1. Introduction
Companies holding a sponsor licence who are going through a change in business ownership or business structure must be aware of how the changes will affect their sponsor licence and the impact on the sponsored migrants.
When you are granted a sponsor licence, you must fulfil your sponsor duties such as reporting duties and record-keeping duties. In this post, we will look at the types of business structure changes that can affect your sponsor licence.
2. Types of Changes in Business Structure
A sponsor licence is not transferable and below are the types of business structure changes which you should be aware of:
- Change in direct ownership;
- You are selling all or part of the controlling number of shares in the organisation;
- You are partly or wholly taken over by another organisation;
- You are splitting out to form new organisations;
3. Reporting Duties for Sponsor Licence Holders
The Level 1 User in your organisation must report any of the above changes via your sponsorship management system (SMS) within 20 working days of the change taking place. The Level 1 User at the new sponsored organisation may do the reporting if the Level 1 User at your organisation is not available due to takeover or merger and comply with any requests to provide documents confirming the changes.
4. Consequences of Failing to Report Changes
If you fail to report the changes within the time limit, your sponsor licence may be downgraded or revoked. We have set out in our post Sponsor Licence Suspended – What To Do Now what happens if the sponsor fails to comply with the sponsor licence duties.
If your sponsor licence is revoked, you will not be able to sponsor any more workers and their permission may be cancelled or shortened.
5. Business Structure Changes: Complete Takeovers and Mergers
New Sponsors
If your company is taking over or merged with another organisation and there are sponsored workers moving to your organisation, you:
- must apply for a new licence within 20 working days if you do not have a sponsor licence – in our previous post Sponsor Licence Refusals: Causes and Solutions we shared tips for a successful sponsor licence application;
- must apply to extend the scope of your licence if you do not have the relevant licence;
- can login to your SMS and apply for an increase in your CoS allocation if you already have a sponsor licence;
- must report the changes via SMS of the workers you have accepted responsibility for if you have a sponsor licence;
- must request to make the previous sponsor's licence dormant;
Old Sponsors
If your organisation is completely taken over by another organisation and your sponsored workers are moving to this new organisation, you must report the changes via the SMS within 20 working days of the change. If any of your sponsored workers are not moving to the new sponsor, you must report it via your SMS. If you wish to surrender your sponsor licence, this can be done on your SMS account or completing the change of circumstances form if you no longer have a Level 1 User.
6. Business Structure Changes: Partial Takeovers and Mergers
Old Sponsors
If you no longer have any sponsored migrants, you must report the change using the SMS. If you wish to surrender your licence, you can use the SMS or complete the change of circumstances form if you no longer have a Level 1 User with SMS access. If you wish to sponsor any migrants in the future after you have surrendered your licence, you will need to apply for a new licence. If you wish to keep your sponsor licence, your CoS allocation will be reduced to zero.
If your organisation still has sponsored workers, you will need to report the change, via the SMS, of any workers moving to the new organisation within 20 working days of the change. If you have any sponsored migrants you are still employing, you do need to continue to report. You will also need to report if you need to amend your CoS allocation.
New Sponsors
The steps to be taken as a new sponsor include:
- Make a valid application for a sponsor licence within 20 working days if you do not already have a sponsor licence – if you are a Start-Up, do refer to our earlier post Securing a Sponsor Licence: A Guide for Start-Ups and New Businesses;
- Apply to increase your CoS allocation using SMS;
- To meet your sponsor duties, you must report the change via SMS within 20 working days and this includes the workers you have accepted responsibility for;
As a new sponsor, you will not have the workers' SMS record. To make a report, you can email the Home Office providing the old sponsor's name, licence number, details of the workers and details of any other changes or relevant information.
7. Business Structure Changes: Change in Direct Ownership
A change in direct ownership will result in your licence being revoked. If your sponsored workers have moved to another organisation with a sponsor licence, your licence will be made dormant. The change in ownership can happen due to a complete sale or sale of shares resulting in the controlling shares being transferred to a new owner.
8. Employees Transferred Under TUPE
There are situations where the employees may be protected under the Transfer of Undertakings Protection of Employment Regulations 2006 (as amended) ('TUPE') and these could be a change in business ownership or changes in service provision. The Home Office website sets out:
Business transfers means: "This is where a business or part of a business moves from one employer to another."
Service provision means: "This is when
- a service provided in-house (for example cleaning, workplace catering) is awarded to a contractor
- a contract ends and is given to a new contractor
- a contract ends and the work is transferred in-house by the former customer."
What happens to the sponsored workers?
When TUPE is triggered, this means that the terms and conditions of the employees' jobs remain the same and their jobs are transferred to the new company. If the new employer has a valid sponsor licence in the correct route, and they have confirmed that they accept responsibility for the workers and the workers' duties remain unchanged, there is no need for the worker to make a change of employment application. There is also no need for a new CoS to be assigned.
What do the new sponsors need to do?
If you have a sponsor licence, you have the full responsibility and this must be confirmed via your SMS.
If you do not have a sponsor licence, you need to apply for a sponsor licence or apply to extend the scope of your existing sponsor licence within 20 working days of the move taking place.
If no application is made within 20 working days or an application has been made but it is refused, the permission of the sponsored workers who moved to you may be cancelled.
9. Contact Our Immigration Barristers
For expert advice and assistance in relation to a Sponsor Licence application, contact our immigration barristers in London on 0203 617 9173 or via the enquiry form below.
10. Frequently Asked Questions (FAQ's)
What happens to my sponsor licence if my company undergoes a change in direct ownership?
A change in direct ownership will result in your licence being revoked. If your sponsored workers have moved to another organisation with a sponsor licence, your licence will be made dormant.
Do I need to report changes in my business structure to the Home Office?
Yes, the Level 1 User must report the changes via your sponsorship management system (SMS) within 20 working days of the change taking place.
What are the consequences of not reporting changes in business structure or ownership?
If you fail to report the changes within the time limit, your sponsor licence may be downgraded or revoked. This can prevent you from sponsoring workers and may affect your existing sponsored workers' permission to stay.
Can a sponsor licence be transferred to a new owner if my business is sold?
No, a sponsor licence is not transferable. The new owner must apply for a new sponsor licence if they do not already have one.
What steps should a new sponsor take after a business takeover?
A new sponsor must apply for a new sponsor licence within 20 working days, apply to increase the Certificate of Sponsorship (CoS) allocation if needed, and report the changes via SMS.
What should I do if my organisation is partially taken over or merged?
You need to report any sponsored workers moving to the new organisation within 20 working days and adjust your CoS allocation if necessary. If you no longer have sponsored workers and wish to surrender your licence, this can be done via SMS or the change of circumstances form.
What happens to sponsored workers during a business transfer under TUPE?
If TUPE applies, the workers' terms and conditions remain the same, and their jobs are transferred to the new company. The new employer must have a valid sponsor licence and confirm responsibility for the workers.
How do I apply for a new sponsor licence if my business has been taken over?
You need to submit a valid application for a sponsor licence within 20 working days of the takeover, using the sponsorship management system (SMS).
What is the role of the Level 1 User in reporting changes to the sponsor licence?
The Level 1 User is responsible for reporting any changes in business structure or ownership via the SMS and complying with requests for documents confirming the changes.
Can I continue to sponsor workers if my sponsor licence is revoked due to a business change?
No, if your sponsor licence is revoked, you will not be able to sponsor any more workers, and the permission of existing sponsored workers may be cancelled or shortened.
11. Glossary
Sponsor Licence: A permit granted by the Home Office allowing a UK employer to hire non-UK workers legally.
Sponsorship Management System (SMS): An online system used by sponsor licence holders to manage their sponsor duties, including reporting changes in business structure or ownership.
Level 1 User: An individual within a sponsor organisation responsible for managing the sponsor licence via the SMS, including reporting relevant changes to the Home Office.
Certificate of Sponsorship (CoS): A unique reference number assigned by a sponsor to a migrant worker, enabling the worker to apply for a visa to work in the UK.
Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE): Regulations that protect employees' terms and conditions of employment when a business or service provision is transferred to a new employer.
Direct Ownership: Refers to the ownership structure of a company, where changes can include the sale of the company or transfer of controlling shares to new owners.
Takeover: When one company acquires control over another company, either fully or partially, affecting the sponsor licence status and responsibilities.
Merger: The combining of two or more companies into a new entity, which impacts sponsor licences and the reporting duties of the involved organisations.
Dormant Licence: A sponsor licence that is inactive, often as a result of business changes such as a takeover, where the new entity takes over the sponsorship responsibilities.
Revocation: The act of the Home Office withdrawing a sponsor licence, usually due to non-compliance with sponsor duties or failure to report significant business changes.
Start-Up: A newly established business, often in the early stages of operation, which may need to apply for a sponsor licence if it intends to hire non-UK workers.
Change of Circumstances Form: A form used by sponsor licence holders to report significant changes in their business structure or ownership to the Home Office when SMS access is unavailable.
Home Office: The UK government department responsible for immigration, security, and law and order, which oversees the sponsor licence system.
Sponsored Worker: A non-UK national who is employed by a UK company holding a sponsor licence and who has been assigned a Certificate of Sponsorship.
CoS Allocation: The number of Certificates of Sponsorship that a sponsor licence holder is permitted to assign to non-UK workers within a specified period.
12. Additional Resources
UK Government: Sponsorship Management System (SMS)
- Instructions on how to use the SMS for managing sponsor duties and reporting changes.
- Sponsorship Management System
UK Government: Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)
- Detailed information on TUPE regulations and employee rights during business transfers.
- TUPE Regulations
Home Office: Employer Sponsorship
- Guidelines and policies from the Home Office regarding employer sponsorship and compliance.
- Employer Sponsorship
ACAS: Understanding TUPE
- Resources and advice on managing employee transfers and compliance with TUPE regulations.
- Understanding TUPE
UK Government: Immigration Rules
- The complete set of UK immigration rules, including those related to sponsorship and skilled workers.
- Immigration Rules
UK Government: Check if You Need a UK Visa
- Tool to check visa requirements and eligibility for workers coming to the UK.
- Check if You Need a UK Visa
CIPD: Employment Law
- Resources on employment law, including aspects of business transfers and TUPE.
- CIPD: Employment Law
Gov.uk: Business and Self-Employed
- Information on business regulations, including mergers, acquisitions, and changes in business structure.
- Gov.uk: Business and Self-Employed
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.