TUPE & Immigration Compliance During Business Restructuring

During a business restructuring, immigration laws can often be neglected. It’s not uncommon for immigration compliance during business restructuring to be a complicated topic. This is because employment law and immigration law can sometimes differ. This article breaks down the implications of corporate transactions on sponsor licences and how to keep your business compliant.

Our immigration solicitors can assure your business stays immigration compliant during acquisitions and TUPE transfers.

A Businesses Responsibility for Immigration Compliance During Business Restructuring

Notifying the Home Office

A sponsor of a worker must inform the Home Office within 20 working days if any the following events occur:

• The name of the business the sponsor works for has changed. This includes any branches that are included under the licence.
• All or part of the business that sponsors the employee is either sold.
• The sponsor business is involved in a merger or is taken over by another business.
• The sponsor business enters insolvency or stops trading.
• If the person responsible for the sponsor business is convicted of immigration offences or other offences. Examples of the person responsible are an owner, director, authorising officer, and Key Contact Level 1 user.

In cases where the sponsor holds a Senior or Specialist Worker licence or Graduate Trainee licence under the Global Business Mobility routes, or a licence that includes multiple UK branches, it’s advised to review the whole group structure periodically. After reviewing, the Home Office can be updated on any structural changes.

It’s recommended to inform the Home Office with an affidavit. This form of documentation informs the Home Office clearly of which entities are ‘linked by common ownership or control’, which has a specific definition in the sponsor guidance. Additionally, an affidavit is more inclusive than under corporate law.

Amending the Sponsor Management System

As well as informing the Home Office, specific sponsor-related records may require updating on the Sponsor Management System. Examples of the changes that may need to be made are:

• Disclosing registration details of a governing body.
• Updating address details that are associated with the licence and individual Key Personnel.
• Replacing and/or deactivating Key Personnel listed on the licence.

Reporting Requirements for Sponsored Workers

Certain corporate transactions may mean you need to report changes regarding the circumstance of individual sponsored workers. These reports must be completed within 10 working days of the update. Examples of a change that would need to be reported are:

• A new work/office location.
• The end of sponsorship is due to that person being made redundant or leaving their employment because of the transaction process.
• A significant change in a job title, core duty, and/or salary because of the transaction.
• The worker’s employment comes within the extent of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) or similar protection.
• A change in the sponsor for the worker who will remain with the same employer in the same employment.

Application for a New Sponsor Licence

In some cases of business transactions, a new sponsor is necessary.

The main reason that a sponsor would need to get a new licence is when there is a change in the direct ownership of the sponsor business. This might be because of the business being sold to a new owner or if a share sale results in a controlling number of shares transferring to new ownership. Additionally, the business might be sold off and existing sponsored employees will move to the business created.

In the event of either of these examples, the current licence will be revoked. Alternatively, if sponsored employees have moved to another sponsor licence, the former will be made dormant.

If the new owners of the business want to continue to sponsor workers and do so in the future, they will need a new licence.

When a New Sponsor Licence Is Not Required

For employees where TUPE protection applies, a new application is not needed. This is if:

• There have been no changes to the employee’s job role.
• The new sponsor has a valid sponsor licence in the relevant work route.
• The employee’s new sponsor can confirm to take on responsibility for the worker.

However, if changes have occurred to the employee because of the transaction, they would need to make a new application for immigration permission. Additionally, a new application would need to be made if the employee is not covered by TUPE during the transaction. A new application will be needed in most cases where the employee is starting work in a different role.

Right-to-Work Checks

Sponsors of workers are obligated to maintain compliant right-to-work checks throughout their workforce.

If staff were acquired by a business under TUPE, the Home Office provides employers a 60-day period. This begins on the start date of the transfer of the business. In this period, employers should carry out repeat right-to-work checks for acquired staff. Not only is this essential to remain sponsor licence compliant, but it helps make businesses aware of any instances of illegal working. Once the first checks have been done it is much easier to schedule future checks for workers with immigration permission.

Immigration Laws and Company Reorganisation

A change in business ownership can result in the loss of your sponsor licence. Your sponsored staff will not automatically transfer over to a new employer’s sponsor licence (even if a TUPE transfer occurs). 

TUPE Transfers Immigration Implications

It is important to not miss any key deadlines when TUPE transfer occurs. Our employment and immigration solicitors are to advise you on obligations when it comes to immigration laws during business restructuring. Our solicitors will guide you through the impact of mergers, takeovers, TUPE transfers and similar changes on a sponsorship licence.

It’s important to make sure to stay compliant during acquisitions and TUPE transfers as mistakes can lead to the loss of a sponsor licence and therefore the loss of your staff. If a sponsorship licence is lost, the staff members on the licence are only allowed to remain in the UK for 60 days.

Tips for Immigration Compliance During Business Restructuring

• Assure staff who are involved in sponsor licence administration are aware of the implications of business restructuring.
• Annually review and update the Home Office regarding the business restructuring.
• Establish and maintain internal communications with the businesses’ general counsel or other staff who are involved in corporate management.
• Flagging early in the process of corporate transaction where a business involved holds a sponsor licence.
• Annually review how the business is structuring its sponsor licences. Consider if this system is the best way for the licences to be held i.e., individual entities, the UK head office, all the UK branches, or groups of branches
• Annually reviewing sponsor licences held by all UK businesses within a corporate group if they are linked by common ownership or control.
• Source immigration advice from experts on the implications of corporate transactions. This is regarding sponsor licence compliance as well as the sponsorship of individual workers.

Why Choose Cartwright King’s Immigration Solicitors?

We know that dealing with immigration matters is not the easiest – especially after new immigration rules were introduced earlier this year. This is exactly why you need an experienced law firm such as Cartwright King by your side, to ensure you are provided with reliable and up-to-date immigration advice.