Making a sponsored worker redundant: what employers need to do

Making a sponsored worker redundant requires employers to address immigration duties alongside the employment process. Consultation, selection, notice and redundancy payments must be considered together with Home Office reporting requirements and the implications for sponsorship.

The issue can arise across sectors, from a technology company reducing its development team to an engineering business reorganising specialist roles or a hospitality operator closing a site. Where affected employees hold sponsored visas, decisions about alternative work, pay and termination dates need an immigration assessment as well as an employment review.

Even where the commercial reasons for redundancy are clear, overlooking those requirements can create additional risks for the business.

If your business is considering redundancies involving sponsored workers, contact our solicitors for advice that brings together employment law and business immigration expertise.

Can you make a sponsored worker redundant?

A sponsored employee can be made redundant where there is a genuine redundancy situation, and the employer follows an appropriate process. Sponsorship does not prevent a business from reducing its workforce, but it adds responsibilities that need to be addressed.

Employers should establish why the role is at risk, consult meaningfully and consider alternatives before reaching a final decision. The immigration implications should inform the planning without replacing the employment process.

For example, a business proposing to reduce an engineering team should consider the roles and skills it needs to retain, while separately assessing the sponsorship implications for affected employees.

Can sponsorship status influence redundancy selection?

Employers should avoid assuming that sponsored employees can be selected first because their employment involves additional costs or administration.

Selection pools and criteria should be fair, objective and applied consistently. Sponsored employees performing the same or interchangeable roles should generally be considered within the same selection pool as other employees.

Criteria that disadvantage employees because of nationality, or indirectly discriminate against a protected group, can expose the business to claims. Using sponsorship costs to distinguish between otherwise comparable employees may create an indirect race discrimination risk.

Employers should also avoid assumptions about flexibility. An employee’s need for immigration permission before changing roles should not automatically count against them in a redundancy assessment.

Where sponsorship status or costs are being considered as part of a proposal, take advice before incorporating them into selection decisions.

What consultation is required?

Sponsored employees should be included in the consultation process in the same way as other affected staff. Consultation should take place while proposals remain open to discussion, including ways to avoid dismissal or reduce the number of redundancies.

Larger exercises may trigger collective consultation obligations, including requirements concerning employee representatives, minimum consultation periods and notification to the Redundancy Payments Service. Employers should assess the applicable rules at the start.

Home Office reporting is a separate process and does not replace consultation or other employment obligations.

During consultation, employers should acknowledge that redundancy may affect the employee’s immigration position and encourage them to seek independent advice. Avoid giving assurances about their visa or personal options without an appropriate assessment.

Could you offer another role within the business?

Considering alternative employment is an important part of redundancy planning. However, a vacancy that appears suitable from an employment perspective may also require an immigration assessment.

For a skilled worker, moving into a different occupation code will generally require a new certificate of sponsorship and an application to update their visa. Changes within the same occupation code may not require a fresh application, although reporting duties and other conditions can still apply.

The employee should not begin a role requiring new immigration permission before that permission has been obtained.

Before offering redeployment, check the proposed duties, salary, employing entity and intended start date. A move to another company in the same group should also be reviewed rather than treated automatically as an internal transfer.

Can you reduce hours or pay instead of making a redundancy?

Reduced hours or pay may be considered as alternatives to dismissal, but agreement with the employee does not, by itself, make the arrangement compliant with sponsorship rules.

A change may affect the applicable salary requirements or require reporting. Employers cannot assume that reducing hours allows every salary threshold to be reduced proportionately.

Unpaid leave and periods on reduced pay also have specific sponsorship rules and exceptions. The proposed arrangement should be assessed before it takes effect, alongside any contractual consultation or consent requirements.

For example, a temporary reduction in working days across a team may have different implications for sponsored employees. Identifying those implications early allows the business to assess whether the proposal is workable.

When must you report the redundancy to the Home Office?

Sponsors must report the termination of a sponsored worker’s employment through the sponsor management system within 10 working days of the termination date.

The report should accurately reflect the circumstances and include the required information, including the worker’s last recorded contact details.

Placing someone at risk of redundancy is not the same as ending their employment or sponsorship. Employers should distinguish between the proposal, the final decision, the notice period and the termination date when establishing what needs to be reported and when.

Make sure the person managing the sponsor licence receives the final employment information promptly. A redundancy process can be handled correctly by HR while a reporting deadline is missed elsewhere in the business.

How do notice arrangements affect sponsorship?

Working notice, garden leave and payment in lieu of notice can produce different employment end dates and immigration consequences.

An employee who works their notice, or remains employed on garden leave, generally continues in employment until the notice period ends. Subject to continued compliance with sponsorship requirements, the termination report is then due within 10 working days of that end date.

A payment in lieu of notice can end employment immediately, bringing the reporting deadline forward. Employers should consider that distinction before confirming departure arrangements, taking account of the contract and the circumstances.

The employee’s immigration permission does not automatically end on their last working day. The Home Office may subsequently shorten their permission, and any notice will specify the revised expiry date. Employers should not promise that an employee has a fixed period to remain in the UK from the termination date.

Can a settlement agreement resolve the immigration position?

A settlement agreement may help resolve employment claims and document agreed departure terms. However, it cannot remove the employer’s sponsor duties or bind the Home Office.

The agreement should be consistent with the actual termination arrangements. Any proposed contribution towards independent immigration advice or other support should be clearly documented.

Take advice before proposing deductions from final pay or repayment of immigration expenses. Some sponsorship costs must be borne by the employer, and a repayment clause should not be assumed to be enforceable simply because the employee signed it.

Redundancy may also raise different considerations from an employee choosing to resign, so any proposed recovery should be reviewed against both the contract and the applicable rules.

Can the employer recover any sponsorship costs?

Employers may be entitled to a partial refund of the immigration skills charge where a sponsored employee leaves before the end date on their certificate of sponsorship. The amount depends on the circumstances and the unused sponsorship period.

That is separate from recovering money from the employee. The immigration skills charge must be paid by the sponsor and must not be passed on to the worker.

As part of the departure process, check whether a refund is due and retain the relevant reporting and payment records.

Will redundancies affect your sponsor licence?

Making a sponsored employee redundant does not automatically mean the business will lose its licence. The employer must nevertheless continue complying with its sponsor duties.

Missed reports, inaccurate information or wider compliance failures can prompt Home Office action. A restructuring may also involve separate changes to the organisation, its ownership or the people managing the licence.

Reviewing sponsorship arrangements alongside the redundancy exercise helps identify whether anything beyond the individual employee report needs attention.

What should employers do before starting the process?

Before announcing proposals involving sponsored employees, bring together the relevant HR, management and sponsorship information.

Key steps include:

• Establishing the business reasons and roles affected.
• Reviewing the proposed selection pools and criteria.
• Identifying sponsored employees and their immigration routes.
• Checking potential alternative roles and changes to pay or hours.
• Planning consultation, notice and termination arrangements.
• Identifying reporting duties and deadlines.
• Allocating responsibility for sponsor management system updates.
• Reviewing proposed deductions, repayment clauses and potential refunds.
• Preparing clear, consistent employee communications.

Taking advice before decisions are finalised gives the business more scope to address problems and consider alternatives.

How our employment and business immigration solicitors can help

Redundancies involving sponsored workers require a clear understanding of both employment law and business immigration. A decision about selection, redeployment, reduced hours or notice arrangements can affect the fairness of the process as well as the employer’s sponsorship obligations.

Our employment and business immigration solicitors work together to give employers a coordinated assessment of those issues. We can advise on redundancy planning and consultation, assess the immigration implications of alternative roles, prepare dismissal or settlement documentation and identify the Home Office reports required.

Considering both areas together helps employers understand their options before making commitments to staff, with advice that reflects the wider workforce plans and the requirements of the sponsor licence.

Sanae Sahebjalal, head of corporate immigration at SO Legal, comments:

“An alternative role, reduction in hours or particular notice arrangement may appear straightforward until the sponsorship requirements are considered. By looking at employment and immigration issues together from the outset, we can help employers understand which options are workable and what each would require.”

Matthew Irvine, head of employment law, adds:

“Sponsored workers have the same employment rights as other employees, including the right to a fair redundancy process. Their immigration status adds complexity for the employer, but it does not reduce those protections. Decisions about selection, alternative roles, and termination dates therefore need to account for both employment rights and sponsorship requirements.”

If your business is planning redundancies involving sponsored workers, contact our solicitors for coordinated advice on the employment process and your immigration responsibilities.