ILR 10 – Year Rule 2026: The Essential HR and Employer Guide to the UK’s Proposed Earned Settlement System

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The UK government has confirmed it will reform the ILR settlement system – and for employers holding a Sponsor Licence, the proposed ILR 10-year rule could be the most significant change to workforce immigration planning in a generation.

Home Secretary Shabana Mahmood confirmed in March 2026 that the “Earned Settlement” reform – originating from the May 2025 Immigration White Paper – will proceed with a March 2027 implementation target. While your current sponsored employees remain on 5-year ILR timelines today, proactive employers are already adapting their salary strategy, HR planning, and compliance processes.

This guide explains what is currently in force, what is proposed, and the six actions every UK employer should take right now.

• 5-year Skilled Worker route to ILR: Still live
• 10-year Long Residence route: Still live
• ILR fee: £3,226 per person (from 8 April 2026)
• Per-pay-period salary compliance: In force from 8 April 2026
• B2 English for new Skilled Worker visa applications: In force from 8 January 2026
• 180-day absence rule for sponsored employees: In force from 11 April 2024

• Standard ILR qualifying period: 5 years → 10 years for most Skilled Workers
• Long Residence route: Proposed abolition for new qualifying periods
• Fast-track: 5 years for employees earning £50,270+; 3 years at £125,140+
• English for ILR: Proposed B2 (currently still B1)
• Extended routes: 15 years for RQF Level 5 and below; 20-30 years for compliance breaches

When a sponsored employee holds ILR, your Sponsor Licence obligations for that individual end completely. They can change jobs freely, take sabbaticals, or go self-employed – all without your involvement. ILR has traditionally been the point at which your compliance responsibility for that person ceases.

Under the current 5-year rule, that end point arrives relatively quickly. Under the proposed ILR 10-year baseline, you would be responsible for sponsoring, monitoring, and maintaining compliance for that employee for potentially twice as long. Every salary change, job title update, absence notification, and address change must be reported on the Sponsor Management System (SMS) for a decade rather than five years. For employers with significant international workforces, this is a material increase in administrative burden, legal risk, and HR cost – and it requires advance planning now, not once the rules change.

Before looking at the proposed reform, HR directors must be clear on what is already law:

From 8 April 2026, UK Sponsor Licence holders must ensure their sponsored Skilled Workers are paid the required salary in every individual pay period – not just on an annual basis. This is introduced through HC 1691 (March 2026 Statement of Changes) as paragraph SW 14.3B in Appendix Skilled Worker.

Three averaging windows apply depending on pay frequency:

• Monthly-paid employees: 3-month rolling window – at least 25% of the annual required salary per 3-month period
• Weekly/fortnightly-paid employees: 12-week rolling window – at least 12/52 of the annual required salary
• Variable hours employees: 17-week rolling window – at least 17/52 of the annual required salary (irregular pattern must be noted on CoS)

Immediate risk areas for employers: salary sacrifice arrangements, unpaid leave periods, bonus-heavy pay structures, and annualised hours contracts.

Any new employee you are bringing to the UK on a Skilled Worker visa, or any employee switching into the Skilled Worker route from another category, must demonstrate B2 English proficiency. Build additional time into your onboarding schedule – IELTS for UKVI test slots in India and internationally have extended lead times in 2026.

Sponsored employees on the Long Residence route must not exceed 180 days outside the UK in any rolling 12-month period (measured from 11 April 2024). Before approving extended overseas assignments, secondments, or remote work arrangements for sponsored staff, brief them clearly on this limit and document your conversation.

The ILR application fee rose to £3,226 per person from 8 April 2026. For employees with families, the total cost could exceed £12,000. Employers who provide immigration support as part of their employee value proposition should update their budgets and benefit documentation accordingly.

Under the proposed reform, ILR eligibility would be assessed across four pillars, several of which directly intersect with employer decisions:

Employees would need to maintain continuous lawful UK residence with:

• Maximum 180 days absence per rolling year (already in force from April 2024)
• No gaps in visa coverage

Extended overseas assignments and international secondments carry ILR risk for your sponsored employees. Make absence tracking and awareness part of your HR conversations with sponsored staff.

Employees would need:

• B2 English proficiency – already required for Skilled Worker visa applications from January 2026
• A pass in the Life in the UK Test

Funding B2 English preparation for key international employees is already valuable given the Skilled Worker visa requirement. If the proposed reform implements B2 for ILR too, this support becomes even more significant as a retention benefit.

The Home Office has proposed assessing:

• Minimum personal income of £12,570 per year
• Whether salary exceeds the £50,270 proposed fast-track threshold – enabling 5-year ILR eligibility
• Whether salary exceeds the £125,140 proposed super fast-track threshold – enabling 3-year ILR eligibility

Under the proposed rules, a salary review that moves an employee from £49,500 to £51,000 could be the difference between a 10-year and 5-year wait for ILR. For key international talent, salary progression planning is now a retention lever with direct immigration value.

Employees would need to demonstrate:

• No serious criminal convictions
• No immigration rule breaches
• No claims on public funds beyond entitlement

Under the proposed longer qualifying periods, SMS reporting obligations carry longer-term consequences. A missed report that results in a compliance notation could affect your employee’s character assessment potentially years down the line.

These are proposed timelines, expected from March 2027. The current 5-year route still applies.

Employees currently earning above £50,270 may face no change to their ILR timeline under the proposed fast-track. This makes the £50,270 threshold a critical salary planning benchmark for any employer who wants to minimise long-term compliance exposure and support employee retention.

The 10-year Long Residence route has frequently been used by employees with complex immigration histories – those who combined student visa time with work visa time, or who moved between visa categories. Under the current rules, 10 years of continuous lawful UK residence qualifies an individual for ILR regardless of which visa route they were on.

The Home Office has proposed abolishing this route when the earned settlement system launches. For employers, this creates immediate practical implications if your workforce includes employees who were planning to use this route:

1. Employees relying on the Long Residence route need a new ILR plan – and ideally a professional assessment now, while the route remains available
2. Employees with mixed visa histories (student plus work) may find their effective ILR timeline extended significantly under the proposed new rules
3. The route remains available today – employees who are close to 10 years of continuous residence should be assessed urgently for a current application

If the proposed 10-year baseline comes into force for employees earning below £50,270, HR teams will manage SMS obligations, visa renewals, absence tracking, and salary compliance for individual employees for potentially a decade. This significantly increases the operational value of investing in dedicated immigration compliance support rather than handling it ad hoc.

Even before the reform is enacted, informed candidates and employees who understand the proposed changes will increasingly favour employers who offer clear salary progression to the £50,270 proposed fast-track threshold. Building transparent salary roadmaps that target this level within 3-4 years of employment is already becoming a differentiator in competitive international talent markets.

Under the proposed 10-year baseline, employees earning below £50,270 would require at least two full Skilled Worker visa cycles before reaching ILR eligibility, compared to one under the current system. Budget now for multiple Certificate of Sponsorship applications, visa fees, and HR resource across an extended period – even before any changes are confirmed.

For each sponsored employee, identify their current qualifying date under the 5-year rules. Flag anyone whose date falls in the second half of 2026 – these employees may be able to apply before any new rules arrive. For everyone else, begin projecting their timeline under the proposed 10-year model so your planning is ahead of the curve.

Flag every sponsored employee who has been in the UK for 7 or more years on any combination of visas. These individuals may be approaching 10-year Long Residence ILR eligibility under the current rules. Professional assessment is essential – this route may not be available once the proposed reform launches.

The per-pay-period salary compliance rule is already in force from 8 April 2026. Run a payroll audit for all sponsored staff to ensure no pay period falls below the required salary rate. Check salary sacrifice arrangements, commission structures, unpaid leave periods, and variable hours contracts immediately.

Identify all sponsored employees earning between £40,000 and £55,000. For those close to the proposed £50,270 fast-track threshold, a salary review conversation now is justified – and the immigration planning value is clear and quantifiable.

With sponsorship periods potentially extending under the proposed reforms, ensure your Sponsor Management System reporting calendar is current, your Level 1 User is trained, and all employee records are accurate. Longer sponsorship periods make robust compliance infrastructure more important, not less.

Proactively communicate to your international employees what is proposed, what is still current, and what you as their employer are doing to support them through this uncertainty. Employers who can say “we are planning ahead for you” are significantly more likely to retain their international talent through this transition period.

Conroy Baker Ltd is a specialist UK business immigration advisory firm regulated by the OISC. We support UK employers – from owner-managed SMEs to multinationals – in managing sponsored workforces through every stage of immigration reform, including navigating the transition between current and proposed rules.

Our dedicated employer ILR and compliance services include:

• Sponsored Workforce ILR Mapping – identifying every employee’s current qualifying date and projected timeline under the proposed earned settlement rules
• Long Residence Route Urgency Reviews – assessing employees approaching the 10-year mark while the route is still live
• Per-Pay-Period Payroll Compliance Audits – full review of all sponsored staff pay structures against the April 2026 in-force requirements
• Salary Threshold Planning – advising on the strategic and immigration value of salary reviews against the proposed £50,270 and £125,140 thresholds
• Sponsor Licence Health Checks – SMS compliance audits and mock Home Office inspection preparation
• Individual Employee ILR Support – personal guidance for each sponsored employee on their current and projected ILR pathway
• HR and Board Immigration Briefings – clear, accurate presentations on the full proposed 2026 reform and its business implications

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