Reorganisations and Restructures: Implications for Sponsor Licences

Today’s economic environment has led to an increase in the number of corporate restructures, and this is expected to continue as more and more organisations face challenging financial conditions.

Whilst business restructuring can be beneficial to help meet the business’ evolving commercial and financial objectives, when these activities take place, immigration compliance is often overlooked.

If your business is undertaking a change in structure, it is important that you consider the effect on your current sponsored employees, or those which you may acquire, before the changes occur.

To ensure compliance with their sponsor license, sponsors must notify the Home Office of changes.

Duty to notify Home Office

In instances where there has been a merger, takeover, or change of ownership the sponsor must notify the Home Office via the Sponsor Management System (SMS) within 20 working days of the change taking place.

The Home Office may require supporting documents which evidence the change, these include:

• Evidence of the sale or purchase (such as a letter from a practicing solicitor or notary confirming the same);
• A certified copy of the purchase agreement. For confidentiality reasons the Home Office will often accept a redacted copy of the agreement provided it contains names of parties; the date of transaction; details of the company being bought (including number and types of shares); and signatures of parties;
• Employment contracts which reflect that the sponsored workers’ employment is maintained and current working arrangements contained in migrant workers’ Certificate of Sponsorship is unchanged.

Failure to notify

What is the impact on migrants?

Failure to notify the Home Office may result in the sponsored workers’ leave in the UK being restricted.

What is the impact of sponsors?

Failure to notify can also lead to the sponsors’ licence being downgraded or revoked and they may be in breach of the prevention of illegal working legislation which carries its own transactions such as a civil penalty of up to £20,000 per illegal worker.

Acquiring sponsored migrants under a TUPE transfer

When a TUPE transfer takes effect, the buyer will assume full responsibility for the sponsored employees from the date of the transfer. If the buyer already has a sponsor licence, it will need to notify the Home Office that it has taken over the sponsorship responsibility. This must be done within 20 days of the transfer.

Sponsor licences are not transferrable and so in instances where there has been a sale of all or part of the sponsor business and the buyer does not already have its own sponsor licence, the buyer must submit a valid application for a sponsor licence within 20 working days of the transfer date. The Home Office will usually require evidence of the transfer, such as correspondence from a solicitor confirming details of the transaction or a copy of the purchase agreement.

If the buyer fails to apply for a new licence within the 20-day period, the migrants could have their visas restricted. The migrants will be given 60 days to find a new sponsor or leave the UK or face deportation.

We stress the importance of a buyer’s duty to apply for a licence as failure to do so can lead to substantial fines. If the migrant continues to work for the buyer, they will be working illegally. Which in turn leaves the buyer exposed to a civil penalty fine of up to £20,000 per illegal worker.

Is a new visa application required?

Sponsored migrants involved in a TUPE or similar situation will not have to submit a new visa application if:

• their role is unchanged;
• the new sponsor has a valid sponsor licence; and
• the new sponsor confirms it takes on responsibility for the worker.

In these circumstances the sponsor does not have to assign a new Certificate of Sponsorship to the migrant.

The exception is where the migrant’s job changes due to the transaction (i.e. they are no longer carrying out the same job they were sponsored for). In such case they would need to make a new application and a new Certificate of Sponsorship will need to be assigned to them.

Corporate reorganisations and restructures are complex, our specialist advice can ensure that your compliance obligations have and continue to be met.

Need sponsor licence advice?

Our business immigration specialists can provide comprehensive support and advice to ensure your business remains compliant. To speak to one of our business immigration lawyers, please complete the form below.