UK Immigration Update: May 2026

This update highlights recent developments in Right to Work requirements for non-employees, potential further changes to the Earned Settlement provisions, and updates to the Guidance tightening requirements for first-time applicants for Sponsored Workers’ Licences.

Right to Work Obligations for non-employees

In a significant change of approach, the Border Security, Asylum and Immigration Act 2025 received Royal Assent in December 2025, extending Right to Work requirements to a broader range of non-“employee” working models, to be given effect by changes to the Code of Practice on Illegal Working and provisions under the Immigration (Restrictions on Employment) Order 2007. 

UKVI published Guidance in April 2026 seemed to follow through by imposing Right to Work obligations for employees and those “directly engaged”. However, the latest Guidance published on 20 May reverses course, essentially reinstating the previous requirement that Right to Work obligations apply solely to employees, sponsored or not. Whilst best practice for all employers is to check that any service provider has the correct immigration status, employers will have no exposure to criminal or civil law consequences for failing to do so. 

Earned Settlement – another change in the offing?

As foreshadowed by our recent bulletins, the much-heralded changes to ILR eligibility via the “Earned Settlement” provisions, initially due to become law in April 2026, were subsequently delayed to at least October 2026 given the need for additional Parliamentary scrutiny.  

There has been significant pushback from within the Government against the changes, citing them as unfair, and their omission from the King’s Speech suggests a potential change of direction. This may intensify with the latest net migration figures showing a reduction to pre-COVID levels.  

Those potentially eligible should still apply as early as possible, but current indications are that any changes will be less protectionist than indicated in the Government’s public consultation document published in November 2025.

Increased scrutiny of new applicants for Sponsored Workers’ Licences

The Government has tightened requirements for new applicants for Sponsored Workers’ Licences, with the focus on greater evidence of operational tenure in the UK. 

Under the latest published Guidance, applicants will no longer be considered eligible if operating solely as “holding” companies whose sole purposes are as employing entities and/or administering payroll. Even more challenging for start-ups will be the need to evidence transactions with external third-party customers, with evidence of payments to HMRC, rental costs, insurance and related payments no longer being sufficient. Intra-group contracts will also, of themselves, be insufficient with the emphasis on bona fide commercial arrangements with external entities.

For further information please contact Jonathan Chaimovic or your usual Clyde & Co contact.