Sponsored migrants will in some cases need to be transferred under the Transfer of Undertakings (Protection of Employment) Regulations 2006 [TUPE] or similar provisions. The Home Office has provided useful guidance on the implications for sponsors and sponsored workers when organisational changes occur which affect the ownership of an organisation (see Sponsor Guidance Part 3: Sponsorship duties and Compliance – version 10/24).
Guiding Principles
When dealing with mergers, takeovers and similar changes, organisations must take into consideration the following guiding principles:
- Sponsor licences are not transferable from one organisation to another.
- The correct steps to be followed after an organisational change has taken place will depend on the following:(i) Whether there will be a change of ownership
(ii) Whether all or a part of an organisation is going to be sold or the whether the controlling shares in a business are going to be sold
(iii) Whether an organisation is being partly or wholly taken over by another organisation
(iv) Whether an organisation is being spilt to form new entities
- Level 1 Users must report any of the changes listed at points (i) to (iv) above via the Sponsorship Management System (SMS) and this should be done within 20 working days of any such change.
- A failure to report an organisational change within 20 working days could result in the Home Office downgrading or even revoking a sponsor licence. One of the consequences of revoking a Sponsor Licence is that migrant workers under it will automatically lose their right to work for that organisation.
- Where a previous Level 1 User is no longer be available because an organisation has been taken over or merged with a new organisation, the Home Office will accept a report from the Level 1 User of the new sponsor organisation.
The Home Office guidance states that once it receives a report that a relevant organisational change, has occurred, it will request for documents confirming that such a change has taken place. It states further that the documents requested may include those contained in Appendix A of sponsor guidance (Appendix A: supporting documents for sponsor licence applications), however it may also request for documents not listed in Appendix A. The documents requested will depend on the circumstances.
What happens to Sponsor Licences following an organisational change like a merger, de – merger, takeover or similar change?
If the direct ownership of an organisation changes, for example, where this is due to a business being sold as a going concern or where there is a sale of the controlling shares to a new owner, this will have a bearing on an existing sponsor licence. The sponsor licence will either be revoked or will become dormant. The guidance states that where all the previously sponsored migrants have been transferred, the sponsor licence will become dormant.
It is important to state that when a business is taken over by another business or the owner changes, its employees jobs are transferred to the new owner or business. This protection is covered by TUPE provisions. Essentially, TUPE provisions provide that employees working for an organisation taken over by another will have their jobs transferred across to that new employer with the same terms and conditions they had under their former employer. Public sector employees are not governed by TUPE but by similar provisions with the same type of protection.
Where some sponsored migrant workers are still being sponsored under an existing sponsor licence, and have not been transferred, that sponsor’s duties and responsibilities will remain unchanged in respect of those migrants, unless its sponsor licence has been revoked or surrendered.
What happens when workers are transferred to under TUPE or similar provisions?
When sponsored workers are transferred under TUPE or similar provisions, the next steps that will need to taken by the new sponsor will depend on whether that employer has a sponsor licence or not. If the employer has a sponsor licence, it will from the date of the transfer, assume full sponsor responsibilities for the sponsored workers that have been transferred. It must also confirm via its Sponsor Management System (SMS) account that it has taken responsibility for the transferred sponsored workers.
The position is different where the new employer does not have a sponsor licence under the route required to transfer sponsored migrants. Where this is the case, the new employer (new sponsor) should either apply for a sponsor licence for the specified route required or apply to extend the scope of its existing licence. Such applications must be made within 20 working days of the TUPE provisions coming into effect.
Where an application is either not submitted within 20 working days or is submitted and subsequently refused, all the sponsored workers who were moved will have their permission under it cancelled, except for those who could be sponsored under the existing licence.
Sponsored workers who are transferred under TUPE or similar provisions will not need to apply for new Certificates of Sponsorship if certain conditions are satisfied. These conditions include the new sponsor having a valid sponsor licence in the appropriate route and confirmation that it will assume responsibility for transferred sponsored work, crucially the sponsored workers’ duties must not have changed.
This article only intended to act as a guide and it is recommended that legal advice is obtained. If your organisation is planning an organisational change, get in touch with our experienced Immigration solicitors for further advice by email or call on +44 (0)207 822 1636.
