When employees transfer from one employer to another under TUPE, their employment can move with them.
A sponsor licence does not.
That distinction is the starting point for any TUPE transfer involving sponsored workers.
Where the Home Office conditions are met, a Skilled Worker or another sponsored worker transferring under TUPE can normally move to the new employer without making a fresh immigration application and without receiving a new Certificate of Sponsorship.
But that does not happen automatically simply because somebody says the transfer is protected by TUPE.
The incoming employer must hold the appropriate sponsor licence, or make the necessary sponsor licence application within the required period. It must accept full sponsorship responsibility for the worker. The worker’s duties must remain unchanged for the Home Office concession allowing sponsorship to transfer without a new immigration application.
There are also reporting obligations for both the outgoing and incoming sponsor.
And separately from the sponsor licence process, the incoming employer should consider fresh right to work checks for the employees it acquires.
A TUPE transfer involving sponsored workers therefore sits across several different legal and operational questions.
They need to be dealt with separately.
First, what is TUPE?
TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations 2006.
Broadly, the regulations protect employees where a business, part of a business, or certain services move from one employer to another.
Where TUPE applies, employees will usually transfer to the incoming employer with their continuity of employment and existing contractual terms protected. TUPE can apply to business transfers and certain service provision changes.
But an important distinction needs to be made from the outset.
Whether TUPE applies is an employment law question.
The Home Office sponsor guidance recognises TUPE transfers and explains what happens to sponsored workers where TUPE or similar protection applies. It does not decide whether a particular commercial transaction legally amounts to a TUPE transfer.
That question should be established under the relevant employment law principles.
Once that has been established, the immigration and sponsor licence consequences can be considered.
A share sale is not the same as a TUPE transfer
This is particularly important in corporate transactions.
If one company buys the shares of another company, the employing company itself usually remains the same legal employer.
There has been a change of shareholder, not necessarily a transfer of employees from one employer to another.
TUPE generally involves a change in the identity of the employer. Government guidance distinguishes this from a simple change in share ownership.
That does not mean a share sale has no sponsor licence consequences.
As we explained in the previous article in this series, a change in the direct ownership of a licensed sponsor can itself require a new sponsor licence.
But that is a different mechanism.
It is entirely possible for a transaction to require a new sponsor licence without being a TUPE transfer.
It is also possible for sponsored workers to transfer to a new employer under TUPE, in which case the Home Office’s specific TUPE sponsorship provisions become relevant.
The transaction structure needs to be identified correctly before deciding what immigration steps follow.
“TUPE and sponsorship should not be collapsed into one question. First establish whether the worker’s employment is actually transferring under TUPE or similar protection. Then establish which organisation will become responsible for sponsorship and whether it has the Home Office permission needed to take that responsibility.”
Abdul Jabbar, Principal Immigration Adviser
Can a sponsored worker transfer under TUPE?
Yes.
The Home Office sponsor guidance specifically provides for sponsored workers whose employment moves to another organisation under TUPE or similar legal protection.
Where the conditions are met, the worker does not need to make a new immigration application merely because their employer changes as part of the protected transfer.
The incoming sponsor does not need to assign a new Certificate of Sponsorship either.
For that concession to apply, the Home Office currently requires:
- the new sponsor to hold a valid sponsor licence covering the relevant sponsorship route
- the new sponsor to confirm that it accepts sponsorship responsibility for the worker
- the worker’s duties to remain unchanged
The incoming organisation assumes full sponsor responsibility from the date the employee moves to it.
This is a valuable provision.
Without it, a business transfer involving dozens of sponsored workers could require dozens of new immigration applications even though the employees were simply continuing the same jobs under a new employer following a legally protected transfer.
But the concession depends on the conditions being met.
The sponsor licence itself does not transfer
This is the part that should be understood before completion.
Suppose:
OldCo Ltd holds a Skilled Worker sponsor licence.
It employs eight Skilled Workers.
NewCo Ltd acquires OldCo’s business through an asset purchase.
The eight employees transfer from OldCo to NewCo under TUPE.
OldCo’s sponsor licence does not move to NewCo.
NewCo must either already hold the appropriate sponsor licence or take the steps required to obtain one.
The sponsor licence belongs to the licensed organisation.
TUPE may transfer the employment relationship.
It does not transfer Home Office authorisation from one legal entity to another.
What if the incoming employer already has a sponsor licence?
This is usually the simpler situation.
Suppose NewCo already holds an A-rated Skilled Worker sponsor licence.
It acquires a business from OldCo and five sponsored Skilled Workers transfer to NewCo under TUPE.
If the relevant Home Office conditions are satisfied, NewCo can accept responsibility for those workers under its existing licence.
The workers do not normally need new Skilled Worker applications simply because the transfer has happened.
Nor does NewCo need to assign replacement Certificates of Sponsorship simply to record the transfer.
Instead, the incoming sponsor must report the change and confirm that it accepts full sponsorship responsibility for the transferring workers.
The Home Office guidance requires that report to be made within 20 working days of the change.
From the date of transfer, NewCo becomes responsible for the workers as their sponsor.
That means the ordinary sponsor duties now sit with NewCo.
What if the incoming employer does not have a sponsor licence?
This is where timing becomes particularly important.
If sponsored workers transfer under TUPE to an organisation that does not already hold the sponsor licence needed for their immigration route, the incoming employer must either:
- apply for the necessary sponsor licence, or
- if it already holds a licence but not for the required route, apply to extend the scope of that licence
The application must be made within 20 working days of the workers moving to the new employer.
That is not a deadline an acquiring business should first discover after completion.
A sponsor licence application requires preparation.
The incoming organisation may need to identify Key Personnel.
It needs appropriate HR and compliance systems.
It may need supporting documents.
The proposed sponsorship arrangement needs to be explained.
If the acquisition is known about in advance, most of that preparation can be done before the transfer occurs, even though the precise Home Office steps may depend on completion.
What happens while the new sponsor licence application is being considered?
The Home Office guidance allows for the position where sponsored workers have transferred under TUPE but the incoming employer’s sponsor licence application is still being processed.
The crucial requirement is that a valid application is made within the 20-working-day period.
If the licence is subsequently granted, the incoming organisation can formally accept sponsorship responsibility for the workers.
The Home Office can then provide limited access to the previous sponsor’s records so that the new sponsor can meet reporting duties relating to the transferred workers.
This arrangement prevents the employees from having to make unnecessary immigration applications simply because the commercial transfer happened before the Home Office completed the new employer’s licence application.
But it depends on the incoming business doing what is required within time.
What if the buyer misses the 20 working day deadline?
The consequences can be serious.
If the incoming employer:
- does not make a valid sponsor licence application within 20 working days, or
- makes a valid application but that application is refused,
the Home Office guidance says the immigration permission of the transferred sponsored workers will be cancelled, except where particular workers can properly be sponsored under another existing licence held by the incoming organisation.
That creates a direct connection between corporate transaction planning and the immigration position of employees.
Imagine a business acquires a division containing 15 sponsored engineers.
The commercial transaction completes successfully.
The employees transfer.
Nobody considers the sponsor licence until six weeks later.
By then, the issue is not simply that an administrative report was late.
The new employer may have failed to make the sponsor licence application within the period on which the transferred workers’ immigration position depends.
That is why sponsored-worker due diligence should be completed before the transfer date wherever possible.
Does the employee need a new Certificate of Sponsorship?
Not merely because they transfer under TUPE.
Where the Home Office TUPE conditions are satisfied, the new sponsor does not need to assign a new CoS simply to take over sponsorship responsibility.
The original sponsorship history remains relevant.
The Home Office can give the new sponsor limited access to the old sponsor’s licence records so that it can make reports concerning workers whose employment has transferred.
That means the immigration system recognises continuity.
But it does not mean that the new employer can ignore the existing sponsorship details.
Quite the opposite.
The incoming sponsor needs to understand what it is taking responsibility for.
The worker’s duties must remain unchanged
This condition deserves careful attention.
The Home Office concession allowing a sponsored worker to transfer without a new immigration application requires their duties to remain unchanged.
That can become relevant where the acquiring company wants to reorganise immediately after the transfer.
Perhaps it wants to integrate two departments.
Perhaps job titles will change.
Perhaps some employees will take on wider duties.
Perhaps the worker will move from one operational structure into another.
Not every minor internal adjustment necessarily changes the immigration position.
But a materially different role may.
The fact that TUPE applies does not provide unlimited permission to redesign a sponsored worker’s job while keeping the old immigration permission untouched.
The sponsor should assess proposed changes before implementation.
What if the worker’s job changes as part of the transfer?
This needs individual analysis.
The TUPE sponsorship concession is designed around continuity of the sponsored employment.
If the incoming employer wants the worker to take a genuinely different role, a new immigration application may be required before that new employment can begin.
For Skilled Workers, that can depend on whether the change moves them into a different occupation code and whether the change falls within the Skilled Worker change of employment rules.
Salary, hours and duties may also need to be considered.
The correct sequence is therefore:
Transfer first, where the existing conditions for sponsorship continuity are satisfied.
Then assess any proposed employment changes separately.
Do not assume that a commercial desire to harmonise roles after a transfer automatically fits the worker’s existing sponsorship.
What happens to the outgoing sponsor?
The outgoing sponsor has its own Home Office responsibilities.
Where sponsored workers move to another organisation under TUPE or similar protection, the outgoing sponsor must report the change.
For a complete takeover, that includes identifying the sponsored workers who have moved and dealing with the future of its sponsor licence.
Where all sponsored workers have transferred and the old organisation will no longer need its licence, the licence may become dormant or ultimately be surrendered depending on the circumstances.
For a partial transfer, the old sponsor may continue holding its licence and remain responsible for sponsored employees who stay with it.
The outgoing sponsor is no longer responsible for workers who have transferred to the new sponsor once the sponsorship transfer has been dealt with appropriately.
The Home Office requires relevant changes arising from mergers, takeovers and similar transactions to be reported within 20 working days.
Partial TUPE transfers need a worker-by-worker analysis
Suppose OldCo employs 100 people, including 12 sponsored Skilled Workers.
It sells one division to NewCo.
Thirty employees transfer under TUPE.
Five of the sponsored Skilled Workers are among them.
Seven sponsored workers stay with OldCo.
This creates two continuing sponsorship populations.
OldCo remains responsible for the seven sponsored workers who stayed.
NewCo becomes responsible for the five transferring sponsored workers, provided it has or obtains the appropriate sponsor licence and completes the Home Office process.
OldCo may need to reconsider its future CoS allocation.
NewCo may need additional CoS allocation for future recruitment, even though it does not need to assign new CoS simply to take over the five existing workers.
This is why transaction schedules should identify immigration status.
A list showing only names and job titles is not enough where sponsored workers are involved.
TUPE due diligence should identify sponsored workers early
One of the most valuable things the incoming employer can do is establish the sponsored-worker population before completion.
For each transferring employee, the buyer should know:
- nationality
- current immigration route
- visa expiry date
- current sponsoring entity
- Certificate of Sponsorship details
- job title
- occupation code
- salary
- normal working hours
- work location
- whether any immigration application is pending
- whether any relevant sponsor report is outstanding
- whether the worker’s employment is actually transferring under TUPE
This allows the incoming sponsor to see what responsibility it is accepting.
It can also expose issues that need to be resolved before or immediately after the transfer.
“The buyer should not discover the sponsored workforce from payroll after completion. We want to know who is sponsored, what they were sponsored to do, what they are being paid and whether anything about the employment will change on transfer. That gives us a position we can actually manage.”
Abdul Jabbar, Principal Immigration Adviser
Review the existing sponsorship before accepting responsibility
Taking over sponsorship also means taking over responsibility for the employee going forward.
The incoming employer should therefore consider whether the existing sponsorship position appears compliant.
Check the role.
Does the employee actually perform the duties associated with the sponsored occupation?
Check the salary.
Does current payroll correspond with the salary on which sponsorship is based?
Check the work location.
Is the worker still based where the sponsorship record indicates?
Check the hours.
Are working arrangements consistent with the immigration assessment?
Check immigration expiry.
When will the worker next need an extension or other application?
Check historical changes.
Were there salary reductions, promotions or work-location changes that should have been reported by the old sponsor?
The buyer cannot rewrite the old sponsor’s history.
It can make sure it understands the position it is inheriting.
Who reports the TUPE transfer to the Home Office?
Both sides can have reporting duties.
The outgoing sponsor reports the relevant transaction and provides details of sponsored workers moving to the incoming organisation.
The incoming sponsor, where it already holds the relevant licence, reports that it has accepted sponsorship responsibility for those workers.
These reports are generally required within 20 working days of the change.
If the incoming sponsor does not have a licence, its priority is making the required licence application within the 20-working-day period.
Once the licence is granted, it confirms that it is accepting sponsorship responsibility and provides the necessary evidence.
Where the normal SMS worker record is not yet available to the incoming sponsor, the current Home Office guidance provides a separate reporting process for transferred workers.
What happens to future sponsor reporting?
Once the incoming employer accepts responsibility, ordinary sponsor duties apply.
Suppose the worker changes home address after transfer.
The new sponsor maintains the relevant record.
Suppose the employee subsequently resigns.
The new sponsor reports the end of sponsorship.
Suppose their normal work location changes.
The new sponsor considers the reporting obligation.
Suppose they need a Skilled Worker extension.
The new sponsor deals with the sponsorship requirements for that application.
The old employer is no longer the organisation managing their sponsorship.
The immigration responsibility has followed the transferred employment under the Home Office process.
Do fresh right to work checks need to be carried out?
This is a separate question from sponsor transfer.
Under the right to work regime, an incoming employer acquiring staff under a TUPE transfer receives the benefit of a statutory excuse established by the outgoing employer where the original right to work check was carried out correctly.
But there is an obvious risk.
If the outgoing employer did not conduct the original right to work check correctly, the incoming employer can inherit exposure if an employee is later found to be working illegally.
The Home Office therefore advises employers acquiring workers under TUPE to conduct fresh right to work checks.
A 60 calendar day grace period from the date of the relevant transfer is currently provided for the incoming employer to carry out those fresh checks. There is no equivalent grace period for a subsequent follow-up check where one is already due.
That makes right to work review a sensible part of the post-tran
