Redundancy and sponsored workers

Redundancy is a sensitive and legally complex process, particularly when it involves sponsored workers. Employers must act lawfully, fairly, and compassionately to avoid legal risks, financial penalties, and reputational damage.

This guide provides practical advice for UK employers on managing redundancies involving sponsored employees, while complying with employment and immigration laws.

Understanding redundancy

Redundancy is a form of dismissal that occurs when an employer needs to reduce its workforce. Common reasons include:

• Business closure.
• Relocation.
• Reduced demand for work due to restructuring, automation, or loss of contracts.

Before initiating redundancy, employers should explore alternatives to avoid job losses. If redundancy is unavoidable, a fair and lawful process must be followed. This includes:

• Consulting affected employees.
• Using objective, non-discriminatory selection criteria.
• Offering alternative employment where possible.

All steps should be documented, and support provided to affected staff, including financial guidance, career advice, and a clear appeals process.

Employees with at least two years of service are entitled to statutory redundancy pay, regardless of immigration status. Payments are based on age, length of service, and gross weekly pay. Use the government redundancy pay calculator for figures.

Settled vs sponsored workers

• Settled workers: British citizens, EU nationals with settled status, or those with indefinite leave to remain.
• Sponsored workers: Hold a visa such as skilled worker visa and their permission to work in the UK is dependent on the employer sponsorship.

Redundancy law applies equally, but employers must avoid indirect discrimination, especially since nationality and race are protected characteristics under the Equality Act 2010.

Can sponsored workers be made redundant?

Sponsored workers can be made redundant, but additional considerations apply, involving both employment and immigration law. Employers must take care to avoid discrimination based on immigration status, to avoid allegations that the process is tainted by bias related to race or nationality.

Sponsored workers rely on their employer not just for their job, but also for their immigration permission to live and work in the UK. Employers must be mindful of the Immigration Rules and of sponsor duties.

• Unpaid leave: Sponsored migrant workers can, in general, only take up to 4 weeks per year without affecting sponsorship.
• Reduced hours/pay: Changes that mean a reduction in working hours and/or pay must continue to meet minimum salary thresholds, unless an exception applies, and must be reported to the Home Office.
• Role changes: If offered alternative employment, any change in role must align with the original job description in the Certificate of Sponsorship. Changes that mean the job falls within a different SOC code would require a new visa application.
• Redundancy payments: Must be calculated based on age, pay, and service, not visa status.
• Additional support: Offer help finding new roles, extend redundancy dates, and provide legal advice. Extra time can be invaluable for sponsored workers making immigration arrangements.

Sponsor Licence Implications

If a sponsored worker is made redundant, you must comply with your sponsor duties, including reporting the change in migrant worker circumstances via Sponsorship Management System (SMS) within 10 working days. Details of the redundancy and last known address must be provided.

This report triggers visa cancellation and may lead to a partial refund of the immigration skills charge.

The Home Office will get in touch with the migrant worker to inform them that their visa is being curtailed. Upon notification, the individual and any dependent family members, will usually have a period of 60 days within which to submit a new immigration application or leave the UK.

Need expert advice?

Facing redundancy involving sponsored workers? Our employment and immigration specialists offer integrated support to guide you through this complex process with confidence.

Contact us today for tailored guidance and peace of mind.