When corporate restructures happen, immigration compliance is commonly overlooked. In this article we outline some of the implications of corporate transactions for sponsor licences and right to work checks and provide some tips for avoiding potential problems.
There are two main reasons why immigration risk is currently on the rise. Firstly, restructuring activity has been buoyant post-pandemic and this trend is likely to continue as businesses face more challenging economic conditions in the short to medium-term. Secondly, since the UK's departure from the EU, many more businesses now hold licences to sponsor workers.
What needs to be done in a particular scenario normally requires specific immigration advice. This is because the transactions involved are often complex and the Home Office's sponsor guidance can sometimes be unclear in this area.
Reporting requirements for the sponsor
Sponsors of workers must notify the Home Office of certain events within 20 working days, including:
- Where there is a change to the sponsor business's name or the name of any branches included under the licence;
- Where there is a sale of all or part of the sponsor business;
- The sponsor business is involved in a merger or is taken over;
- The sponsor business stops trading or enters into an insolvency procedure;
- The nature of the sponsor business substantially changes; or
- An owner, director, Authorising Officer, Key Contact, Level 1 User or other person involved in the day-to-day running of the sponsor business is convicted of certain immigration or other offences.
Specific sponsor-related records on the Sponsor Management System may also require amending depending on the nature of the changes, including:
- Replacing and/or deactivating Key Personnel listed on the licence;
- Updating address details associated with the licence and individual Key Personnel; and/or
- Disclosing registration details of a governing body.
If 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 is a good idea to review the overall group structure periodically and send an affidavit to the Home Office regarding the updated structure. An affidavit is normally the most appropriate form of documentation as it provides a clear view of which entities are 'linked by common ownership or control', which has a specific definition in the sponsor guidance, and which is more inclusive than under corporate law.
Reporting requirements for sponsored workers
Corporate transactions may prompt a requirement to report certain changes relating to the circumstances of individual sponsored workers. These normally must be completed within 10 working days of the change, and may include things such as:
- New work location;
- End of sponsorship if a person is made redundant or chooses to leave their employment due to the transaction process;
- Significant changes to job title, core duties and/or salary as a consequence of the transaction;
- The worker's employment coming within scope of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) or similar protection; or
- The worker's sponsor changing but they remain working for the same employer and in the same employment.
Application for a fresh sponsor licence
In some cases an application for a fresh sponsor licence may be required.
The most common situation where this happens, and one which is poorly understood by sponsors, is where there is a change in the direct ownership of the sponsor business. This may happen either because the business is sold to a new owner as a going concern, or if a share sale results in a controlling number of shares transferring to a new owner.
If this happens, the existing sponsor licence will be either revoked, or, if sponsored workers have moved over to another sponsor licence, made dormant. If the new owners wish to continue sponsoring existingworkers or to sponsor workers in the future, they will need to obtain a fresh sponsor licence.
Another scenario that may prompt a need for a fresh sponsor licence is where part of the sponsor business is sold off, and existing sponsored workers will move to the new business created, or the new business may wish to sponsor workers in the future.
Fresh immigration applications for sponsored workers
Workers for whom TUPE or similar protection applies do not need to make a fresh application for immigration permission if:
- their role is unchanged;
- the new sponsor has a valid sponsor licence in the relevant work route; and
- the new sponsor confirms it takes on responsibility for the worker.
The situation is different however if a sponsored worker's job changes due to the transaction in such that they are no longer carrying out the same job they were sponsored for, or otherwise are not covered by TUPE or similar protection. In that case, they would need to make a fresh application for immigration permission before starting work in the different role.
Right to work checks
As part of their sponsor duties, sponsors of workers are required to maintain compliant right to work checks across their entire workforce.
Where staff are acquired by a business under TUPE, the Home Office provides employers a period of 60 days from the date of the transfer of the business to carry out repeat right to work checks for acquired staff. Aside from sponsor licence compliance, doing this will enable the acquiring business to proactively deal with any instances of illegal working, and to ensure that reminders for further follow-up checks are put in place for all workers with limited immigration permission.
Top tips for immigration compliance when there is a corporate restructure
We would suggest the following:
- Training staff involved with sponsor licence administration on implications of corporate restructures;
- Establishing and maintaining internal communication channels with the business's general counsel or other staff involved in corporate management;
- Annually reviewing and updating the Home Office on the business's corporate structure;
- Annually reviewing sponsor licences held by all UK businesses within a corporate group that are linked by common ownership or control;
- Periodically reviewing the structuring of sponsor licences and considering whether it is most appropriate for licences to be held by individual entities, the UK head office and all UK branches, or groups of branches;
- Flagging at an early stage in a corporate transaction where a business involved in it holds a sponsor licence; and
- Getting specific immigration advice on the implications of a particular corporate transaction, both in terms of sponsor licence compliance and sponsorship of individual workers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.