Immigration considerations - restructuring, cutbacks and curtailments
by Shoosmiths LLP
Employment and immigration specialists Emma Morgan and Amy Leech look at the immigration considerations that arise in redundancy situations, acquisitions and insolvency procedures. A recording of the webinar is below along with a summary of key takeaways.
In current economic conditions, with the cost of living rising and the effects of the pandemic still lingering, businesses are having to look at ways to make cuts and reduce costs. This includes making cuts through redundancies and/or selling or restructuring their business and in worst case scenarios, companies becoming insolvent. These processes all trigger important immigration considerations for businesses who sponsor migrant employees. The webinar highlights issues to look out for and provides practical advice for businesses in dealing with this.
Redundancies, reorganisations and how these interplay with sponsored workers and reporting obligations for sponsor licence holders
Where a business sponsors migrant employees and is considering redundancies, restructures and reorganisations, reporting obligations are often triggered.
If the sponsored employee’s employment is to be terminated due to redundancy, this will need to be reported to the Home Office within 10 working days of the termination date. The Home Office will then process the report and write to the sponsored worker, giving them 60 days to find a new sponsor within the UK before their leave is curtailed.
Where an alternative to redundancy is found, consideration needs to be given as to whether the sponsored employees’ role, salary, hours, location etc will change.
If the alternative is a new role which involves a change in the applicable Standard Occupational Classification code (SOC), then a new Certificate of Sponsorship (CoS) would need to be assigned to the sponsored worker, provided you are satisfied that other requirements under the Skilled Worker route can be met. The sponsored worker would then need to submit a new application to the Home Office for permission to stay in the UK based on their new CoS and could not start the new role until their new application has been approved.
If the new role falls under the same SOC code as the current role, this is permissible provided the new role was a genuine vacancy and continued to meet the requirements for the Skilled Worker route. There would be no need for a new CoS or fresh application and the sponsored worker could simply start the new role.
If the alternative results in a change to salary, duties or hours, the sponsor licence holder needs to check that the future rate of pay still meets the appropriate rate under the relevant SOC code. The changes would need to be reported within 10 working days.
If the alternative means that the sponsored employees will move to a different location, consideration should be given as to whether this location is covered by the sponsor licence and a report of the change of location should be made accordingly within 10 working days.
Immigration considerations of corporate restructures or when an acquisition happens
When selling, acquiring or restructuring a company that holds a sponsor licence, certain reporting duties will arise.
Where the transaction results in a direct change in ownership of the entity holding the licence, this must be reported to the Home Office within 20 working days of the change. The Home Office will expect supporting documents to be provided with the report, typically a certified copy of the transaction agreement, an affidavit signed by a senior executive of the company or a letter from a practising solicitor or notary confirming the transaction and evidence of the TUPE transfer if applicable.
In some scenarios, it may be necessary to apply for a fresh sponsor licence to continue sponsoring employees. Sponsor licences are not portable so the seller’s existing licence cannot simply be picked up as part of the transaction and “transferred” to the buyer’s company. We therefore recommend legal advice is taken and ‘comfort’ is sought from the Home Office first to see whether a fresh sponsor licence is needed. Where a new licence must be applied for, this will need to be done within 20 working days.
Sometimes a company may not be aware of its sponsor compliance obligations and reporting deadlines may be missed. If this happens, the company and buyer should seek advice and take reasonable actions including making the report as soon as it becomes aware.
Failing to report can trigger a compliance visit from the Home Office and therefore a wider review of a company’s licence and its usage. Employers should be proactive if this happens and take measures internally to ensure it doesn’t happen again in readiness for any compliance visit. Employers in this situation should consider conducting their own internal audit in readiness of a potential compliance visit.
The impact of an insolvency procedure on a sponsor licence
If a business is on the brink of insolvency this will potentially have an impact on any sponsorship licences held within the company’s group.
If a company enters an insolvency procedure or stops trading altogether, the company has an obligation to report this to the Home Office through the SMS but should be aware that the trigger point to report differs depending on the type of insolvency procedure invoked.
This is particularly difficult area to navigate and any business who hold a sponsor licence needs to be aware of the implications of entering into any type of insolvency process. Some of those processes will require a new licence, new key personnel, or could mean revocation and the loss of key sponsored employees. Given the complexity, it is important to seek legal advice as soon as possible to ensure the implications are understood and all reporting obligations are fulfilled.
It is vital for businesses to be proactive and consider immigration issues early in the process, before any final decisions on restructuring, reorganising, or insolvency procedures get underway. This can be a difficult area to navigate and so the Board and Senior Leadership Team of any business needs to be aware of the potential implications and requirements before making final decisions, particularly where there are such tight deadlines for compliant reporting of changes, or other necessary steps to be completed (usually within 10 or 20 working days). It is therefore essential for businesses to consider the immigration impact as early as possible and take legal advice where they are uncertain of what is required.
The webinar and this summary is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.