Mergers, acquisitions or any type of organisational restructure are inherently complex projects. While there are many ‘obvious’ areas where organisations focus attention and resource as part of the restructure process – finance, taxation, stakeholder communications – one area which can be overlooked is immigration compliance, in particular the validity of the organisation’s sponsor licence and its ability to employ non-European workers. And this creates a real business risk.
What you need to consider
If your organisation is undergoing a change in ownership or a change in structure due to a merger or acquisition, it’s vital that you consider the impact on your sponsor licence and on sponsored migrants that you employ, or may acquire, before the changes occur.
You also need to be aware of your duty to report such changes, and the deadlines for reporting.
It’s an area that’s fraught with uncertainty, due to the complex nature of the transactions that can impact the sponsor licence, and because there have been so many changes to the sponsor licence rules since the inception of the Points Based System.
Any issues with your sponsor licence could lead to it being revoked – a scenario employers will want to avoid. So how will changes to your organisation’s structure affect your sponsor licence? And what can HR teams do to ensure your organisation remains compliant and retains its sponsor licence following the change process?
How will a corporate restructure impact my sponsor licence?
A sponsor licence is not transferrable and what happens depends on whether your organisation:
- Sells all or part of, or the controlling number of shares in the organisation.
- Is being taken over completely or in part by any other organisation.
- Acquires a controlling interest in another organisation.
- Is splitting out to form new organisations.
Put simply, sponsors must report a merger, takeover or change of ownership to the Home Office via their Sponsorship Management System within 28 days of the change taking place.
Where a business is sold as a going concern or share sale resulting in the controlling number of shares being transferred to a new owner, the seller’s sponsor licence will be revoked. The new owners must then apply for a new sponsor licence (unless they already have one) within 28 days following completion.
It’s an easy mistake to make to assume that a ‘simple’ change of share ownership doesn’t need reporting if it doesn’t result in any visible changes to the corporate structure or employee contracts. However, any form of change of ownership comes with reporting requirements and may even also require a new licence application.
Acquiring sponsored migrants under a TUPE transfer
If TUPE is triggered or a similar arrangement exists, and a sponsored worker moves to your organisation, you’ll take up full responsibility for them as their sponsor from the date of the transfer. Details must be submitted of all sponsored migrants who are transferring from one sponsor to another.
If you do not already have a sponsor licence under the tiers and categories needed to sponsor them, you must make an application either for a sponsor licence, or to extend the scope of your existing sponsor licence. Your application must be made within 20 working days of the move taking place.
If you don’t do this, all of the migrants moved to you, except any that can be sponsored under your existing licence if you have one, will have their leave reduced to 60 days.
Impact of restructure on sponsored migrants
Sponsored migrants involved in a merger, de-merger or takeover do not need to submit a new visa application and the new sponsor does not have to assign a new Certificate of Sponsorship to them. 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, sponsored migrants may have their leave reduced to 60 days.
Practical steps for HR teams to stay compliant
Given the complexities of the compliance and reporting requirements, we recommend HR teams and those responsible for assessing immigration compliance issues take the following practical steps:
- Carry out right to work checks within 60 days of acquiring new employees through acquisition or TUPE transfer of services.
- If you are required to apply for a new sponsor licence, diarise the deadline for applying, with all supporting documents, within 20 days.
- When the picture does become clearer, you need to be made aware of the exact legal status of the change and the key dates involved.
- Immigration issues should be considered at an early stage of a restructure. This creates a challenge for HR teams to ensure they are involved in, or at the very least informed of, initial discussions about any restructure affecting the organisation.
- Check in good time if any sponsored migrants are affected, and how, as this will impact what you need to do.
- Ensure all relevant notifications in relation to the transaction are made within 20 days, for example, changes to migrants’ circumstances.
- Take professional advice if you’re at all unsure of the steps required to ensure compliance following the changes.
If your organisation is planning or undergoing a restructure, please contact us for advice on the implications for your sponsor licence. Alternatively, visit our website for more information on sponsor licences: https://www.davidsonmorris.com/tier-2-licence/.