There is a long-established principle that liability for immigration breaches can transfer on the acquisition of a business, along with employees. The widening of the sponsorship net to bring most employment-related immigration into the Points Based System makes the Sponsor Management System the default mechanism for making timely notifications. Both buyers and sellers of businesses need to know their obligations and the risks of getting it wrong.
Change of business ownership and TUPE transfers from an Immigration Perspective
If there is a change in the ownership of your business, you may find workers are protected under TUPE or similar protection. Examples are:
- Merger
- Partial merger
- Takeover
- De-merger
- Change in controlling shareholder occurs.
How does TUPE protection work for sponsored migrants?
The Transfer of Undertakings (Protection of Employment) Regulations 2006 as amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 govern this so that the jobs of employees transferred to the new company and their terms and conditions of employment do not change. However, immigration permission does not transfer as seamlessly and action is likely be needed.
How should we consider this from a business immigration angle?
The provisions of TUPE or similar protection will also apply to workers sponsored by the business.
Therefore, the business acquiring the sponsored workers must hold a suitable and valid sponsor licence to continue the employment relationship. The acquiring business must ensure that it complies with its duties and obligations as a sponsor which will include notifying the Home Office that they accept responsibility for the sponsorship of these workers. If the acquiring business does not have licence. It has a shirt window in which to apply for one.
How does TUPE affect the immigration status of a sponsored worker?
Provided the correct reports are made via the Sponsor Management System (SMS) within time, and the workers title and duties remain the same, the sponsored workers should not need to apply for a new immigration permission.
However, a sponsor report may be required later if there are future changes in responsibility or salary changes. If a sponsored worker’s role changes, it should always be considered whether a sponsor report is sufficient or if an application for leave to remain is needed to facilitate the change in employment.
What do we need to do as the original sponsor or acquiring business (the new sponsor) when there is a change of ownership and/or TUPE protection applies to sponsored workers?
Ultimately the actions to be taken depend on the type of change to the business ownership.
As a sponsor licence cannot be transferred between businesses, an acquirer may have to apply for a sponsor licence. Alternatively, if the acquiring business already holds a sponsor licence it may need to extend its scope to additional immigration routes or request additional Certificates of Sponsorship. Sponsors will also be required to make the required reports to the Home Office via the Sponsor Management System (SMS) and may need to review existing Right to Work checks. These are some examples, not an exhaustive list, of actions that you may need to take as a sponsor.
If you do not comply with the Sponsor guidance with the designated timeframe there is a risk that your sponsor license may be suspended or revoked, and that the sponsored workers leave is curtailed early – and they will have to leave the UK if unable to find alternatives fast, with the potential liabilities they may then assert against the employer that lost its licence.
What if you don’t have access to your Sponsor Licence?
The PBS has been operating for 15 years now; licences are subject to renewal every 4 years, but inevitably some lapse into disuse as key personnel leave. Then, business circumstances change and the licence is needed again. Should you find that you don’t have a Level 1 User present in the business, you will need to request access from the Home Office. It is important to ensure the business as a Sponsor maintains access and control throughout the lifecycle of a sponsor licence – failure to do so can have serious consequences when acquiring the sponsored employees of a business.
Listen to our podcast on mergers and acquisitions relating to immigration here.
