When employment meets immigration law – help for businesses

If you are thinking about selling your business and you sponsor migrants, or you are considering buying a business that employs migrants, you must consider the immigration status of the staff in the business from the outset.  You can’t afford to overlook it.

Buying a business

As a buyer, as part of the due diligence process you should ensure that ‘right to work’ checks have been carried out by the seller and you should ask for full details of any sponsored employees.  Early knowledge of sponsored employees is essential, as you will need to take steps to enable them to work for you.

In the case of a TUPE transfer, you will need to hold the appropriate sponsor licence or apply for one within 20 working days of the transfer. This allows the sponsorship of the affected migrant employees to continue.  Although sponsor licence applications may take 4 to 8 weeks to be processed, as long as you have applied within 20 working days, the migrant employees will be able to continue working for you whilst the application is considered.

If you already have a sponsor licence for the relevant sponsor category, the sponsorship of the affected migrant employees may transfer to you without a new certificate of sponsorship (CoS) or a visa application needing to be assigned or submitted.  They will need to continue to fill the same or a materially similar role and remain within the same Standard Occupational Classification (SOC) code stated on their CoS.  Otherwise, this may trigger a new sponsorship process and (possibly) the requirement to complete an entirely new resident labour market test – causing delays and complications.

You will need to carry out your own ‘right to work’ checks on all employees within 60 days of the transfer.  If it turns out that any of the incoming employees do not have the right to work in the UK and cannot obtain or apply for a work visa within the 60-day grace period, you may need to dismiss them, following a fair dismissal process.

Selling a business

As a seller, you will need to report the transfer using the Sponsor Management System (SMS), by reporting the change in employer and workplace within 10 working days, confirming the reason for the change and providing written evidence of the change in sponsoring employer within 20 working days.

And another thing…

If you already sponsor migrant employees, you will be aware that any form of restructuring or change of circumstances will trigger certain obligations to report.  All transactions resulting in a change of ownership – share sales included – may result in the revocation of your licence and the new owner or majority shareholder will need to apply for a new sponsor licence to continue to sponsor the migrant employees.  This type of transaction will normally be treated as akin to a change of employer situation.  It may be possible to involve the Home Office from the outset, and before the conclusion of the transaction, in order to assess the best way forward.

In such cases, as a new sponsor licence is required, a new CoS will need to be assigned and the affected migrant employees will need to submit a new visa application to remain and work in the UK.  The role may need to be advertised to meet the resident labour market test prior to assigning any CoS.  Forward planning is essential ahead of any corporate restructure and change of ownership.

Group company changes

If you are part of a group of companies (linked through common ownership) and a sponsored employee is moving from one employer to another within the same group, it would usually be sufficient to inform the Home Office via the SMS that their place of work has changed.  However, if you are part of a group and cease to be linked through common ownership to the sponsor on whose licence you are named, you will need to apply for your own sponsor licence and notify the Home Office of the change via the SMS within 20 working days of ceasing to be linked to the sponsor if you want to continue to employ any sponsored employees.

If a sponsored employee travels out of the UK shortly after a change of sponsor, they should travel with a letter from their new employer explaining the background of the change in sponsor and confirm that all notifications have been made to the Home Office.  This will hopefully prevent any confusion or hold up at the UK borders.