Business Sales: The Immigration Perspective

When buying or selling a business, or even re-organising the structure of group companies, both sides to the transaction need to have a very good understanding of exactly what the business owns and does not own. Identifying and restructuring the business assets, finances, liabilities and employees will form a major part of this sale process.

Where employees are going to be affected by that transaction they may be afforded statutory protection under the Transfer of Undertakings (Protections of Employment) Regulations 2006 which may require that the acquiring business take on the employees of the selling business so that their employment contracts are protected.

However, where such employees are non-EEA workers (i.e. non-British and non-European) there is an extra level of due diligence that needs to be carried out with regard to business Sponsor Licenses.

A Sponsor License allows a UK business to hire non-EEA workers by giving them the power to issue ‘Certificates of Sponsorship’ to their potential employees, which then in turn allows the employee to obtain a work visa under the Tier 2 or Tier 5 visa system. Without a Sponsor License, the business in question could be fined up to £20,000 per employee who does not have the right to work in the UK, unless that employee has another form of immigration status that permits them to work.

In a Corporate transaction, Sponsor Licenses and the Immigration status of employees may need to be considered where any of the following take place:

• A Sponsor company transfers its business and employees to another company.
• A Sponsor company’s immediate holding company changes.
• A company without a Sponsor License takes on the employees of a Sponsor company.
• The HR functions of a Sponsor Company are transferred to another company. 

In some cases there is only a simple requirement to notify the Home Office of the changes to the group structure, but in other circumstances a Sponsor company may need to have their Sponsor License made dormant or the acquiring company may need to apply for a Sponsor License in order to allow the employee’s visas to continue.

If these matters are not sorted then the Home Office may take action if they become aware of any non-compliance. Such action could include any of the following:

• Removal of Sponsor Licenses.
• Civil or criminal penalties for hiring illegal workers for the employer.
• Curtailing of employee visas to 60 days.
• Potential criminal liability to employees in cases of illegal working.

At Chattertons, we have experienced lawyers in areas of Corporate, Employment and Immigration Law who can assist you in navigating the minefield of a Corporate transaction. If you would like to discuss your transaction with a member of our team further or you would some further information about the immigration law implications, please contact a member of our Corporate or Immigration team.