When taking over a business, in addition to various other legal obligations on the incoming employer, there are important immigration compliance matters relating to TUPE transfers that must be handled correctly to avoid falling foul of the law.
The following guide for employers looks at how to comply with the rules around right to work checks following a transfer of undertaking, including the penalties for non-compliance with these rules.
What is TUPE?
TUPE is an acronym that stands for the Transfer of Undertakings (Protection of Employment) (TUPE) Regulations 2006 (as amended) which set out the statutory provisions that govern the transfer of undertakings in the UK. In broad terms, the TUPE Regulations provide key legal protections for staff when a business changes ownership by preserving the rights of transferring employees and protecting them from any unfair disadvantage. As such, these employees will maintain continuity of employment from their original start date, and also benefit from the same terms and conditions.
In circumstances where TUPE applies, including when all or part of a business in which an employee works changes hands, or where employees are engaged in providing a service and there is a change of service provider, this will trigger various statutory information and consultation obligations prior to any transfer taking place on both the incoming and outgoing employer. After the transfer has taken place, the application of the TUPE Regulations will then determine the extent of the employee’s contractual rights moving forward, where any existing entitlements and liabilities will transfer to the new employer.
What are TUPE right to work checks?
Under the Immigration, Asylum and Nationality Act (IANA) 2006, it is unlawful to employ someone subject to immigration control if that person has not been granted leave to enter or remain in the UK, or their leave is invalid, has ceased to have effect or is subject to a condition preventing them from accepting the employment on offer. As such, all employers in the UK have a responsibility to prevent illegal working by conducting a right to work check before employing someone to ensure that the person is not disqualified from working in the UK, or from carrying out the work in question, by reason of their immigration status.
A TUPE right to work check is simply a check undertaken by an employer of newly-acquired staff following a relevant transfer of undertaking as defined by the TUPE Regulations.
Once a right to work check has been undertaken by a new employer, provided this has been carried out correctly, this will discharge that employer’s duty to prevent illegal working. It will also enable the employer to establish a statutory excuse against civil liability under the IANA if anyone within the existing workforce is found to be working illegally. In this way, in circumstances where the employer can produce clear proof of compliant checks, the right to work rules will afford the employer protection against a penalty for any illegal workers.
The TUPE Regulations specifically provide that right to work checks carried out by the outgoing employer (also known as the transferor or seller) are deemed to have been carried out by the incoming employer (also known as the transferee or buyer). In theory, the buyer will therefore obtain the benefit of any statutory excuse established by the seller.
However, even where checks have previously been undertaken by the outgoing employer prior to employing the transferring employees, if they failed to conduct right to work checks on all employees or did not conduct the original checks correctly, the incoming employer will still be liable for a penalty if an employee is later found to be working illegally. The only exception to this rule is where a transferring employee commenced work on or after 29 February 2008, where the IANA only makes an employer liable for a civil penalty if they employ someone who does not have the right to work in the UK or undertake the work in question where that person commenced employment on or after this date.
When it comes to conducting right to work checks as an incoming employer, this may also be the only way to determine when any follow-up check should be carried out for employees with time-limited permission to work in the UK. This is because employers not only have a duty to conduct checks on all new employees before taking them on, but to conduct a subsequent check if the initial check showed that person to be in the UK with limited leave to enter or remain. This could be where, for example, someone is in the UK on a temporary work visa or with pre-settled status under the EU Settlement Scheme.
For all these reasons, employers who acquire staff in cases of TUPE transfers are not strictly obligated, but strongly advised, to undertake a fresh right to work check on those staff that they have recently acquired, except where an individual has been in continuous employment prior to 29 February 2008. All employers, including incoming employers, will not be required to have a statutory excuse in respect of employment which commenced before this date, including where employment has continued as part of a TUPE transfer.
When should TUPE right to work checks be conducted?
The Home Office, who administers the civil penalty scheme to prevent illegal working, recognises that there may be practical problems in undertaking right to work checks before employment commences for workers acquired as part of a TUPE transfer. For this reason, incoming employers are provided with a grace period during which a fresh check should be undertaken. This period will run for a period of 60 calendar days from the date of the transfer of the business under the TUPE Regulations, where the incoming employer should conduct a compliant check in respect of each TUPE employee acquired under the transfer.
The 60-day grace period applies in all situations where there is a relevant transfer, even if the transferring business is subject to terminal insolvency proceedings, such as cases involving compulsory liquidation. However, where there is only a change in the employer’s legal constitution, rather than a ‘relevant transfer’ as defined under TUPE, the right to work check does not need to be repeated because of this change. This could be where, for example, the employer is a corporate body and there has been a change from a private limited company to a public limited company, or from a partnership to a limited liability partnership, or even a TUPE transfer within the same group of companies. Still, this is only the case when the employer is effectively the same entity and is only changing its legal status, where checks should still be undertaken in the event of any doubt, rather than risking liability for a civil penalty should employees be found to be working illegally.
Importantly, in all cases where checks are undertaken by the incoming employer and the grace period applies, there is no grace period for any follow-up checks. This means that if a fresh check reveals that an employee has a time-limited right to work in the UK, a further check must be conducted prior to expiry of their existing leave to ensure that this individual has been granted further permission to work in the UK and to do the work on offer.
How should TUPE right to work checks be conducted?
In circumstances where staff are acquired as part of a TUPE transfer, the incoming employer should receive copies of all right to work checks previously conducted by the employer as part of the overall TUPE process. However, even though any pre-employment checks will be deemed to have been carried out by the new employer, they will only be able to rely on those checks where they have been conducted correctly. This means that responsibility for any omissions or oversights, either in the way in which the original check was conducted or where a check has been missed altogether, will still rest with the incoming employer.
It is therefore essential for the new employer to know how to conduct a compliant check on transferring employees and to do this within 60 days of the transfer date. To avoid allegations of discrimination, they should also conduct right to work checks on all transferring employees and cannot mandate how an employee proves their right to work. In some cases, the immigration status of an employee may be only held in digital format, such as an eVisa, while other employees may need or prefer to prove their status manually.
There are several ways in which an incoming employer can conduct a right to work check, depending on a person’s nationality and the way in which their immigration status is held. The different ways to conduct TUPE right to work checks can include:
- A digital check: where the employer uses identity document validation technology (IDVT) via the services of a certified Identity Service Provider (IDSP) to complete the digital identity verification element of right to work checks for British and Irish citizens only.
- A Home Office online check: where the employer is given a share code by the transferring employee, generated using the Home Office online checking service at GOV.UK, and uses this code to access the employee’s immigration status and conditions of stay online.
- A manual document check: where the employer manually verifies original documents given to them by the employee in their presence, or via video link, from either Lists A or B of acceptable proof of work documents.
- An ECS check: where the employer makes an online request to the Employer Checking Service (ECS) to verify an employe’s right to work in the UK where an employee has made an in-time application for permission to stay, but a decision is still pending.
In all cases, the employer must make a clear copy of each right to work check, recording the date on which a check is made and retaining this in a format that cannot be altered. These records must be retained for the duration of a person’s employment, plus two years.
TUPE & follow-up right to work checks
In all cases, where a TUPE right to work check reveals a time-limited right to work in the UK for certain employees, the employer must conduct a follow-up check at the appropriate stage to retain their statutory excuse against civil liability. Equally, where the employer has requested verification from the ECS of an employee’s right to work in the UK and has received a positive verification notice (PVN) from the Home Office, this will result in a time-limited statutory excuse, where a follow-up check must be conducted after 6 months.
In some cases, when checking an employee’s ongoing right to work to ensure that they are not overstaying their immigration permission where this is time-limited, a decision on the employee’s extension application may still be pending with the Home Office. In these circumstances, provided the employer is satisfied that the employee has submitted an in-time application to extend or vary their permission to be in the UK, the employer’s statutory excuse against civil liability will continue for a further period of up to 28 calendar days from expiry of their employee’s permission. This will provide the employer with sufficient time to obtain a PVN from the ECS or to conduct an online Home Office check.
When conducting follow-up checks, these only need to be carried out for employees with a time-limited right to work in the UK or for whom the employer has established a time-limited statutory excuse by way of a PVN. This is because for all other transferring employees for whom the new employer has established a permanent right of work in the UK, such as British or Irish nationals, a follow-up check is not necessary under the rules.
Failure to comply with right to work obligations
The penalties for non-compliance with both TUPE and follow-up right to work checks can be serious, including a civil penalty per breach. The new employer will also be at risk of criminal prosecution if they continue to employ someone who they know or have reasonable cause to believe does not have the right to work in the UK.
It is open to the incoming employer to seek contractual warranties and indemnities with the outgoing employer in relation to any risks relating to non-compliant right to work checks. However, the incoming employer will remain directly responsible for any penalties, and damage to their employer brand, if they are later found to be employing illegal workers.
DavidsonMorris are specialist business immigration legal advisers, working with UK employers to ensure compliance with their duties to prevent illegal working. We have expertise in compliance aspects of corporate transactions including mergers, acquisitions and TUPE transfers.
All staff involved in recruitment and onboarding (which may not just be HR and line managers) should be trained to perform the checks correctly and consistently. Regular spot-checks of documents should also be conducted by HR to ensure standards are being maintained and to identify any potential issues to be rectified. And while employers are not expected to show expert levels of fraud detection, there are certain expectations to discharge their duty under the prevention of illegal working regime.
Our Right to Work e-learning offers employers a practical way to roll out immigration compliance training to all required personnel at a fixed cost.
If you have a question about any aspect of Right to Work checks and avoiding Home Office penalties, or for more information about our e-learning programme, contact us.
TUPE Right to Work FAQs
What rights do I have in TUPE?
The TUPE Regulations provide key legal protections for transferring employees when a business changes ownership, by preserving their employment rights and protecting them from any unfair disadvantage as result of the change of ownership.
Does TUPE apply to works contracts?
In broad terms, TUPE applies when all or part of a business in which an employee works changes hands, or where employees are engaged in providing a service and there is a change of service provider.
What is an example of an ETO reason for TUPE?
An example of an ETO reason following a transfer of undertaking under TUPE could include essential cost-saving requirements (economic reasons), using new equipment or processes (technical reasons) or making changes to the structure of an organisation (organisational reasons).
Last updated: 8 October 2023