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UK immigration: Considerations when reorganising

  • United Kingdom
  • Corporate
  • Employment law
  • Global mobility and immigration

15-10-2021

One consequence of the COVID-19 pandemic was the emergency support provided for businesses by the Government. As the economy re-adjusts to working without the support of furlough, uncertainty within the economy raises the prospect of restructuring.

An issue often overlooked when planning for and implementing restructuring exercises is potential immigration requirements and duties. In particular, obligations to report corporate changes to the UK Visas and Immigration service and the impact of a corporate change on immigration sponsorship licences. Outlined below are some of the frequently asked questions on this topic:

Question

Points to note

What corporate changes must be reported to the UK Visas and Immigration service?

Changes that must be reported include:

  • changing the company’s name or that of any branches
  • selling all or any part of the business
  • a merger or takeover
  • ceasing trading or going into an insolvency procedure
  • substantial changes to the nature of the business, including formation of new corporate organisations within the company structure

Within what timescale should the report be made and how?

The report must be made within 20 working days of any significant change. In most cases, notification of the change should be submitted through the Sponsor Management System, together with certain evidence of the relevant change.

What are the sanctions for failure to report?

Failure to report a significant change could result in a sponsorship license being downgraded or revoked, with potentially significant impact on an organisation’s people resource. 

Is there an obligation to report TUPE (or similar protection) transfers to the UK Visas and Immigration service?

Yes. When a business changes owner or another business takes over part of it or a service it provides, its employees may be protected under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (as amended) (‘TUPE’). If a sponsored worker’s employment is affected by TUPE or similar protection, a report must be made within 10 working days of that event.

What is the position regarding sponsorship licences when receiving new staff as a result of a TUPE transfer?

Sponsorship licences do not transfer with the ownership of a company. It will be important therefore for a new employer following a TUPE transfer to consider whether it has an appropriate licence. Workers do not need to make a new application for permission to stay in the UK and the new employer does not have to assign a new Certificate of Sponsorship to the workers, provided:

  • the employer has a valid sponsorship licence in the relevant route
  • the employer has confirmed that it accepts responsibility for the workers
  • the workers’ duties remain unchanged

In this case, the new employer takes up full responsibility for the workers and must meet all of the duties.  

What is the position if the employer receiving new staff as a result of a TUPE transfer does not have a relevant sponsorship licence?

Where the new employer does not already have a relevant sponsorship licence under the route needed to sponsor workers, an application for such a licence must be made be made within 20 working days of the transfer taking place.

What is the risk if an employer receiving new staff as a result of a TUPE transfer fails to complete right to work checks?

Should right to work checks not be made on employees who transfer to an organisation, the new employer will become liable for any breaches of immigration law after 60 days of employment. It is therefore necessary to ensure that appropriate checks are made, even if a record of previous right to work checks has been presented by the previous employer and appears accurate. 

 

 



Practical action points: restructuring and immigration compliance

Due diligence

Ensure that the right questions are asked to establish the immigration position regarding workers who are within the scope of a corporate restructuring exercise, including: Does the company sponsor workers? Will the acquiring company be able to accommodate them within its sponsor licence? Have the correct records been obtained, including in respect of workers’ right to work? Ensure that the information provided is properly assessed.

Reporting

Ensure that the relevant requirements are understood in terms of reporting and associated actions. The guidance on immigration reporting following restructuring is detailed and, from our experience, seldom precisely covers the situation which has arisen.

Post completion RTW

When accepting a TUPE transfer of employees ensure the RTW checks are completed within 60 days.

Deadlines

Monitor deadlines carefully. A report generally needs to be made within 20 working days, which is difficult to comply with in practice if such requirement has not been identified in advance.

Our immigration experts are able to provide advice and guidance in relation to the immigration requirements of a restructuring exercise, including a sponsor’s duties, reporting obligations and ensuring appropriate right to work requirements are met.

For further information, please contact: