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Can a business make a sponsored worker redundant?

Sadly, business owners sometimes have to ask the question ‘Can we make a sponsored worker redundant?’ It isn’t a question you want to ask lightly, having invested time and money in sponsoring overseas workers on work visas, but there are times when a business is forced to make redundancies to survive. In this article we answer your questions on whether a business can make a sponsored worker redundant and the potential ramifications. 

Can a sponsored worker be made redundant?

A business can make a sponsored worker redundant provided the business follows the correct procedure. Whether your business is considering redundancies across your workforce or the redundancies will be 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 workers and settled workers. 

Any employee, regardless of their immigration status, who is dismissed from their employment through redundancy, and who has been continuously employed for two years or more, is entitled to a statutory redundancy payment. The amount of the redundancy payment depends on the employee’s gross pay, their age and length of service rather than their visa or immigration status. The government has produced a calculator for redundancy pay.

Is it 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.
  • A move in the place of business.

Business owners are understandably reluctant to make any worker redundant, particularly when they appreciate that making a worker who is subject to UK immigration controls redundant is likely to result in the curtailment of the worker’s Tier 2 work visa. Thus, the sponsored worker may not only lose their job but also their home and their ability to remain in the UK.

Knowing the profound impact of redundancy on a sponsored worker, it is important that businesses fairly select candidates for redundancy and don’t discriminate for or against either sponsored workers or settled workers.

What is the difference between a settled worker and a sponsored worker?

When it comes to making redundancies, the law does not distinguish between whether an employee is a settled worker or a sponsored worker. It is important that business owners and HR staff have in mind the settled worker or sponsored worker status of their employees when conducting the redundancy process.

A settled worker is an employee who isn’t subject to immigration control, such as:

  • A British citizen.
  • An EU worker with settled status or pre-settled status under the EU Settlement Scheme.
  • A worker with indefinite leave to remain status.

A sponsored worker is likely to be sponsored by the business on either the old-style Tier 2 (General) visa, the new skilled worker visa or the intra company transfer visa. The fact that a Tier 2 work visa holder is on a time limited visa should not impact on the redundancy selection, although the length of service of an employee can be used as one of several objective selection criteria.

What is the redundancy process?

After the company has ascertained that there is a redundancy situation and you have recorded the reasons for the redundancies then the business needs to consider the redundancy process. The process will depend on whether the company has a contractual redundancy policy. If the business does then you should follow the policy.

Whether your redundancy policy is contractual or not, if your company redundancy process or selection criteria puts employees with protected characteristics at a disadvantage you could be subject to a discrimination claim. Under employment legislation protected characteristics include race and nationality. There is no maximum award for a discrimination claim so it is important to get the redundancy process right. Read our article for more information on discrimination by association.

The redundancy process is summarised below: 

  1. Consider collective consultation. This process depends on the number of employees and the number and location of the redundancies. For more information on the topic of redundancy consultation read our employers guide to collective consultation.
  2. Inform the government if you are considering making twenty or more employees redundant by completing a notification form.
  3. Start the collective consultation process if required. If you anticipate making fewer than twenty 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 pay.
  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 company sponsor licence at risk.

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.

What are the alternatives to making a sponsored worker redundant?

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 four 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 system within ten working days of the change in salary.
  • Changing the sponsored worker’s job. To try to avoid making redundancies some businesses will look to changing some employee job roles. If a business does have to make changes to a sponsored worker’s role, then it is essential that the business checks the wording of the job description in the worker’s certificate of sponsorship to ensure that the amended job description is covered in the original certificate of sponsorship. 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 from an employment solicitor who has experience in this area of business immigration. 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. Normally, a change of employment application must be approved before a sponsored worker can start work in their new role.

If your business has to make either sponsored workers or settled workers redundant, or to change job roles or salary, it is important that there is 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 sponsor licence compliance audit or in employment tribunal proceedings. For more information on redundancy options read our article on the alternatives to redundancy.

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

If your business is having to make redundancies then it doesn’t matter whether your workers are settled or sponsored workers as every member of your workforce at risk of redundancy is entitled to the protection of UK employment law.

Where a pool of workers at risk of redundancy comprises both sponsored and settled workers it is particularly important that your business doesn’t just comply with UK employment and redundancy law requirements before selecting workers for redundancy, but that it also considers any immigration and visa issues arising as a consequence of the redundancy process.

For example, the company may be in a position to be able to offer those at risk of redundancy suitable alternative employment within your business. Whilst your settled workers may be able to easily accept an offer of alternative employment, the situation may not be as straightforward for your sponsored workers on skilled worker visas or intra company transfer visas.

Offering a sponsored worker 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 any 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 role with the same employer under the terms of their skilled worker visa if the new job remains within the same standard occupational classification code (SOC Code) as their original code. 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 any sponsored worker will need to undergo to take on the new job role if offered to them and accepted, including the need for a new skilled worker visa application after their current SOC 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 and the offer of alternative jobs within the business because the company doesn’t want the hassle of having to deal with a new skilled worker visa application, the allocation of another certificate of sponsorship and compliance with sponsor licence reporting and recording duties.

Conducting the redundancy exercise with sponsored workers

It is essential that employers follow the correct redundancy process when making job redundancies as failure to do so could result in:

  • Claims for unfair dismissal.
  • Discrimination claims.

The right to claim unfair dismissal applies if a settled or sponsored worker has been employed for a qualifying period. If the employee started work after the 6 April 2012 the qualifying period is normally two years. If the employment commenced before April 2012 the qualifying period is normally one year.

There is no qualifying period for an employee (whether they are a settled worker or a sponsored worker) to bring a discrimination claim because they believe that they have been selected for redundancy on discriminatory grounds or based on unfair selection criteria.

When there are potential disagreements over the selection of the redundancy pool it can be advisable to take employment legal advice and to consult with your workers on the membership of the redundancy pool of candidates.

After the redundancy pool has been ascertained, the business then needs to consider the redundancy selection criteria. Careful thought should be given to your business needs and priorities in order to use the agreed selection criteria (and how the criteria are weighted in importance) to enable your business to retain the best employees, whether or not they are sponsored or settled workers.

When looking at the redundancy selection criteria it is essential to ensure that the criteria are not directly or indirectly discriminatory and there is no element of unconscious bias. The criteria must be objective in nature.

When conducting redundancy exercises, employers need to be aware that any pool of potential redundancy candidates could feel aggrieved by the redundancy process. For example:

  • Settled workers could feel that they had unfairly been selected for redundancy because business owners know that a sponsored worker will find it harder to secure alternative employment in the UK (because they are restricted to securing employment with a sponsor licence holder), and the consequences of the sponsored worker and their family potentially having to leave the UK because of the redundancy.
  • Sponsored workers could feel that the pool of candidates selected for redundancy is based on race, nationality, or visa status rather than based on a 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 what is a fair redundancy selection pool applies equally to all employees of a business, 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 business and 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 race or 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 reflect on 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 alterative other than to make compulsory redundancies, you must:

  • Identify which employees are at risk of being made redundant – the selection must not be influenced by sponsored worker or immigration status.
  • Consult with employees on the redundancy pool criteria and selection criteria.
  • Ensure that there is a demonstrably fair selection criteria for redundancy so that the business doesn’t discriminate for or against sponsored workers.

Employers often struggle with what amounts to a fair selection criteria for redundancy when having to decide on redundancies out of a pool of workers (such as a pool of accountants or architects or website designers). Some fair reasons for selecting employees for redundancy include:

  • The skills and qualifications of the worker.
  • The worker’s aptitude to the job and their standard of work and performance.
  • The worker’s attendance record.
  • The worker’s disciplinary record.
  • The worker’s 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 any 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 skilled worker visa holders.

Any criteria for redundancy selection must be applied to all employees in the redundancy selection pool. However, it is possible that some attributes carry greater weight than others. For example, a worker’s skills and aptitude may carry greater weight to an employer than an employee’s length of service. The redundancy criteria can be weighted to reflect those employee values that are most important to the business. The important point is that all employees in the redundancy pool should understand the redundancy selection criteria and the proposed weighting system before the redundancy process is carried out.

In every redundancy scenario, but particularly where the redundancy selection pool includes both settled and sponsored workers, it is essential that the redundancy selection is seen as fair and objective. For example, if your criteria include 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?

What are the sponsor licence consequences of an employer making a sponsored worker redundant?

If a business makes a sponsored worker redundant there will be no consequences for the continuation of the company sponsor licence, provided there is compliance with Home Office sponsor licence recording and reporting duties. If the business doesn’t comply with the recording and reporting duties then the company risks their sponsor licence being downgraded or, in the worst-case scenario, suspended or revoked.

If the business chooses to redeploy a sponsored worker into a new job it is essential that the SOC code is checked and that all sponsor licence reporting and recording duties are complied with.

Although there shouldn’t be any adverse consequences to the sponsor licence if the business is forced to make sponsored workers redundant, be aware that the future recruitment of replacement sponsored workers may not be straight forward. That is because of the end of free movement and the introduction of the new UK points-based immigration system on the 1 January 2021. Since that date EU nationals are subject to immigration controls and require visas in the same way as non-EEA nationals. The recruitment of overseas workers from the EU is now more limited because EU workers who are subject to UK immigration controls must meet the skill and minimum salary threshold criteria for the skilled worker visa.

What are the sponsor licence recording and reporting duties if a sponsored worker is made redundant?

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.

In addition, a sponsor licence holder is under a duty to record on the sponsor licence management system that the business is withdrawing their sponsorship of a sponsored worker if the worker is leaving their employment. The rules say that notification on the sponsor licence management system must be made within ten days of the employee’s last day of employment.

What are the immigration consequences if an employer makes a sponsored worker redundant?

Making the decision to make any worker redundant is hard, but it is particularly difficult to make a sponsored worker redundant when an employer understands the potential immigration consequences for the sponsored employee.

If a sponsored worker is made redundant then the sponsoring employer will have to withdraw their sponsorship of the worker and report the redundancy on the sponsor licence management system within ten days of the last date of employment. The business also has to provide the Home Office with the sponsored worker’s last known address. 

That report on the sponsor licence management system will normally trigger the Home Office curtailing the sponsored worker’s visa in accordance with the provisions in paragraph 323 of the Immigration Rules to a period of sixty days through the issue of a ‘curtailment notice’. This notice shortens the permission to stay in the UK to sixty calendar days and gives a new visa expiry date. If there are fewer than sixty days left on the sponsored worker’s work visa then the Home Office will make no change to the visa expiry date.

The sponsored worker’s visa curtailment will also be applied by the Home Office to the worker’s dependant family members who are resident in the UK on dependant visas. There is no right of appeal against the visa curtailment decision but the Home office can exercise discretion if the worker has a dependant under the age of eighteen years.

The redundant sponsored worker then has a maximum of sixty days within which to:

  • Secure alternative employment with an employer who holds a sponsor licence and who can assign a new certificate of sponsorship to the worker. They will need to apply for a new skilled worker visa before the expiry of their curtailed visa.
  • Apply to switch visa. For example, subject to family circumstances, a sponsored worker may meet the eligibility criteria for a family visa, such as a spouse visa or a parent visa.

The sponsored worker may have planned to settle in the UK through applying for indefinite leave to remain (ILR) in the UK. However, even if the sponsored worker meets the lawful residence and general eligibility criteria for ILR they may not meet the required minimum income threshold for an ILR application based on at least five years residence in the UK on a work visa.

If none of the above options are available to the sponsored worker then they will have to leave the UK. Failure to do so would result in the sponsored worker becoming an over stayer. That would affect their ability to successfully re-apply for UK entry clearance.

Re-employing sponsored workers and the cooling-off period

Under old immigration rules, if a sponsored worker was made redundant by a UK employer, then the employer could not quickly re-employ them if business picked up. That was because if the sponsored worker left the UK due to the curtailment of their visa a twelve month ‘cooling-off period’ was imposed before the individual could make another application for a work visa. With the introduction of the skilled worker visa, the Tier 2 cooling off period has been abolished.

Can a business get a refund of the immigration skills charge?

If your business paid the immigration skills charge for a redundant sponsored worker then it is understandable that the company will want to know if a partial refund of the charge can be claimed.

The immigration rules say that an employer can get a partial refund of the immigration skills charge if the sponsored worker leaves their employment prior to the end date on the certificate of sponsorship. Usually, the Home Office refunds the immigration skills charge within ninety days of the event that resulted in the request for a partial refund of the charge.

About our expert

Rashid Uzzaman

Rashid Uzzaman

Senior Business Immigration Solicitor
Rashid Uzzaman is a Senior Business Immigration Solicitor and joined Harper James Solicitors in May 2018. Rashid specialises in all aspects of corporate immigration matters, including Tier 1 (Entrepreneur and Exceptional Talent Migrants), Tier 2 (General, ICT and Sportspersons), Tier 4 (Students), Tier 5 (Temporary Workers) of the Points Based System and Sponsorship Licence Applications. He also specialises in auditing businesses for compliance with the immigration rules and provides training on how to implement and maintain an effective system of compliance in the workplace.

Areas of Expertise

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