1. Introduction
Companies holding a sponsor licence, especially in the immigration law sector, need to understand how changes in business ownership or structure can impact their sponsor licence. At Temple Gate Solicitors, we offer expert guidance on how to maintain your sponsor licence and ensure compliance during corporate transitions.
A sponsor licence is crucial for businesses wishing to employ foreign nationals, and failure to comply with sponsor duties during structural changes can lead to serious consequences.
2. Types of Changes in Business Structure
A sponsor licence is not transferable, and certain changes in business structure may require a new sponsor licence. Here are the types of business structure changes that could impact your sponsor licence:
Change in Direct Ownership
This involves the sale or transfer of a controlling number of shares in your business.
Mergers and Acquisitions
If your company is partially or fully acquired, your sponsor licence may be affected.
Organizational Split
If your business is split into multiple entities, the sponsor licence may need to be reassigned or reissued.
3. Reporting Duties for Sponsor Licence Holders
The Level 1 User within your organisation must report any significant structural changes (e.g., ownership, mergers, or splits) via the Sponsorship Management System (SMS) within 20 working days of the change. Failure to report could result in penalties or the revocation of your sponsor licence.
4. Consequences of Failing to Report Changes
Failure to report business structure changes within the required timeframe may lead to:
- Downgrade or Revocation of Your Sponsor Licence: Your licence could be downgraded or revoked, which would result in the inability to sponsor foreign workers.
- Loss of Sponsored Workers: Your workers’ permission to remain in the UK could be shortened or cancelled.
For assistance during these critical times, consult with Temple Gate Solicitors to ensure your business complies with Home Office requirements.
5. Business Structure Changes: Complete Takeovers and Mergers
New Sponsors
If your company is taken over or merged, you must apply for a new sponsor licence within 20 working days if you do not already hold one. Additionally, you will need to adjust your Certificate of Sponsorship (CoS) allocation to accommodate any sponsored workers.
Old Sponsors
If your company is taken over by another, you must report any changes regarding sponsored workers within 20 working days. If workers are moving to the new entity, the appropriate steps must be taken to update the SMS. If your company no longer intends to sponsor workers, you may choose to make your sponsor licence dormant.
6. Business Structure Changes: Partial Takeovers and Mergers
Old Sponsors
In the case of partial takeovers, if your company no longer employs sponsored workers, you can choose to surrender your sponsor licence. If workers remain with the company, you must report the changes to the Home Office and update your CoS allocation.
New Sponsors
If your company is the new sponsor post-merger or takeover, apply for a sponsor licence as soon as possible. Report all structural changes via SMS and ensure your CoS allocation is updated accordingly.
7. Business Structure Changes: Change in Direct Ownership
When there is a change in the direct ownership of your company (such as the sale or transfer of controlling shares), your sponsor licence will be revoked. If workers are moved to a new organisation with an active sponsor licence, your sponsor licence may be made dormant.
8. Employees Transferred Under TUPE
In certain situations, employees are protected under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). If TUPE applies, workers’ employment conditions remain unchanged and transfer to the new employer. If the new employer holds a valid sponsor licence, there is no need for workers to apply for a change of employment.
It is crucial that the new employer complies with sponsor duties and updates the SMS accordingly.
9. Contact Temple Gate Solicitors for Expert Legal Advice
Navigating sponsor licence compliance during business structure changes can be complex. Temple Gate Solicitors offers expert legal advice and support for businesses managing sponsor licences. Whether your business is undergoing a merger, acquisition, or ownership change, our experienced immigration team can guide you through the process to ensure compliance.
For more information, contact Temple Gate Solicitors:
- Phone: +44 (0) 207 183 8043
- Email: info@templegatesolicitors.com
- Website: www.templegatesolicitors.com
We’re here to assist with sponsor licence applications, compliance, and immigration-related matters.
10. Frequently Asked Questions
What happens to my sponsor licence if my company undergoes a change in direct ownership?
A change in ownership leads to the revocation of your sponsor licence. If your workers have moved to another organisation with a valid sponsor licence, your licence may be made dormant.
Do I need to report changes in my business structure to the Home Office?
Yes, the Level 1 User must report structural changes to the Home Office via the SMS within 20 working days.
What are the consequences of not reporting changes?
Failure to report changes can result in the downgrade or revocation of your sponsor licence, impacting your ability to sponsor workers.
Can a sponsor licence be transferred to a new owner if my business is sold?
No, sponsor licences are not transferable. The new owner must apply for a new sponsor licence.
What steps should a new sponsor take after a business takeover?
The new sponsor must apply for a sponsor licence, report changes via SMS, and update the CoS allocation.
What happens to sponsored workers during a business transfer under TUPE?
If TUPE applies, workers’ terms and conditions remain the same and transfer to the new organisation. The new sponsor must assume responsibility for the workers and update the SMS.
