A number of Tier 2 sponsors, when making an application to become a licensed sponsor with the Home Office, do not consider the effect of changes to their company structure on their sponsor licence and/or what their sponsor obligations are in such circumstances. The reality is the rules on restructures are complicated and the stakes are high if an error is made.
When employers apply for a sponsor licence, in order to employ migrant workers requiring immigration permission to work in the UK, the sponsor must choose which tiers, categories and sub-categories they wish to be licensed under. These include Tier 2 for skilled workers and Tier 5 for temporary workers. If the sponsor’s licence application is granted, they will be able to assign certificates of sponsorship (CoS) to migrants who wish to work for them. A sponsor licence is valid for four years, after which it will expire and a new application will need to be made.
A sponsor licence is not transferrable and what happens depends on whether a company:
- sells all or part of, or the controlling number of shares in their business or organisation;
- is being taken over completely or in part by any other organisation or is splitting out to form new organisations
A buyer or seller sponsor must report a merger, takeover or change of ownership to the Home Office via their Level 1 user within 28 days following completion using the Sponsor Management System (online portal) and include details of all the moving sponsored migrants. For the buyer sponsor, this can be from the Level 1 user at the new sponsor organisation.
Change in ownership
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.
If the buyer does not make a valid application within this time limit or their application is refused, all the migrants moved to them (except those that can be sponsored under an existing licence) will have their leave or worker authorisation reduced to 60 days.
If TUPE (transfer of undertakings) is triggered and a sponsored worker moves to the buyer then, from the date of completion, the buyer will take up full responsibility for the worker as their new sponsor and must meet all the associated duties to prevent illegal working.
Complete or partial takeovers, mergers and de-mergers and splitting out to form new organisations
Where sponsored migrants are moving into a new organisation:
- The original sponsor must confirm if they want to surrender their licence. If the original sponsor wants to keep their licence but no longer employs any sponsored migrants, their CoS will be reduced to zero. However, if the original sponsor has retained some sponsored migrants, they will need to amend their allocation of CoS and continue to report to the Home Office on any sponsored migrants that they are still employing
- The original sponsor must report on any sponsored migrants not moving to the new sponsor – these migrants’ leave or worker authorisation will be reduced to 60 days after which, in the absence of new sponsorship or other immigration permission to remain in the UK, the migrants will need to leave the UK
- If the new sponsor does not have a sponsor licence, they must make a valid application for one within 28 days following completion
- If the new sponsor already has a licence, they can apply to increase their CoS so that they can recruit more migrants in the future. They must report the change via SMS within 28 days following completion and include details of any migrants for whom they have accepted sponsorship responsibility.
In view of the complicated requirements detailed above it is always worth taking advice at the outset where a restructure is envisaged.