If you sponsor foreign workers or are about to take on foreign workers as part of a change of ownership, merger, takeover, de-merger, or similar change, then this article will be of particular interest to you.
If your organisation holds a sponsor licence and there is a change of structure in the organisation then it is important to note that your sponsor licence is not transferable. What happens to you and your sponsored workers will depend on the type of restructuring or ownership change.
Change in Ownership: Full Takeovers and Mergers
Where there is a change in direct ownership of your organisation and your company is taken over fully by another organisation, your sponsor licence will either be revoked or made dormant. This happens if, for example, the business is sold as a going concern, or a share sale results in the controlling number of shares being transferred to a new owner.
If there is a transfer of the business (TUPE) of from Company A which has sponsored employees to Company B, then Company A will need to report this transfer on their SMS within 20 working days and state which sponsored employees will be transferred over to Company B. If Company B does not have a sponsor licence they will need to apply for one within 20 working days of the transfer. Once the licence is approved then Company B will inform the Home Office that they are taking full responsibility for the sponsored workers that are moving over. Company B’s sponsor licence will be made dormant. In relation to TUPE transfers, the sponsored workers are not required to apply for a new visa as their contracted employment duties and salary will remain the same.
If Company B in the above scenario does have a sponsor licence then both Company A and B will need to inform the Home Office of the takeover via the SMS within 20 working days. Company A will need to confirm which sponsored employees are moving over to the Company B and Company B will confirm responsibility for the sponsored employees transferring over. Company A’s sponsor licence will be made dormant.
If Company A will retain some of their sponsored employees and only some will move over to Company B then both companies must inform the Home Office on who will be transferred over. Company A must make it clear it wishes to keep its licence.
Change in Company Owner Only
If there is a transfer or sale of the controlling interest of the Company, as in 51% or more of the shareholding then a new licence is required by the existing Company. In the scenario where there is no change of employer for any of the employees, the same Company continues to trade but has a new majority owner, the Company is required to to inform the Home Office of the change within 20 working days and apply for a new licence. Once the new licence is approved, the Company can move the sponsored employees from the old licence to the new licence. The old licence will need to be made dormant by the Company.
The above are just a few examples of common scenarios but there are many more potential types of change of ownership. We at Redfern Legal can advise you on your particular scenario and the best course of action.
Reporting Duties
When there is a change or structure or a change of ownership, this must be reported on the Sponsor Management System (SMS) within 20 working days of the change taking effect. If you fail to do so, your current sponsored workers may have their visas cancelled and your licence could potentially be revoked
If sponsored workers have been transferred to the new organisation under TUPE then they do not need to apply for a new visa. However, if they are going to be employed under new terms in the new company then a new visa may potentially need to be applied for.
General Advice to Organisations
Normally organisations know well in advance if they will takeover or merge with another Company. If this is the case, it is highly recommended to enquire very early on about any sponsor licence and sponsored employees of the Company that is the subject of the takeover. Then it would be prudent to apply for a sponsor licence as soon as possible by your organisation before it completes the takeover to allow for a smooth transition for the sponsored employees from one licence to another.
Jules Motcho jmotcho@redfernlegal.com
