Can you dismiss a skilled worker who does not qualify for ILR (Indefinite Leave to Remain) when you thought they would?

As I mentioned previously, I am still trying to get my head around the issues that continue to arise from the recent announcement made by the Home Secretary in relation to the settlement provisions. For now, I want to unpack one part of the change.

As a quick recap: if someone is in the UK as a Skilled Worker, their employer will have a sponsor licence and sponsoring them. Once they complete five years of continuous residence, they can typically apply for indefinite leave to remain (also called settlement). This, in turn, means that they would no longer need to be sponsored to do their job (reduced employment costs for the employer).

As part of the recent announcement, the Skilled Worker will need to have earned at least £50,270 in the last three years to be eligible to apply for indefinite leave, at the five-year point along with other criteria such as English language at A-level standard. There are also discussions about the idea of being a “good citizen” – who knows how that is going to be measured.

I want to explore what happens if someone reaches five years but doesn’t earn £50,270. What happens then? Well, their employer (sponsor) can continue to sponsor them for another five years, after which they reach 10 years of residence, and the proposal is that they could then apply for indefinite leave to remain. One would hope that they would meet the new salary threshold by then, but who knows? It’s likely that those in lower-paid roles, often described as “low skilled” – a definition I strongly object to, as I couldn’t do care work myself and would argue that it is absolutely a skilled profession – are likely to only be able to apply for indefinite leave to remain once they have been sponsored for 10 years.

Anyway, I digress. Back to the question: what can a sponsor do with a sponsored worker who doesn’t qualify at the five-year point, and what happens if the sponsor decides they don’t want to sponsor them for another five years because they haven’t budgeted for that?

I spoke to our Employment Law colleagues, and this is what they said…  The issue here is the fact that, for as long as the individual doesn’t have indefinite leave to remain (settlement), they need to be sponsored by the employer, which is an ongoing cost to the business and one which it may not be able or willing to maintain.

If unfortunately, the position is that the sponsor has a business need to reduce staffing costs, then the role that their sponsored employee is undertaking could be placed at risk of redundancy. The employer would need to follow a fair redundancy consultation process in the usual way.

Care should be taken during the consultation process due to the risk of grievance complaints or claims. Ultimately, termination of employment could have a huge impact on the sponsored worker as it would curtail their right (and the right of their dependents) to continue living and working in the UK. Any potential alternatives to redundancy should be explored and discussed during the consultation process.

Helpfully for employers, the Supreme Court has previously held that nationality and immigration status cannot be equated, and that precarious immigration status is not a good ground for discrimination claims under the Equality Act 2010[1]. In other words, immigration status does not fall within the protected characteristic of “race” under that Act.

In a further helpful development for employers, the Court of Appeal has held that although employers cannot generally justify discriminatory policies solely on the ground of the need to save costs, an employer’s need to reduce costs, including staff costs, in order to “balance the books”, can provide a justification defence to any indirect discrimination claims[2]. However, in such cases, it must also be shown that the measures adopted (termination of sponsorship and employment in this scenario) are a proportionate means of achieving that aim (reducing costs), taking into account the impact on the individual and whether that objective could be achieved in other ways.

So, although reducing costs can be a legitimate reason for not continuing to employ a sponsored worker, whether this would succeed in defeating a discrimination claim – if such a claim were to get off the ground (which is questionable because of the point mentioned above about immigration status not falling within the Equality Act 2010) – would depend on the specific circumstances, such as the size and resources of the employer and whether there were other ways costs could be reduced.

[1] Taiwo (Appellant) v Olaigbe and another [2016] UKSC 31

[2] Heskett v Secretary of State for Justice [2020] EWCA Civ 1487