In the boardrooms of growing tech companies, the conversation is usually about “optimization.” The CFO looks at the line item for “Global Payroll Fees” and notices that Provider A charges $599 per employee, while the flashy new Provider B promises to do it for $299.
The math seems simple. You have 20 employees in the UK, Singapore, and Canada. Switching providers will save the company $72,000 a year. It feels like a responsible, fiduciary decision. You sign the contract, notify the team, and prepare for the migration.
But three weeks later, you receive a panicked 3:00 AM call from your Lead Engineer in London. They just received a notification that their visa is being curtailed. They have 60 days to leave the country.
You didn’t just switch software vendors. You walked your best talent off a “Visa Cliff.”
The Illusion of “Transfer”
The fundamental misunderstanding that leads to this disaster is the belief that an Employer of Record (EOR) is just a payroll processor. It is not. To the government of the host country, the EOR is the legal employer.
When you sponsor a talented developer from Brazil to work in London, their Tier 2 Skilled Worker visa is not tied to your company (the client). It is tied to the specific tax ID and sponsorship license of the EOR.
When you decide to switch providers to save money, you are not simply “migrating data.” In the eyes of the law, you are firing the employee from Company A and rehiring them at Company B.
This triggers a cascade of immigration events:
- Termination Notification: The old EOR is legally required to inform the Home Office (or local immigration authority) that the employee no longer works for them.
- Visa Cancellation: The government initiates the cancellation of the current visa.
- The Gap: The new EOR must now step in and sponsor the employee. But this is not an instant “handover.” It is a fresh application.
The Sponsorship Void
Here is where the “Cliff” appears.
Not all EORs are created equal. Many of the newer, cheaper “tech-first” platforms do not have their own entities in every country. They rely on third-party partners (aggregators) or lack the specific “Sponsorship License” required to hold visas.
You might switch to a new provider only to discover—too late—that while they can process payroll in the UK, they cannot sponsor visas there. Or, even if they can, their license might be capped.
If the new provider cannot secure a new Certificate of Sponsorship before the old visa expires (or is curtailed), your employee enters a legal limbo. They lose their right to work. They may be unable to re-enter the country if they travel. In the worst-case scenario, their clock toward “Indefinite Leave to Remain” (permanent residency) resets to zero because their continuous employment was broken.
You have effectively erased five years of their life progress to save $300 a month.
The “Cooling Off” Trap
Even if the new provider can sponsor, the timing is treacherous.
Some countries have “Cooling Off” periods or labor market tests. If the switch is treated as a “new hire” rather than a “transfer of undertaking” (like TUPE in Europe), the new EOR might be legally required to advertise the role to local citizens for 28 days before they can offer it to your expat employee.
Imagine telling your Senior VP of Product that they have to “re-apply” for their own job, and that you legally have to interview other people for it, just because you changed payroll vendors. The breach of trust is often irreparable.
How to Bridge the Gap
Does this mean you are held hostage by your current expensive provider? No. But it means the EOR switch must be treated as a delicate legal surgery, not a bulk administrative task.
To navigate the cliff safely, you must follow a rigorous diligence process:
- The Entity Audit: Before signing with a new EOR, demand proof of their own legal entity and sponsorship license in every country where you have visa holders. Do not accept “we have partners” as an answer.
- The “Bridge” Strategy: You may need to keep your visa-holding employees on the old provider for an extra 3–6 months while moving the rest of the local staff to the new provider. This “split” strategy buys time for the new visa applications to process without a gap in coverage.
- The TUPE Protections: In Europe, strict laws (TUPE) protect employees during transfers. A capable EOR should be able to frame the switch as a “Transfer of Undertakings,” which legally preserves the employee’s tenure and rights. If the new provider doesn’t know what TUPE is, run away.
Conclusion
Global talent is your most valuable asset. When that talent is working on a visa, they are living in a state of fragility. Their home, their children’s schools, and their future depend on that employment contract remaining unbroken.
Saving money on administrative fees is a valid business goal. But if that saving comes at the cost of your employees’ residency, you will find yourself with a cheaper payroll bill for a team that no longer exists. Compliance is not just about taxes; it is about protecting the people who build your business from the bureaucracy that threatens to deport them.
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