Points to consider – inheriting sponsored employees via TUPE

Due diligence is a key stage for any corporate transaction, particularly in a situation where (i) the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) is triggered, and (ii) the transferor employs sponsored migrants. Immigration issues should be considered at an early stage to allow sufficient time to comply with the necessary deadlines.

The ways in which TUPE interacts with immigration law is generally less understood than the employment position. Many are familiar at least with the concept of TUPE and the protection it affords to the transferring employees, ensuring they continue their employment on the same terms and conditions; however, when the employees in question are sponsored migrants, there are additional considerations needed for compliance with immigration laws.

To assist, here is an outline of the steps employers must follow to ensure compliance with both employment and immigration law:

Step 1 –  Sponsorship Requirements

For the Transferee, the initial consideration should be whether they hold a valid Sponsor Licence. If they do, under which routes can they facilitate sponsorship? This will heavily feed into the due diligence process, when establishing exactly which (if any) sponsored migrant employees will transfer across and the routes under which they are sponsored. For example, if the Transferee can only sponsor Skilled Workers under their current Sponsor Licence, but they will receive employees working under the Global Business Mobility (GBM) route, then they will need to apply to expand their licence to facilitate their sponsorship post-transfer.

If the Transferee does not hold a valid Sponsor Licence, they must apply for one within 20 working days of the transfer taking place. It is important to note that the application does not need to be approved within that timescale, but must at least be submitted. Failure to do so could result in significant criminal and civil penalties against the Transferee for illegal working.

Step 2 – Reporting Requirements

Both the Transferee and Transferor are required to report the organisational change to the Home Office within 20 working days of the transaction completing, which must be carried out as follows:

Transferor

• Confirm which sponsored employees have transferred across; and
• Confirm whether it wishes to retain or surrender the Sponsor Licence following the transfer. Where all the sponsored migrants have transferred across, and the intention is to retain the Sponsor Licence, reasons will need to be provided.

Transferee

• Prepare an Affidavit, which sets out the nature of the transaction which triggered the TUPE process. Ensure you append the corporate documentation, such as the asset or share purchase agreement.
• Provide details of all the migrant employees that have transferred – this should include all their immigration documentation, passports and job descriptions.
• Provide a letter from a qualified employment solicitor, confirming that TUPE applies to the transaction and the migrant workers will continue in their same role with no less than the salary they are currently on, and their continuity of employment will be protected
• A copy of the final TUPE letters sent out to the relevant sponsored employees.

All the relevant reports should be submitted via the Sponsorship Management System (SMS), with the supporting documentation sent directly to the Home Office via email.

Step 3 – Right to Work checks

Under TUPE, the right to work checks completed by the Transferor will automatically transfer across to the Transferee, and they will benefit from the statutory excuse. However, a cautious approach should be adopted here as this will only be of ‘benefit’ if they transferor conducted valid right to work checks on the employees prior to the transfer.

Again, the Transferee should drill down into the detail during the due diligence process to ensure compliant checks were carried out, and the transfer paperwork should address the issue with appropriate warranties and/or indemnities.

Post-transfer, the transferee will have a 60 day ‘grace period’ in which to conduct fresh checks on all employees who transferred under TUPE, not just the sponsored employees. Whilst this will not secure the Transferee a Statutory Excuse where one did not exist prior to the transfer, it will allow the Transferee to identity any possible illegal working and take immediate steps to rectify the situation before UK Visas and Immigration come knocking!

Step 4 – Ongoing compliance with Sponsor duties

This is a significant part of the process, and far too broad to cover under a single heading. The key points to keep in mind is the Transferee must ensure to familiarise itself with the sponsorship compliance requirements. There are various aspects of the sponsored workforce’s employment on which the Home Office must be kept up to date.

Rather frustratingly, the SMS will not hold the details of any transferred sponsored employee until they either extend, or switch into another visa. However, the reporting requirements still stand and the same must be fulfilled separately via email.

As always, this article is intended to provide an initial overview of the process. If you require a more detailed roadmap, or advice on specific aspects, please do get in touch with the Immigration team to discuss.