When redundancies affect individuals on sponsored work visas, employers must be alive to additional complexities. Immigration constraints limit the alternatives available, discrimination risks multiply, and the consequences for the worker are wider than losing just their job. We explain what employers need to consider at each stage of the process.

Most employers know the basics of a fair redundancy process: a genuine redundancy rationale, fair pooling/selection, adequate consultation and consideration of alternative employment. Get those right and the risk of employment tribunal claims – for unfair dismissal and/or discrimination – is generally manageable.

However, where the affected workforce includes employees on sponsored work visas (assuming these are employee sponsored workers), there are additional considerations and potential pitfalls. For example, constraints on their immigration status are likely to restrict alternative options – such as reduced hours or redeployment into a new role – that may otherwise be available. Also, the consequences of dismissal are more severe: a sponsored worker doesn't face losing just their job, but their right to stay in the UK too.

This means that it is important for employers to pay particular attention to the impact of the redundancy process on their sponsored workforce from the outset of the process.

Pooling and selection

The first step for an employer is to identify the correct pool of affected employees. This will usually comprise those carrying out the work that has ceased or diminished. Immigration status is unlikely to be relevant at this stage: sponsored workers should be included in the same pool as settled workers performing the same or interchangeable roles, as status does not alter the nature of the work. Giving preferential treatment to sponsored workers, or making their selection more likely, could give rise to a race discrimination claim.

The same pooling principles should be applied to everyone regardless of immigration status. Similarly, once employers move to defining and applying selection criteria, these should be objective and non-discriminatory. Although it’s unlikely that immigration status itself would be a criterion, ostensibly neutral selection criteria could place sponsored employees at a particular disadvantage.

• Sponsorship costs. The cost of sponsorship has risen exponentially in recent years. However, using this to differentiate between otherwise comparable employees could give rise to an indirect race discrimination claim. An employer may struggle to “objectively justify” that decision.
• Attendance criteria. If attendance levels are a selection criterion, it may be necessary to look at the reasons for absences. Is a sponsored worker’s absence related to their immigration status, in some way? For example, have they had to wait from abroad for an immigration process to conclude? In the same way that employers must be cautious about whether sickness absence relates to an underlying disability, there may need to be closer scrutiny of this criterion.
• Flexibility assumptions. Criteria like “flexibility” or “commitment” can sometimes carry inherent discrimination risks. Assumptions about a sponsored worker's ability to move roles – where undertaking a different job may mean that they need to submit a fresh visa application – should not count against them.

Consultation

Consultation with at-risk employees is crucial. It should occur before final decisions are taken and employees should be given the opportunity to have their say. Topics for discussion tend to include the redundancy rationale, the pool, the selection criteria and scores, the timescale, the financial package, available vacancies, and suggestions for avoiding redundancy. Where 20 or more employees may be made redundant within 90 days, collective consultation rules also apply.

For sponsored workers, the stakes are higher still, because redundancy threatens not just their livelihood but their immigration status. If an employer dismisses a sponsored employee, it must notify the Home Office of the termination – within 10 working days of the termination date. The Home Office will then, in time, curtail the sponsored employee’s immigration permission.

This process is now happening swiftly, with curtailment notices now going out in as little as a month or two after the date of notification. We have written about this in more detail in this article but this timescale means that employers need to be alive to this consequence during the consultation process. For example, an employer isn’t obliged to give immigration advice to employees during redundancy consultation, but good practice would tend to see the employer explaining – at an early stage – the possible immigration consequences to at-risk employees, perhaps encouraging the employee to seek independent legal advice.

Alternatives to redundancy

In a redundancy exercise, employers are encouraged to think creatively about alternatives to a redundancy dismissal. Examples include pay cuts or reduced hours, lay-offs and short-time working, reducing use of contractors, redeployment or secondments, recruitment freezes, or flexible working arrangements.

An employee selected for redundancy should also usually be offered a suitable available vacancy. The duty to search for alternative employment continues until the end of the notice period, and any offer must take effect immediately or within four weeks of termination.

However, for sponsored workers, the menu of alternatives shrinks somewhat. Several common options may be incompatible with visa conditions or sponsor licence obligations. Employers considering redeployment, lay-offs or salary reductions should assess the immigration impact from the outset. Reporting requirements may also be triggered, and failure to take the necessary steps may have an impact on the sponsor licence and/or the employee’s immigration permission.

Some common constraints include:

• Redeployment or changing duties. Unlike for settled workers, redeployment isn’t simply a matter of obtaining consent and offering the role. Moving a sponsored worker into a different role may require a fresh visa application to be submitted if the new role sits in a different occupation (or “SOC”) code from the one they are currently sponsored within. If a new visa is needed, the visa will need to be in place before work in the new role can begin. Even if the occupation code doesn’t change, but the duties do, the employer will likely need to report the change in duties via the Home Office’s Sponsor Management System.
• Salary thresholds. Any reduction in pay – whether through reduced hours, a pay cut, or a move to a lower-graded role – must be assessed against the applicable going-rate and general salary thresholds for the route. Unlike settled workers, for whom a move to a lower-paid role is primarily a personal/professional choice, sponsored workers are constrained by minimum salary requirements. A role that would otherwise be suitable may simply not be available to them if the relevant sponsorship salary threshold is not met.
• Unpaid leave. Sponsors can generally authorise only up to four weeks’ unpaid leave per calendar year without triggering reporting obligations or potentially breaching visa conditions. This limits the scope for sabbaticals, career breaks, or extended short-time working.

Notice periods and termination

Where a redundancy dismissal is confirmed at the end of the consultation process, the employee will be entitled to notice to terminate their employment. Notice can either be worked (possibly on ‘garden leave’) or paid in lieu. The notice arrangements are usually at the employer’s discretion.

As noted above, the termination of a sponsored worker’s employment triggers an obligation on the employer to notify the Home Office of the dismissal. That report to the Home Office must be made within 10 working days of the termination date.

Therefore, the treatment of the notice period has practical implications for sponsored workers. Having the employee serve out their notice on garden leave produces a different outcome to making a payment in lieu of notice (“PILON”). An employee on garden leave remains employed throughout the notice period, so sponsorship continues and the notification obligation is only triggered at the end of the notice period. Whereas a PILON terminates employment with immediate effect, bringing the notification requirement forward.

After the Home Office is notified of the termination of employment, it will inform the employee of the curtailment of their immigration permission. The curtailment will normally be notified in the form of an email which will set out the new expiry date of the employee’s leave – in most cases this will be 60 days from the date of the notification. By the end of that window, the individual must have made a fresh immigration application or have left the UK.

Having a sponsored worker serve out their notice period (whether working or on garden leave) gives the worker as much time as possible to secure a new sponsored role, make an alternative immigration application, or otherwise arrange their affairs before their visa is curtailed by the Home Office. Many employers, recognising the severity of the consequences of dismissal, want to be helpful here and are increasingly amenable to allowing a sponsored worker to serve out their notice period on garden leave.

Does this carry any risk? There is perhaps an argument that retaining a sponsored employee on payroll (while giving a PILON to others) could give rise to less favourable treatment arguments from other redundant employees – although this isn’t something we’ve commonly seen arise in practice.

Post-termination matters

The employer’s obligations don't end when a sponsored worker's employment terminates:

• Reporting and record-keeping. As mentioned above, sponsors must report the cessation of employment to the Home Office within 10 days of the termination date. Failure to comply can have serious consequences for the sponsor licence.
• Difficulties re-entering the UK. Individuals who wish to travel out and back in to the UK after their employer has notified the Home Office of their dismissal may find that they face challenges re-entering the UK – see our separate article for further information on this issue.
• Dependants’ visas. Family members’ ‘dependant’ visas are linked to the sponsored employee’s immigration permission. Termination of the sponsored worker’s employment will affect the immigration status of their partner and children too – they can expect to have their permission curtailed in the same way.
• Cost clawback. Some employers include contractual provisions requiring sponsored employees to repay sponsorship costs if their employment ends within a specified period. Enforcing clawback where employment ends by redundancy may be inappropriate and could result in legal challenge. We explore some of the risks regarding clawbacks in our article here.
• Immigration Skills Charge refunds. Where employment ends earlier than expected, the employer may be entitled to a partial refund of the Immigration Skills Charge. It’s worth having processes in place to identify and claim these.

Think ahead

Redundancy exercises involving sponsored workers require careful planning at every stage. The interplay between employment law and immigration obligations creates additional complexity that employers can’t afford to overlook as potential consequences extend beyond the employment tribunal and could put the employer’s sponsor licence at risk. Considering the immigration implications from the outset, not as an afterthought, will leave employers best prepared and sponsored workers best supported.

For further guidance, please contact Tom McEvoy.