Dismissals and redundancies involving sponsored visa holders: what employers need to know

With increasing economic uncertainty, many UK employers are facing the difficult reality of workforce restructuring. For organisations that sponsor international talent under the Skilled Worker visa route (formerly Tier 2 General), or similar sponsored immigration categories, handling redundancies and dismissals requires not only compliance with employment law, but also careful navigation of the Immigration Rules.

In this article, we break down key considerations and legal obligations and outline practical steps for employers when terminating the employment of sponsored visa holders.

Sponsored visas: what makes them different?

A sponsored visa ties the employee’s immigration status directly to their sponsoring employer and a specific job role. Therefore, unlike individuals with personal immigration status (such as those on the EU Settlement Scheme, a UK Ancestry visa or a Graduate visa), sponsored workers do not have an unrestricted right to work in the UK and their immigration status will be impacted if they cease to be employed by their sponsor.

Key sponsored visa categories include:

• Skilled Worker visa (and the predecessor Tier 2 General)

• Global Business Mobility: Senior or Specialist Worker (formerly Intra-Company Transfer or Tier 2 ICT)

In most cases, the visa holder is an employee of the sponsor, but some may be self-employed partners or secondees.

Can you dismiss or make redundant a sponsored worker?

Yes – sponsored employees can be lawfully dismissed or made redundant. However, employers must take care to ensure that the process is fair and that they fulfil all immigration-related obligations.

All UK employment laws – including protection against unfair dismissal and discrimination – apply regardless of immigration status. Crucially, sponsored workers must not be treated more or less favourably than other employees in comparable roles because of their race including colour, nationality, ethnic or national origin.

To that end, employers should follow a fair and transparent process when dismissing or making a sponsored employee redundant in line with ACAS guidelines and, for redundancy scenarios, conduct meaningful consultation and consider suitable alternative employment (while being aware of visa restrictions – see more below).

For more information on employment considerations in a redundancy situation, see our recent blogs: Getting redundancy selection criteria right and Redundancy processes: finding alternative employment.

Suitable alternative roles in redundancies

Unlike employees with unrestricted work rights, sponsored workers cannot automatically take on a new role within your organisation. Their visa only permits them to perform the job for which they were sponsored.

If you are considering alternative employment for a sponsored worker, you need to be mindful of the following requirements:

• The new role must meet the sponsorship requirements (including salary and skill level).

• You may need to assign a new Certificate of Sponsorship (CoS) and subsequently the sponsored worker would need to apply for a new visa.

• Failure to obtain a new visa for the new role may breach the prevention of illegal working legislation, risking a civil penalty of up to £60,000 and jeopardising your Sponsor Licence.

Because of these limitations, it may not be possible to redeploy a sponsored employee as easily as someone with unrestricted status.

Reporting terminations to the Home Office

If you terminate a sponsored worker’s employment, whether through redundancy, dismissal or resignation, you must report the change in circumstances via the Sponsor Management System (SMS) no later than 10 working days after the relevant change/event has occurred.

To do this, the sponsor’s Level 1 User (ie personnel appointed by the sponsor who are authorised to access the SMS) must use the “report migrant activity” function and submit a report against the sponsored worker’s CoS to confirm the termination.

Impact on the worker

Once the sponsored worker’s termination has been reported on the SMS, the Home Office will typically cancel permission to stay in the UK to 60 days. This allows the worker time to either apply for a different visa from within the UK (if this is permitted on the route they wish to switch to), or it allows time for them to leave the UK. In some cases, the Home Office may decide it is appropriate to cancel permission with immediate effect (for example where the worker poses significant risk to the public or where the level of non-compliance with the Immigration Rules merits immediate cancellation). In such circumstances, the worker must leave the UK immediately.

Impact on the worker’s dependents

When cancelling permission for the sponsored worker, the Home Office will also consider whether the sponsored worker has any dependants who were granted permission to be in the UK in line with them. In such cases, the Home Office will, in most circumstances, cancel permission for all dependants too (with their visas ending in line with the sponsored worker).

Can an employer reclaim sponsorship costs from the Home Office or the worker?

Where a sponsored worker’s employment is terminated, the employer should receive a partial refund of the Immigration Skills Charge, which was paid when the CoS was assigned (if applicable as some visas are exempt from this charge). The amount refunded depends on how long is left on the sponsored worker’s visa. Refunds are usually processed within 90 days.

The rules regarding recouping fees from the sponsored worker have changed in recent months, meaning only certain immigration-related costs can be recouped. Fees which cannot be recouped include the sponsor licence application fee, the CoS fee, Immigration Skills Charge, any fees related to priority/premium services related to the licence and any associated administrative fees in connection to obtaining and maintaining the sponsor licence or requesting/assigning the CoS (including professional fees for immigration advisors). Examples of fees that can be recouped from the worker include the Immigration Health Surcharge and the Home Office application fee, and professional fees for any third-party advisors in relation to the immigration application, provided that the worker had a genuine choice in obtaining such services. Employers are advised to review any clawback agreements in place to ensure that they do not attempt to recoup any prohibited costs, as to do so would be a breach of your sponsor compliance duties.

Supporting sponsored workers

Beyond minimum legal duties, there are proactive steps employers can take to support visa holders facing job loss:

1. Take prompt immigration advice and advise the employee as to their options. Many workers are unaware they can potentially switch to other visa categories.

2. Offer to provide references and outplacement services to help employees look for new roles elsewhere.

3. Rather than paying employees in lieu of notice, consider asking the employee to work their notice period or keeping the employee on payroll through garden leave. This delays the termination date, postpones the Home Office notification requirement and gives the employee more time to secure a new visa.

4. Acknowledge that this will likely be a difficult and uncertain time and offer support and resources such as an Employee Assistance Programme, which offers free and confidential support to employees.

5. Consider adding or updating clawback provisions in employment contracts, ahead of any unforeseen changes in staffing needs.