There was a cost of £65 per adult individual and £32.50 for individuals under 16 set for EU citizens who wish to remain in the UK after 30 June 2021.
Speaking in the House of Commons, May said: "The Government will waive the application fee so that there is no financial barrier for any EU nationals who wish to stay."
Trade body UKHospitality (UKH) urged the Government to scrap the costs as a signal of goodwill towards hospitality staff from the EU and prevent a potential “bureaucratic nightmare”.
UKH chief executive Kate Nicholls welcomed the news and said it would provide peace of mind “for many EU citizens working in the hospitality sector planning for their futures”.
She continued: “It will save the hospitality sector, workers and their families an estimated £20m and is a gesture that rightly highlights the hugely valuable contribution EU workers make to the UK economy, particularly in hospitality. It is encouraging that the Government has heard our concerns.”
The Government must outline a solution that minimises disruption to companies facing uncertainty about business after Brexit, Nicholls added.
"Parliament needs to settle on a decision, preferably avoiding a no-deal Brexit, and give UK businesses a chance to prepare for the future," she said.
May said anyone who had already applied through an app-based pilot scheme, which launched today, would have the cost reimbursed
Several pubcos explained they were readying themselves to cover the costs of their employees’ fees to The Morning Advertiser last week.
Critics of the fee included the Mayor of London Sadiq Khan and the Scottish parliament.
Peter Borg-Neal, chief executive of Oakman Inns, said the pubco was “absolutely delighted” with the news and wished to show solidarity with the employees “who are such an important part of the Oakman family”.
He said: “While this doesn’t deal with the need to ‘apply’ rather than ‘register’ to remain in their jobs and homes it is at least a welcome first display of goodwill to EU nationals who are making such a huge contribution to the UK."
“Around 27% of our people are non-UK EU nationals and they are proportionately over-represented among our management team and our skilled chefs,” he continued.
“Not only would we be a much weaker business without them – we would be unable to contemplate further growth.”
Neal said the company will need an estimated 1,000 new team members over the next year as it expands and to replace leaving staff. “There is no way we could meet that requirement from British citizens alone,” he said.
He added: “It is good news that the Government has listened to the campaigning from hospitality, health, agriculture and care industries among others – as well groups such as the 3Million. Hopefully, it is a sign that the Government has got its head up out of the trenches and will start to move things forward in a much more positive manner.”
Brigid Simmonds, chief executive of the British Beer & Pub Association called the move a “big boost” for Britain’s pubs and their workforce.
“The vast majority of pubs operate as small businesses, so the scrapping of the settled status fee will be of huge relief to those publicans who faced unnecessary admin and knock on costs from it,” she said.
Ian Wright CBE, chief executive of the Food and Drink Federation also welcomed the decision and called EU workers within the manufacturing industry “highly valued”.
He added: “While elements of the Prime Minister’s statement are to be welcomed, the ongoing lack of certainty for business about our immediate and longer-term relationship with our nearest and biggest trading partner continues to undermine business confidence.”
Pub bodies have criticised the Government’s post-Brexit immigration policy for its priority on ‘high-skilled’ individuals and has warned many businesses are dependent on EU staff to make up for difficulties recruiting at home.