The government is consulting on a new earned settlement system that would change how many migrant workers qualify for Indefinite Leave to Remain. For most routes that currently lead to settlement after five years, the proposed model introduces a ten year baseline with stricter conditions around conduct, earnings and integration. Some higher earners would qualify sooner. Many lower paid workers would face longer routes.
For business owners, these changes could affect how attractive your jobs look to overseas candidates, how long key staff are likely to stay on temporary visas and how family circumstances influence their decisions to join or remain with your business.
While no rules have changed yet, it makes sense to understand the direction of travel so you can start thinking about workforce planning and salary strategy in good time.
What Changes Under Earned Settlement?
The consultation explains that settlement decisions would rest on four pillars. These are character, contribution, integration and residence. Time in the UK still matters but will no longer be enough on its own. Applicants would need to show they have lived here long enough, worked and paid in at a certain level, learned English to a higher standard and stayed on the right side of the law and public finances.
For most work routes, the standard qualifying period for ILR would move from five years to ten. A separate ten year long residence route is proposed to be removed. Instead, there would be one ten year baseline which can be adjusted up or down. Skilled workers in roles below RQF level 6, which includes many care and lower paid service roles, are being consulted on for a fifteen year standard route rather than ten.
Alongside this, all settlement applicants would be expected to meet a set of mandatory conditions. These include stricter suitability tests around criminal records, English at B2 level, passing the Life in the UK test, showing a period of earnings above the income tax and National Insurance threshold and having no outstanding NHS, tax or other government debts. Failing any one of these conditions could block ILR even if the time requirement is met.
There are also proposed adjustments linked to income and benefit use. Workers with taxable income above £125,140 for three years could see their ten year route reduced to three years. Those with taxable income above £50,270 for three years could keep a five year route in effect. At the other end, anyone who has used public funds for less than twelve months could see five years added to their route. Use of public funds for twelve months or more could add ten years, which would produce fifteen or twenty year routes for some people. Example scenarios for those with irregular histories such as overstaying show potential routes of around thirty years.
Workforce Planning and Salary for Small Businesses
These changes sit directly across your staffing plans if you rely on sponsored workers or other migrants who aim to settle. For many small businesses, the main exposure will be in two places. First, roles that are difficult to fill locally and are sponsored at or near the minimum salary levels. Second, senior or specialist roles where the candidate expects a clear and reliable path to ILR for themselves and their family.
Under the earned settlement model, lower paid sponsored roles become less attractive as long term options. A worker on a fifteen year route, with the risk of further penalties if they need to claim benefits at any point, may see your opportunity as a stepping stone rather than a permanent move. That can increase churn and drive recruitment costs up over time. If your business depends heavily on such roles, you may need to think about how to make the package more sustainable. That could include clearer pay progression, training that leads to higher skilled roles or support that helps staff avoid gaps in employment that might nudge them towards benefit use.
Salaries take on a new dimension. Under the proposals, higher earnings are not only about meeting the going rate or minimum thresholds for sponsorship. They would also influence how quickly key staff can settle. For example, if you are hiring a senior manager or specialist whose pay is likely to sit above the higher rate tax threshold, you may be able to offer a three or five year settlement route as part of the overall package. That can make a big difference when competing with larger employers or overseas opportunities.
Small businesses will need to be realistic, because not every role can be paid at those levels. The practical step is to identify which posts are strategically important enough that an uplift in salary to reach one of the settlement bands might be commercially justified. You can then weigh that against the value of retaining that person over a long period. For other roles, you may focus more on building a pipeline of talent rather than assuming long term retention through settlement.
Family Dependants and Staff Retention
Family considerations often drive decisions about whether someone accepts a job or stays with an employer. Under earned settlement, partners and adult dependants are brought into the same four pillar structure. They are expected to meet similar standards on character, contribution and integration. That means a partner with weaker English, lower earnings or past debt to public bodies could have a longer or less secure route to ILR than the main worker.
For small business owners, the point is not to become immigration advisers. It is to recognise that family circumstances sit behind many career decisions. A worker whose partner struggles to meet the new conditions may start to question whether a long term future in the UK is viable. This can feed directly into retention, especially in tight knit teams where one person leaving has a disproportionate effect.
It will help to create a culture where staff feel able to raise immigration concerns early. You do not need to give formal advice. You can signpost them to independent advisers and, where appropriate, provide accurate records such as payslips, employment letters and confirmation of role changes that they may need for future applications. Being supportive in this way can strengthen loyalty, especially in smaller workplaces where relationships are personal and turnover is disruptive.
Practical Next Steps for Employers
Although the earned settlement system is still at consultation stage, business owners can start preparing in practical ways. Map out which staff are sponsored or on routes that might lead to settlement, and identify where long term reliance on those roles exists. Consider whether any key positions might justify higher pay to align with faster settlement routes, and where that is not realistic think about how you will manage regular turnover.
Review your HR processes to ensure that employment records are complete, because workers are likely to need detailed evidence of their earnings and roles when they come to apply for ILR. Check that right to work and sponsorship records are accurate and up to date, since longer sponsorship periods increase the chance of Home Office scrutiny. Where you anticipate more reliance on sponsored workers in future, consider taking early advice on sponsor licence management and compliance so that you are confident your systems can support a ten or fifteen year journey, not just a single visa term.
Above all, treat settlement as part of your wider workforce planning rather than a separate legal issue. The proposed changes create winners and losers from an immigration perspective. Your task as a small business owner is to understand which side your key roles are likely to fall on, and to adjust your hiring, pay and retention strategies accordingly if the earned settlement model is introduced in the form currently outlined.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services Limited - a Marketing & Content Agency for the Professional Services Sector.
