In corporate transactions, such as mergers, acquisitions, and restructures, immigration compliance is commonly overlooked. As a licensed sponsor, it's important to consider the impact of any restructuring on your organisation, no matter how big or small, on your sponsor licence and your sponsored migrants. Failing to do so can create significant immigration compliance risks that, if overlooked, may lead to staff shortages, service disruption and impact critical projects and timelines.
In this article we outline some of the implications of corporate transactions for sponsor licences and right to work checks, and provide tips for avoiding potential problems.
The Skilled Worker visa is now the main immigration route for individuals of all nationalities, except British and Irish, who wish to work in the UK. Employers must have a Skilled Worker sponsor licence which is an official authorisation granted by the Home Office that allows a UK-based employer to hire and sponsor non-UK nationals under the Skilled Worker visa route.
A Skilled Worker sponsor licence is tied to a specific legal entity and cannot be transferred.
This means that any change in ownership or group structure can jeopardise your ability to sponsor migrant workers unless the correct steps are taken promptly. Failure to comply can lead to licence suspension or revocation, and sponsored employees may face visa curtailment, disrupting business continuity.
Corporate transactions can take many different forms and it's important to consider at the outset what the impact might be.
Alongside requirements for new licence applications, certain reports to the Home Office may also be necessary.
For example, in the case of a TUPE transfer where the new employer already holds a valid licence, the new employer must make a report to the Home Office confirming they take responsibility for any newly transferred sponsored migrant workers. In the case of an organisation that has been completely taken over or merged into another organisation, a report to surrender the existing sponsor licence may be needed.
It's also essential to keep in mind ongoing reporting duties, for example required reports that are not solely about a structural change. A corporate transaction or restructure may result in the following, which all must also be reported to the Home Office:
Changes must be reported within either 10 or 20 working days, as directed by Home Office guidance.
Organisations should be aware of the critical importance of right to work checks. If conducted correctly, they establish a statutory excuse against civil penalties which may be imposed if it's found that an employee does not, in fact, have the correct permission to work in the UK. Civil penalties may be imposed at up to £60,000 per worker found to be working without permission. Right to work checks should be at the forefront of any organisation’s processes when considering new employees.
Under TUPE regulations, right to work checks carried out by the seller in a corporate transaction are deemed to be carried out by the buyer. This means both that the buyer may benefit from statutory excuses established by the seller, but also that the buyer may be taking on liability for any checks missed or incorrectly carried out.
There is thankfully a 60-day grace period from the date of transfer of the business, during which the buyer may conduct fresh right to work checks on TUPE employees acquired. It's crucial that this process is undertaken to protect the buyer moving forward.
Failure to comply with the correct steps following a corporate transaction or structure can lead to serious consequences and may result in the loss of access to foreign talent in the workplace.
Where a new licence application is required but it's not made, sponsored migrant workers’ visa permission may be cancelled, meaning they would lose the right to work in the UK and an organisation could no longer maintain their employment on that basis.
Where reports are required but not made within the correct timeframes, the Home Office may decide to downgrade or revoke a sponsor licence.
If a licence is downgraded, the Home Office will require an organisation to comply with an ‘action plan’, for a fee to regain a higher rating. Whilst the licence is kept downgraded, the organisation will not be able to assign certificates of sponsorship to new workers, or to add branches or routes to its licence.
If a licence is revoked, there is no right of appeal and an organisation will not be able to apply for a licence again for 12 months. Visa permission of any workers sponsored at the time of revocation will normally be cancelled.
In cases where required action is not taken and this is not immediately discovered, it can have significant consequences later down the line. For example, discovery of missed action during later sale of the business can hold up completion while the issue is resolved.
To ensure business continuity, it's vital for an organisation to be aware that any corporate transaction or restructure may impact its ability to sponsor migrant workers.
Any organisation considering a corporate transaction or restructure should bear in mind the following:
For support with corporate transactions that may affect a sponsor licence, please contact our immigration team.
