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Can a business make a sponsored worker redundant?

Redundancy isn’t something that sponsoring employers consider lightly, having invested time and money in sponsoring their overseas migrant workers, but there are times when a business is forced to make redundancies. In this article, our business immigration and employment lawyers answer your questions on whether a business can make a sponsored worker redundant and the potential ramifications. 

Can a sponsored worker be made redundant?

An employer can make a sponsored worker redundant provided they follow the correct procedure. Whether your business is considering redundancies across your workforce or confined to a small section of workers, it is essential to follow the redundancy process and to ensure that your company doesn’t differentiate in its treatment of sponsored and settled workers. 

Any employee regardless of their immigration status, who has been employed for at least 2 years is entitled to a statutory redundancy payment. The amount depends on the employee’s gross pay, age and length of service rather than their immigration status. For more information take a look at:

The definition of redundancy

The termination of an employee’s employment is classed as redundancy if their dismissal is wholly or mainly attributable to:

  • The cessation of the business
  • Surplus workers – for example, because of a downturn in trade or a change in business practices, such as the increased use of artificial intelligence
  • A move in the place of business

Employers must fairly select candidates for redundancy and not discriminate for or against sponsored or settled workers.

The difference between a settled and a sponsored worker

Although redundancy law does not distinguish between whether an employee is a settled or a sponsored worker, companies do need to consider the status of their employees when conducting the redundancy process to minimise the risk of discrimination claims.

A settled worker is an employee who isn’t subject to immigration control. This includes:

  • British citizens
  • EU worker with settled status under the EU Settlement Scheme
  • Workers with indefinite leave to remain

A sponsored worker is sponsored by their employer on a skilled worker visa, senior or specialist worker visa, or scale-up visa. Other workers may be on time-limited visas, such as graduate or family visas. A settled worker may also have protected characteristics, such as race or nationality. The fact that a work visa holder is on a time-limited visa or has a protected characteristic should not impact on the redundancy selection. However, the length of service of an employee can be used as one of several objective selection criteria in the redundancy process.

The redundancy process

After the company has decided to make redundancies and recorded the reasons, the business needs to consider the redundancy process. If the company has a contractual redundancy policy it should be followed.

Whether the redundancy policy is contractual or not, if your company’s redundancy process or selection criteria puts employees with protected characteristics at a disadvantage it could face a discrimination claim. All sponsored workers have a protected characteristic because of their nationality or race. There is no maximum award for a discrimination claim so it is important to get the redundancy process right.

The redundancy process should involve: 

  1. Consider collective consultation. This process depends on the number of employees and the number and location of the redundancies. For more information on redundancy consultation read our employers guide to collective consultation
  2. Inform the government if you are considering making 20 or more employees redundant by completing a notification form
  3. Start the collective consultation process if required. If you anticipate making fewer than 20 redundancies, then an individual consultation process should be followed
  4. Select candidates for redundancy. Having identified the pool of candidates at risk of redundancy, notified them that they are at risk, and consulted on alternatives to redundancy, you should then select the candidates for redundancy using a scoring system on objective selection criteria
  5. Inform the employees and ensure that the employee receives the correct notice and redundancy payment
  6. Report on the sponsor licence management system if the redundant employee is a sponsored worker. Failure to comply with sponsor licence reporting and recording duties could place the sponsor licence at risk of suspension or revocation

The specific redundancy process will depend on your business circumstances. Whatever the degree of pressure to make redundancies, it is best to take time on the redundancy process to avoid either discrimination claims or audit issues with the sponsor licence.

The alternatives to making a sponsored worker redundant

Business owners are understandably reluctant to make any worker redundant, particularly when they know that making a sponsored worker redundant will result in the curtailment of the employee’s work visa. Thus, the sponsored worker may not only lose their job but also their home and their ability to remain in the UK.

There are alternatives to making a sponsored worker redundant including:

  • Letting the sponsored worker take unpaid leave. A full-time sponsored worker can usually only take up to 4 weeks unpaid leave per calendar year without their absence from work affecting their sponsorship unless they fall within one of the available Home Office concessions
  • A reduction in the sponsored worker’s hours of work and/or pay. The immigration rules say the hours and pay of a sponsored worker can be reduced as long as the reduction in salary does not result in the new rate of pay falling below the minimum salary threshold or the going rate for the job, whichever is the higher. Any reduction in salary should be reported to the Home Office on the sponsor licence management (SMS) system within 10 working days of the change in salary
  • Changing the sponsored worker’s job. To avoid making redundancies some businesses will change some employee job roles. If a business has to make changes to a sponsored worker’s role it should check the wording of the job description in the worker’s certificate of sponsorship to ensure the amended job description is covered in the original certificate. If the company is unsure about whether the job role in the certificate of sponsorship covers the changes to the job role it is best to take legal advice. If the new duties are not contained in the sponsored worker’s certificate of sponsorship, then a change of employment application should be made to the Home Office

If your business has to make workers redundant or change job roles or salary, there should be a record on individual HR files as to why and when decisions were made in case the business is later asked to justify their actions in a Home Office compliance audit or employment tribunal proceedings.

For more information read our article on alternatives to redundancy.

What should a business consider when deciding to make a sponsored worker redundant?

If your business is forced to make redundancies every member of your workforce who is at risk of redundancy is entitled to the protection of UK employment law.

Where a pool of workers at risk of redundancy comprises sponsored and settled workers it is important that your business doesn’t just comply with UK employment and redundancy law before selecting workers for redundancy, but that it also considers any immigration issues arising as a consequence of the redundancy process. For example, whilst your settled workers may be able to accept an offer of alternative employment, the situation may not be as straightforward for your sponsored workers as any alternative job roles would need to be eligible for a work visa and have a standard occupational classification code.

Offering sponsored workers a new role as an alternative to redundancy

Any employer making redundancies must make genuine efforts to see if there is suitable alternative employment for redundant employees either within the business or within an associated company. If there is suitable alternative employment then it should be offered during the redundancy consultation process.

A sponsored worker can only accept an alternative job with their employer if the new job has the same standard occupational classification code (SOC Code) as their original job. This is the case if the new job role arises through internal promotion, redundancy or for any other reason. If the new job role will take the sponsored worker out of their current SOC Code, a new skilled worker visa application will be required.

Where an employer has alternative job roles to offer to a pool of candidates for redundancy it is important that:

  • Advice is taken on the process that sponsored workers will need to undergo if they accept a new job, including the need for a new skilled worker visa application after their current SOC Code has been carefully checked
  • Care is taken to ensure that the selection process for the redundancy pool and the offer of alternate jobs isn’t discriminatory. For example, only placing settled workers in the pool for redundancy selection because the company doesn’t want the hassle of having to deal with a new skilled worker visa application, the allocation of a new certificate of sponsorship and compliance with sponsor licence reporting duties

Conducting the redundancy exercise with sponsored workers

Conducting a redundancy process incorrectly can result in:

  • Claims for unfair dismissal- workers must normally have been employed for 2 years to make an unfair dismissal application 
  • Discrimination claims – any worker can bring a claim whatever their length of service

When there are potential disagreements over the selection of the redundancy pool it is advisable to take employment law advice and consult with your workers on the scope of the pool.

After the redundancy pool has been ascertained, the business needs to consider its redundancy selection criteria with thought given to business needs and priorities to ensure the agreed selection criteria (and how the criteria are weighted in importance) enable the company to retain the best employees, whether or not they are sponsored or settled workers.

When formulating redundancy selection criteria, the criteria must not be directly or indirectly discriminatory and with no element of unconscious bias. The criteria must be objective in nature to avoid potential redundancy candidates feeling aggrieved by the redundancy process. For example:

  • Settled workers may feel unfairly selected for redundancy as they know business owners realise that  sponsored workers find it harder to secure alternative UK employment because they are restricted to securing work with a sponsoring employer
  • Sponsored workers could believe the pool of candidates selected for redundancy is based on race, nationality, or visa status rather than fair selection criteria
  • Sponsored workers may allege that they have not been offered the available alternative jobs because of the need for the sponsored worker to apply for a skilled worker visa 

What is a fair redundancy selection pool when making sponsored workers redundant?

The guidance on fair redundancy selection pools applies equally to all employees, whether they are sponsored or settled workers. In some scenarios, a company may find that the whole pool of candidates selected for potential redundancy are sponsored workers. However, that should be because of the nature of the worker’s job role rather than because of their nationality or immigration status.

A dismissal of an employee will be deemed automatically unfair if the employee has been selected for redundancy for an inadmissible reason. For example, because they are a sponsored worker or because of their nationality.

As there is no qualifying period of continuous employment for a redundant employee to bring a claim where the worker makes an allegation that they were selected for redundancy for an automatically unfair reason, it is important to carefully check the company redundancy selection criteria to ensure that there is no direct or unconscious bias either for or against sponsored workers.

If your business has no alternative other than to make compulsory redundancies, you should:

  • Identify which employees are at risk of being made redundant without being influenced by immigration status
  • Consult with employees on the redundancy pool criteria and selection criteria
  • Ensure that there is a demonstrably fair selection criterion for redundancy to avoid discrimination for or against sponsored workers

Fair reasons for selecting employees for redundancy include:

  • Skills and qualifications of the worker
  • Worker’s aptitude to the job and standard of work and performance
  • Attendance and discipline record
  • Length of service

Whilst an employer can use length of service with the business (last in and first out policy) as a redundancy selection criteria, a business should avoid allegations of indirect discrimination. For example, if the ‘last in first out’ policy means only sponsored workers are at risk of redundancy because your business only recently started sponsoring workers.

Any criteria for redundancy selection must be applied to all employees in the redundancy pool but some attributes carry greater weight than others to reflect those employee values that are most important to the business. For example, a worker’s skills and aptitude may carry greater weight than the length of service.

In every redundancy scenario, but particularly where the redundancy selection pool includes both settled and sponsored workers, it is essential the redundancy selection is seen as fair and objective. For example, if your criteria include a worker’s aptitude, is the evidence coming from the verbal view of one line manager or an assessment and review of the documented history of appraisals of each worker?

The sponsor licence consequences of making a sponsored worker redundant

If a sponsored worker is made redundant there are no consequences for the sponsor licence, provided Home Office sponsor licence recording and reporting duties are complied with. If not, the company risks its sponsor licence being downgraded or, in the worst-case scenario, suspended or revoked.

If a sponsored worker is made redundant then information about the redundancy process, reason for, date of and the redundancy terms should be placed on the sponsored worker’s HR file.

The company should also record on the SMS system that the business is withdrawing its sponsorship of a sponsored worker if the worker is leaving their employment. Notification must be made within 10 days of the employee’s last day of employment and the company must provide the Home Office with the sponsored worker’s last known address. The report should result in a partial refund of the immigration skills charge, the refund is usually made to the employer within 90 days of the SMS report.

The SMS report normally triggers the cancellation of the work visa, giving the sponsored worker 60 days to leave the UK, find a new sponsoring employer or switch visas. If there are fewer than 60 days left on the work visa the Home Office will make no change to the visa expiry date. Visa cancellation also affects the dependant visas of any family members.

About our expert

Fozia Iqbal

Fozia Iqbal

Senior Business Immigration Solicitor
Fozia has been practising in the field of immigration law for over 20 years, specialising in Business Immigration since 2015. Fozia has advised an array of businesses, from start-ups to multinationals, owner-managed businesses through to SMEs, as well as individuals looking for immigration solutions. With a range of experience across the board, it is unusual for her to come across an immigration issue that she cannot tackle. 

Areas of Expertise

What next?

If you are an employer and you need advice on the correct redundancy procedure to follow with sponsored workers, our employment and business immigration law solicitors can help. Call us on 0800 689 1700
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