Market News

By Lucy White

(Bloomberg) -- The UK government has announced a crackdown on rogue employers who have been exploiting migrant workers, banning offenders from hiring any more overseas staff.

Businesses who employ migrants under the UK’s sponsorship system will also be prohibited from charging workers for any costs associated with that sponsorship, in a new measure designed to reduce exploitation. 

A recent report from the Work Rights Centre, a charity which advises migrant workers, found as many as 177 companies held a license to sponsor migrant workers despite breaking employment law. Many have been accused of exploiting migrant workers by charging them thousands of pounds for visa-related costs and then forcing them to work for under the minimum wage, or failing to provide them with any hours at all. 

It comes as levels of migration to the UK have soared in recent years, with a large part of the rise attributable to an influx of workers as job vacancies ballooned. This has caused political tension — fears that the UK’s public services couldn’t cope with the rise in migration stoked far-right riots over the summer, which saw attacks on foreign nurses and hotels housing asylums seekers.

Labour has vowed to reduce net migration, and official figures to be released later Thursday will likely show that number falling. But large sectors of the economy, such as health and social care, are still heavily reliant on low-paid foreign workers. 

“Worker exploitation is completely unacceptable,” said Minister for Migration and Citizenship Seema Malhotra. “Shamefully, these practices have been seen particularly in our care sector, where workers coming to the UK to support our health and social care service have all too often found themselves plunged into unjustifiable insecurity and debt. This can, and must, end.” 

Currently, the UK’s Skilled Worker Visas operate on a sponsorship system. Employers in a limited number of sectors can apply for a license which allows them to offer migrant workers a job, but those workers’ right to remain in the UK is then tied to that job. That means many, often on low incomes, are too afraid to report abuse — charities helping migrant workers have warned the system is broken and must be reformed.

The Home Office stopped short of a full reform Thursday. However it said companies which commit serious employment breaches, such as not paying the National Minimum Wage, will be barred from hiring overseas workers.

It will also take action against employers who are showing “signs of rule breaking” before they have committed serious breaches of the law, the Home Office said. Such businesses will be put on Action Plans, binding them to set of actions, for 12 months — up from three months previously.

Officials noted that many employers are “engaging in the unethical practice of charging Skilled Workers for the cost of sponsorship,” often at “grossly inflated levels.” In some cases seen by Bloomberg, workers were being charged up to £20,000 ($25,400) for costs vaguely labeled as “administration” or “lawyers’ fees.” 

This was often leaving workers “burdened with unsustainable levels of debt to their employers,” the Home Office said. Now, employers will no longer be able to charge their staff for costs associated with their sponsorship. 

Dora-Olivia Vicol, chief executive of the Work Rights Centre, said the Home Office’s announcement was the “bare minimum.” 

“These proposals to punish bad employers go some way in preventing future migrants from exploitation, but do nothing for those who have already become victims of exploitation or abuse,” she said. “Where is the justice for those who were tricked into spending their life savings for a job opportunity that never materialized, only to be left destitute with no support? Or those who were forced to work under conditions akin to modern slavery, and threatened with being sent home if they speak out?”

The Home Office said that since July 2022, the government has revoked around 450 licenses given to businesses allowing them to sponsor workers in the care sector.