Can an employer pay a sponsored worker more than a non-sponsored worker?

One question clients often ask is whether an employer can lawfully pay a sponsored worker more than a non-sponsored worker doing the same role, particularly given the increases to minimum salary thresholds under the Skilled Worker route.
 

From an immigration perspective, the question has become more pressing as sponsors must ensure that sponsored workers are paid in line with Home Office salary requirements, while also managing wider employment law risk where others doing the same job are paid less.

The recent Employment Tribunal decision in Gharabili v Cedar Hope Care Services Ltd provides a useful illustration of the tension between immigration compliance and equality law. The Tribunal found that the employer’s pay practice amounted to indirect race discrimination because the non-sponsored worker was paid less than the sponsored workers. The Tribunal awarded the claimant over £14,000 in compensation, including £10,000 for injury to feelings.

Facts
 

The Claimant, Ms Gharabli, was employed by the Respondent, Cedar Hope Care Services Ltd, as a support worker from February 2023.  She was promoted to senior support worker but later stepped back down to support worker for personal reasons.

During her employment, Ms Gharabli discovered that support workers from overseas on Skilled Worker visas (the overseas workers) were being paid £12.31 per hour, whereas she and other non-sponsored support workers (the non-sponsored workers) were paid £10.50 per hour. It was undisputed that around 80% of the Respondent’s staff were working under sponsorship visas.

The Claimant’s pay was increased after she raised this discrepancy but, following further events and disagreements with the Respondent, she eventually resigned with immediate effect in June 2024 citing, among other things, discrimination on the basis of pay.  She brought a number of claims against the Respondent, including direct and indirect race discrimination, direct and indirect religion and belief discrimination and whistleblowing. Only her indirect race discrimination and whistleblowing claims succeeded, and it is the former that is relevant for the purposes of our question.

Tribunal decision
 

Indirect discrimination occurs where an apparently neutral provision, criterion or practice (PCP) is applied to everyone, but has the effect of placing those with a particular protected characteristic at a disadvantage. Indirect discrimination can be justified if the PCP is a proportionate means of achieving a legitimate aim. Proportionality requires the Tribunal to consider whether the same aim could have been achieved by less discriminatory means.

In this case, the PCP was the Respondent’s pay structure, under which sponsored workers were paid more than non-sponsored workers. This disproportionately impacted the non-sponsored workers because the Home Office salary rules applicable to sponsored workers set a higher minimum rate than the national minimum wage applicable to the wider workforce.

The Respondent relied on the Home Office minimum pay requirements for sponsored workers as justification for the disparity in pay, arguing that the higher rate was necessary to comply with its immigration obligations as a sponsor. On one level, that is understandable: if a sponsor does not pay a sponsored worker in accordance with the relevant Home Office requirements, it risks being in breach of the Immigration Rules and sponsor duties.

The Respondent implied that it could not afford to match the pay of its domestic workers to that of overseas workers and claimed that its alternative would have been to not hire any overseas workers at all. 

The Tribunal accepted that the Respondent’s aim of complying with Home Office salary requirements for sponsored workers was capable of being a legitimate aim.

However, the Tribunal held that immigration compliance on its own was not enough to satisfy the proportionality test and justify indirect discrimination. The employer still had to show that there was no less discriminatory way of achieving that legitimate aim.

The Tribunal noted that no analysis or evidence was put before it to show why it would be financially prohibitive for the Respondent to match the pay of non-sponsored workers to that of sponsored workers, particularly given that they were carrying out the same job and the majority of the workforce was sponsored.

The fact that the Respondent increased the Claimant’s pay when she raised a complaint suggested that the Respondent had flexibility to do so and indicated, said the Tribunal, some acknowledgement that the Claimant’s sense of grievance about this was justified.

The Respondent’s case therefore failed on justification and the Claimant’s claim of indirect race discrimination was upheld.

Comment
 

This case is an important reminder to sponsors that compliance with immigration rules does not displace their obligations under equality law.

Although the decision turned on its specific facts, it highlights the importance for sponsors of not making blanket pay decisions driven solely by immigration requirements without proper analysis and documented reasoning.

It is unlikely to be enough for an employer simply to say: “we paid sponsored workers more because we had to, and we could not afford to match that for our non-sponsored workers”. The Tribunal is likely to expect evidence that the employer considered whether non-sponsored workers doing the same role could also be brought up to the same rate, and, if not, why that was not financially viable. Equally, an assertion that the business could not recruit sponsored workers if it had to comply with sponsorship salary requirements and match that pay for non-sponsored staff is also likely to fail without evidence.

It is worth noting that this was a first-instance decision and is therefore not binding on future Tribunals. Nevertheless, it provides a useful indication of how Tribunals may approach justification where pay disparities arise from compliance with sponsorship salary rules.

The key takeaway for sponsors is that salary-setting decisions made for immigration purposes should be tested through an equality lens, with a clear paper trail recording the reasoning, the alternatives considered and the evidence supporting the approach taken.

About the authors

Marcia joined as a partner in the immigration team in January 2014. She has practised in the area of immigration, nationality and European law since 1998. She has had a long career in the field of immigration and is incredibly passionate about this area of law.  She has won a number of challenges against the Home Office regarding complex cases, which have resulted in discretionary leave for her clients.

Andreas is a partner in our employment team.  He has substantial litigation experience, with a particular focus on complex and high value employment and partnership disputes.

Özlem Mehmet is a Senior Professional Support Lawyer in our Employment Team. Before joining Kingsley Napley, Özlem was a Tutor and Team Leader at BPP University’s Law School, teaching on the Legal Practice Course. She taught the Employment Law, Business Law & Practice, Corporate Finance and Equity Finance modules of the course, as well as the skills modules of Interviewing & Advising and Professional Conduct & Regulation. She also supervised a number of Masters level projects on employment law related topics.