have both sponsored and non-sponsored migrants in their workforce. At this time, you should:

• Review your current migrant workforce to assess:
  • whether any employees will meet the current requirements for settlement in advance of April 2026 and encourage such individuals to progress settlement applications as soon as possible under the current more lenient rules.
  • whether any employees would benefit from workable salary increases in order to ensure they will meet the settlement requirements within a reduced timeframe (given that employees may continue to qualify for settlement within a 5-year period should they have had a taxable income of at least £50,270 for 3 years). E.g. in the case of sponsored workers, in some instances it may be more cost-effective for the business to implement modest salary increases than pay extra years of sponsorship-related fees.
  • whether any employees may qualify for settlement earlier than anticipated (e.g. high earners).
• Engage with employees to ensure that they are aware of the incoming changes and provide appropriate support where required.
• Consider whether any employees could benefit from a reduction to their baseline qualifying period, such as by engaging in community work, and advise them accordingly.
• Review policies in place for paying employee (and dependant) sponsorship related fees (such as the Immigration Health Surcharge or visa application fees) and consider the financial viability of continuing such arrangements and the potential impacts of revising them (especially if they are contractual in nature).
• Review policies in place for supporting employee settlement applications.
• Review budgets for increased sponsorship related costs.

How can we help?

Our team of dedicated Business Immigration professionals is keeping the proposals under careful review and is ready to advise on their impact on your business and workforce.