A proposed overhaul of UK settlement rules would double the wait for permanent residence, and it reaches back to sponsored engineers already here. For AI employers, it is quietly becoming a retention problem.
By Sunny Sandhu, Senior Immigration Associate, AY&J Solicitors
For years, the offer that brought skilled engineers to Britain was straightforward: work here for five years, and permanent settlement follows. That promise is now under review, and for the sponsored specialists the AI sector depends on, the recalculation has already begun, even though not a single rule has yet changed.
The cause is a proposed overhaul the government calls earned settlement, announced in a November 2025 White Paper and consulted on until February 2026. It would move the UK away from settlement based on time served toward a model based on contribution. The headline change is blunt: the standard qualifying period for indefinite leave to remain would double from five years to ten for most routes, and rise to fifteen for Skilled Workers in roles below degree level.
The scale behind the reform explains its urgency. The Home Office’s own central estimate is that around 1.6 million people would settle in the UK between 2026 and 2030 under current rules, peaking at roughly 450,000 in a single year in 2028. It is that projected wave, driven largely by the record immigration of 2022 to 2024, that ministers say they want to slow. Independent analysis suggests more than 300,000 children already in the country could be left waiting longer as a result.
Two points cut through the noise. First, none of this is law yet: as of autumn 2026 the five-year route remains fully in force, no Statement of Changes has been laid before Parliament, and implementation is only targeted. Second, and more uncomfortably for employers, the government has confirmed the changes are intended to be retrospective. They would reach people already in the UK on a path to settlement, not only future arrivals. An engineer who arrived in 2022 expecting to apply in 2027 could find that timeline stretched, through no choice of their own.
This is where an abstract policy debate becomes a concrete workforce issue for technology companies. The people most exposed are precisely those firms compete hardest to hire: sponsored engineers, researchers and data scientists who came on the understanding that permanence was five years away. And they are arriving in smaller numbers. Total work visa grants fell to 168,471 in the year to December 2025, down 19 per cent on the previous year and 50 per cent below the 2023 peak, with grants to IT professionals down 18 per cent. Fewer specialists are coming in, which makes holding on to those already here more valuable, not less, at the very moment the terms of staying are being rewritten.
Immigration advisers are already fielding the operational version of the question. AY&J Solicitors, a Legal 500 ranked UK immigration firm that advises businesses on sponsor licences and compliance, says the employers approaching it are less interested in the politics of the reform than in a practical audit: which of their sponsored staff are affected, which are protected, and what, realistically, can be done.
“The employers who handle this well map their exposure early, before the rules are even finalised,” said Yash Dubal, chief executive of AY&J Solicitors. “They work out which of their sponsored people are on a five-year expectation that may change, which are close enough to settle under the current rules to prioritise, and where pay or role decisions genuinely affect the timeline. Waiting for the Statement of Changes is waiting too long, because by then your best people have been reading the headlines for months.”
That reference to pay is not incidental. The same proposal that creates the problem contains a lever to manage it. Earned settlement is designed to let higher earners buy the wait back: under the proposals, sustained income above 50,270 pounds could cut the qualifying period by up to five years, and income above 125,140 pounds by up to seven, potentially returning a worker to a five, or even three, year path. There is a quieter piece of good news for the sector too: the harshest fifteen-year baseline targets roles below degree level, and most AI, engineering and data science positions sit above it, placing them in the ten-year band with the clearest route to earning it down.
AY&J Solicitors advises employers on indefinite leave to remain and settlement planning for their sponsored workforce, and its advisers make the same point repeatedly: the firms that come through this best treat it as workforce planning, not paperwork.
A further change catches technical teams in particular. The consultation proposes abolishing the standalone ten-year long residence route, which lets people settle by accumulating a decade of continuous lawful residence across different visa categories. That matters disproportionately in tech, where careers often zig-zag from a student visa to the graduate route to Skilled Worker sponsorship. Workers quietly relying on that accumulated time to settle could lose it, and many will not realise until they check.
What, then, should an AI employer actually do while the position is still proposed rather than fixed? AY&J Solicitors advises against overhauling anything yet, because nothing has changed in law, and instead urges employers to gain visibility now, so that if the rules move the company is not starting from zero. A short review answers most of it: who among the sponsored staff is on a settlement path and when they expect to reach it; who could apply under the current five-year rules soon and might be encouraged to; whether anyone depends on the long residence route that may disappear; and where the earnings thresholds realistically change an individual’s timeline. None of it requires irreversible action. It simply means the conversation with a nervous senior engineer is informed rather than improvised.
“Retention and immigration have quietly become the same conversation,” Dubal added. “For a company whose entire advantage is its people, the settlement rules are no longer an HR footnote. They are part of whether the talent stays.”
The AI talent race is usually framed as a contest of salaries, equity and interesting problems. Increasingly it is also a contest of certainty. The rules have not changed yet. The anxiety already has. The firms still holding their engineers when the first catches up with the second will be the ones that saw it coming, understood exactly who it touched, and could tell their people something steadier than the headlines.
The proposals described here are subject to consultation and are not yet law; the five-year settlement route remains in force as of publication. This article is general information, not legal advice.
