Many skilled workers or other categories of sponsor license-holding businesses are unaware that a change in their ownership structure can have significant immigration law implications, especially since they do now know they have the responsibility and duties to report changes in structure.
Mergers, Acquisitions & Sponsor Licences
Mergers, acquisitions, and any form of organisational restructuring are fundamentally complex.
During the restructuring process, most resources and attention are usually put on finance, taxes, and contact with stakeholders. One area that is often overlooked is immigration compliance.
If your company's ownership changes or its structure changes because of a merger or acquisition, you need to think about how this will affect your sponsor licence and any sponsored migrants you employ or may acquire before the changes happen. You also need to know that you have to report these changes and when you have to do so.
What businesses should do?
The steps that a business will need to take will depend on the change in ownership structure and whether a controlling interest has been transferred. It's easy to think that a "simple" change in share ownership does not need to be reported if it does not change the company's structure or employee contracts. However, any kind of change in ownership must be reported and may also require a new application for a licence.
You should report any of the changes via the Sponsor Management System (SMS) within 20 working days of the change taking place. Failure to deal with the implications of organisational change on the sponsor licence’s validity creates significant business risk. Any issues with your sponsor licence could lead to it being downgraded, suspended, or revoked.
Failure to notify of a change of ownership, merger, takeover, or de-merger can give grounds for the Home Office to take enforcement action against the sponsor, which may result in its sponsored workers’ leave in the UK being curtailed.
Impact on the sponsor licence by corporate restructuring
Fundamentally, a sponsor licence is not transferrable between organisations. How the organisational change will impact the licence will depend on whether the organisation:
For example, where an organisation is sold as a going concern, resulting in a change of ownership, its sponsor licence will either be revoked or rendered ‘dormant’.
Acquiring sponsored migrants under a TUPE transfer
When a worker is covered by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (as amended) (called "TUPE"), their job is usually moved to the new company and their terms and conditions of employment remain the same. Workers who change employers under TUPE do not need to make a change of employment application provided that:
Workers who are not protected by TUPE will need to get a new Certificate of Sponsorship and fill out an application for a change of employer.
Therefore, it is very important to seek legal advice to determine whether or not TUPE applies.
If TUPE or a similar arrangement is started and sponsored workers are moved to a new employer, the new employer will take full responsibility for the migrant workers from the date of the transfer.
To lawfully employ the transferring sponsored workers, the new employer must either:
Details must be submitted via SMS of all sponsored migrants who are transferring from one sponsor to another.
Failure to meet this requirement can result in sponsored workers’ leave being curtailed to 60 days.
Impact of a Restructuring on sponsored migrants’ Leave
Sponsored workers who are involved in a merger, de-merger, or takeover do not have to submit a new visa application, and the new sponsor does not have to assign them a new Certificate of Sponsorship. The only exception is where the move involves the migrant changing their job or the migrant does not have TUPE or similar protection.
If appropriate reports are not submitted, and where required a new licence application is not made, sponsored migrants may have their leave curtailed to 60 days.
If a sponsored worker’s role changes because of the organisational change, a determination will be needed as to whether a new application for leave to remain is required. This will involve assessing the proposed changes to visa requirements such as the role and salary. Where a new application is needed, a new Certificate of Sponsorship will also be required to be assigned.
Severe consequences
Any sponsor licence holder that is going through a change in ownership should therefore seek advice on what actions they need to take in respect of their licence to ensure they do not fall foul of their sponsor licence duties.
The consequences for failing to carry out these actions are severe. The Home Office has the authority to revoke workers' sponsorship and curtail their visas. The workers would then be required to leave the country or find new employment, and the business can be prevented from applying for a new licence for 12 months.
Therefore, any sponsor licence holder changing ownership should seek advice on the steps they must take in relation to their licence to ensure they do not breach their sponsor licence duties and responsibilities.
As above, it is essential that businesses with sponsored employees properly consider the impact that any change in ownership will have on their migrant workers. They should seek legal advice and plan accordingly.
For expert advice and assistance about the effect of changes in business ownership on sponsor licences and how this might affect sponsored workers, contact us at 0203 865 6219 or leave a message.