How a Merger or Acquisition may affect a Company’s Sponsor Licence

The Office for National Statistics (ONS) collects data on UK mergers and acquisitions (M&A).

It reported that in 2016 there were 227 successful inward M&A worth £187.4 billion – the highest annual number since 2011 – and 400 domestic M&A worth £23.9 billion were successful – the highest number and value since 2008.

Immigration has been a hot topic in recent times but how many companies actually understand the implications or give adequate thought to immigration issues applicable to existing staff or to employees they may inherit.

Any company with a sponsorship licence permitting it to employ migrant workers must fully understand the process it must follow to ensure it does not contravene the sponsorship licence rules and that correct procedures are followed.

A company has a duty to report changes to the Home Office. Failure to do so can have profound consequences not only on the company but for those members of staff who have been sponsored.

A sponsor licence is not transferrable and what happens depends on a number of different circumstances.

Sponsors must report a change of ownership, a merger, a de-merger or a takeover to the Home Office via their Sponsorship Management System within 20 days of the change taking place.

If, for whatever reason, this is not done within the requisite time the Home office will take action against the licence holder which could lead to revocation of the licence.

Once a company has reported the change, the Home Office will ask for, and verify, documents submitted to support the change.

If you have any concerns about the reporting process, your legal representatives can ensure that the necessary reporting is done.

Similarly, If a business is sold as a going concern or a share sale results in the controlling number of shares being transferred to a new owner, a sponsor licence will be either revoked or made dormant if sponsored migrants have transferred to another sponsor’s licence.

The new owners must then apply for a new sponsor licence, unless they already have one, if they wish to continue employing any migrants they inherit through the company acquisition.

Likewise, If a company accepts sponsored migrants whose employment is being transferred under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) arrangements or if a similar arrangement exists, it will take over full responsibility for them as their sponsor from the date of the transfer. As such the company must fulfil all of the associated duties placed upon it as a licence holder.

Companies involved in a merger, takeover or acquisition should check in good time if any sponsored migrants are involved and seek legal advice to ensure the sponsored migrants are transferred correctly and that all compliance requirements are met.

DWFM Beckman specialise in Immigration and Employment Law. Therefore, if you are going through a merger or an acquisition and have any concerns about immigration or any other aspects of the process we can assist you every step of the way thus ensuring that the process is seamless and compliant.

Please contact Senior Associate Kezia Daley in the Immigration department at kezia.daley@dwfmbeckman.com or by telephone 020 7408 8888.