When applying for or maintaining a UK sponsor licence, your business structure and ownership history can have a big impact. This is especially true for parent companies with multiple subsidiaries and for businesses that change hands through mergers, acquisitions, or management buyouts.
In this guide, we'll explain how the Home Office views these situations, the compliance risks to watch for, and how to stay on the right side of the rules with diagrams to help visualise each scenario.
Note that all our examples on complex business structures will involve evidencing common ownership or control.
1. UK based Parent Companies and Groups with Multiple Subsidiaries
How the Rules Apply
You need to consider your business set up. The Home Office will consider who the employer is, and the evidence for each company. One of the easiest ways to have people move between businesses, is for a parent company to hold the sponsor licence and have linked entities to it on the licence.
See the below example for how a complex business structure might make it easier for the parent company to hold the licence.
Example Diagram – Group Structure
In the above example, the UK entities are the parent company, European and UK subsidiaries. The easiest option would be for the parent company to apply with linked companies for a Skilled Worker and Global Business Mobility licence. It allows swift moves.
2. Where the parent company is a holding company or is based abroad
There is an issue with the parent company follows the below structure and holds no paperwork.
Applying for a sponsor licence involves providing evidence that the company operates inside the UK. If the company does not operate because it is a holding company, it can mean that you don't hold the paperwork required.
That leaves you with two options, either the ABC UK Ltd can apply for the licence with connected companies, or ABC Europe Ltd (as a UK based company) could apply for the licence and link all the entities to allow a smooth transition.
This example adds slightly more complexity as we need to evidence how the businesses are linked via common ownership or control, but it is possible to evidence this in a different way from the above. All our examples on complex business structures will involve evidencing common ownership or control.
The above covers a holding company where the business has a holding company as the parent company, but the below covers where the business is based outside the UK.
In the above example, the parent company is now based in the US and the European subsidiary is based in France. We can apply for a licence for the UK entity, and link the overseas entities via common ownership to allow smooth transitions.
If you hold a licence currently and have opened up an overseas entity it is still possible to link your UK company to your overseas entity on your sponsor licence via the SMS.
3. Ownership Changes – Mergers, Acquisitions, and Changes of ownership
When there is a change of direct ownership it affects the licence, this affects the business whether it is to simplify the structure to to grow the business. In the below examples, assume that ABC UK Ltd owns the sponsor licence.
In the above example the parent company has been changed into a holding company in the British Virgin Islands, owned by two separate companies.
The UK company on the bottom left of the graph has not changed direct ownership, so there is no need to surrender the licence and apply for a new one. An SMS report merely needs to be made.
UK Company Direct Ownership Change
In the below example, assume that the UK company still owns the licence, but the European entity has now been closed. The parent company will now directly own the UK company.
In this example, the business needs to apply for a new sponsor licence, and surrender the old licence, because of a change in direct ownership, even though the parent company has gone from indirect ownership to direct ownership. The direct owner is now different.
When this happens:
- Your old licence must be surrendered within 20 working days..
- The new entity must apply for a fresh licence before employing sponsored workers within 20 working days.
- Workers may need to make a new visa application under the new sponsor.
Simple ownership structures or spin off companies
Where a business has a simple ownership structure and sells the subsidiary like the below, or spins it off as a separate entity from the group structure the business inside the UK will need to apply for a new sponsor licence, and surrender your current licence. Please see the below examples.
In the above example, ABC (London) Ltd, sells ABC (Manchester) Ltd to another company. As the business's direct owner has changed, you must apply for a new sponsor licence.
Staying with ABC (London) Ltd and ABC (Manchester) Ltd, what if ABC (London) Ltd, spun ABC Manchester Ltd off from the group entity owned by different shareholders.
Again, the direct ownership of ABC (Manchester) Ltd has changed so a new licence will need to be obtained. However, despite the common ownership, unlike some of the above examples they cannot claim common ownership or control, as all shareholders hold less than 51%. The shareholders must have either 51% ownership or 51% voting rights to claim common ownership and control.
4. TUPE Transfers and Sponsored Workers
If staff are transferred under TUPE to a new employer:
- The new employer must hold a valid sponsor licence before transfer if they wish to keep employing those sponsored workers.
- You must make a sponsor note of the change of circumstances on your licence.
You must note that your sponsored workers will not automatically
transfer over to your new licence, and where they are not TUPEing
across, an application for change of employment must be made before
they work for you.
5. Common assumptions
- You can sell your business and the sponsor licence goes with it –WRONG– Any change of direct ownership does not mean that the business will retain its licence. If there is a change of direct ownership, an application for a new sponsor licence must be made.
- If I obtain a new licence, the employees sponsorship will automatically transfer – WRONG – If an employee is transferred under the TUPE (Transfer of Undertakings (Protection of Employment) regulations 2006, a report must be made via the SMS, if it is not considered a TUPE transfer then they need to apply for a new skilled worker visa.
- I can just use a TUPE transfer to avoid someone having to apply for a new visa –WRONG – You must make sure that an individual meets the conditions as a TUPE transfer. The Home Office will not just accept your assumption that someone automatically meets the requirements, and not checking with an employment specialist that someone meets these requirements could risk your licence in the future. The Home Office is very strict on meeting employment and immigration requirements.
- The Home office won't know direct ownership has changed – WRONG – our recent experience has indicated that the Home Office are checking Companies house before granting even CoS allocations. The Home Office takes this seriously, don't risk your licence.
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.
