Considering an acquisition or merger of a UK company? Considerations for the Employee Transfer Process.

When a UK business undergoes a merger, is acquired or otherwise restructured, it is essential to ensure immigration compliance, particularly in relation to sponsored employees.

A sponsor licence is non-transferable, so when changes, such as mergers, takeovers or splits occur, the impact on the licence must be addressed promptly. Each of these events requires careful consideration to ensure uninterrupted compliance with your sponsor duties, and the company must notify the Home Office of changes within 20 working days through the Sponsorship Management System (SMS).

Both the old and new sponsors have a responsibility to report the organisational change and any sponsored worker transfers. The former employer must update the SMS within 20 days of the change to ensure the Home Office is informed of the takeover or merger. They must also make relevant notifications regarding the change of the sponsored employees’ circumstances within 10 working days of the event taking place. If Level 1 User (who is responsible for managing the licence) is no longer available due to the change, the Home Office must be notified by way of submitting the relevant change of circumstances form. If the necessary reports are not submitted within the 20-day period, the consequences can be severe. The sponsor licence may be downgraded, suspended or even revoked, leading to the curtailment of sponsored workers’ visas.

If a business acquires sponsored workers through the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) and already holds a sponsor licence, it must confirm responsibility for these workers via the SMS. No new Certificate of Sponsorship (CoS) is needed if the workers’ roles and employment conditions remain unchanged. However, if the new employer does not hold a sponsor licence, they must apply for one or expand the scope of their existing licence within 20 working days. Failure to apply for a new or expanded licence within the 20-day period can lead to the cancellation of the sponsored workers’ visas, which could leave the business without the required workforce.

In addition to the sponsor duties, the new employer must conduct relevant right to work checks within 60 days of the transfer under TUPE. This is to ensure that all transferred employees, including sponsored workers, have the appropriate immigration status to continue working legally in the UK. Failure to do so could result in penalties and the absence of statutory excuse in case of discovering illegal workers.

When employees are transferred under TUPE, they maintain the existing terms and conditions of their contracts. For sponsored workers, it means they do not need to make a new visa application if their job duties remain unchanged and the new employer confirms sponsorship responsibility. If the new sponsor holds a valid licence applicable to the relevant immigration route, the transition will be smooth and there will be no need to assign new CoSs.

Handling sponsored workers during mergers, acquisitions and other forms of restructuring requires strict compliance with the UK immigration rules and planning well in advance. Timely reporting, fulfilling right to work obligations, and ensuring that all licence applications and notifications are completed within the required timeframe is necessary to avoid any disruption of your business operations and ensure the continued employment of your sponsored workers.

?How Gherson can assist

Gherson’s Immigration Team are highly experienced in advising on UK visa matters. If you have any questions arising from this blog, please do not hesitate to?contact us?for advice, send us an?e-mail: [email protected]

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

?Gherson?2024