UK Sponsor licence failures lead to immigration risk issues

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Sanwar Ali Comments:

The sponsor licence compliance requirements are overly complex, burdensome and confusing.  It is difficult for employers to comply with all the requirements.  This is the case even if there is no restructuring of the business.

It is therefore not surprising that there are even greater difficulties with compliance following a corporate restructuring.  Perhaps for many employers they may have little choice but to seek expert advice to make sure that they meet the compliance requirements.  UK visas and the Government should make it easier so that professional advice and assistance is not required.  Many years ago under the previous work permit scheme no sponsor licence was required.  Now employers need a sponsor licence to sponsor Skilled Workers.

More and more UK businesses risk infringing immigration compliance rules when restructuring their companies, leading to potential problems. With compliance often overlooked when corporate restructures take place, immigration risk is on the rise.

Amid an increase in corporate restructures in the post-pandemic era as businesses face more challenging economic conditions, combined with the UK’s departure from the EU and more companies holding sponsor licences, organisations are at greater risk of being caught out by UK immigration compliance rules.

Maintaining compliance can be complicated for companies who are restructuring as the Home Office’s sponsor guidance is a little unclear in this situation, and there are many factors to consider.

Home Office reporting requirements for sponsors

Sponsors of overseas workers are required to report specific events to the Home Office within 20 workings day, including:

  • Changes to the name of the sponsor’s business or any associated branches included under the licence
  • The full or part sale of the business holding the sponsor licence
  • The sponsoring business is part of a merger or is being taken over
  • The sponsoring business stops trading or enters into insolvency
  • The nature of the sponsor business changes significantly
  • An owner, director, authorising officer, key contact, level 1 user or another person involved in the day-to-day operation of the sponsoring business is convicted of certain UK immigration or other offences

In any of these scenarios, specific sponsor-related records on the Sponsor Management System (SMS) may need amending depending on the nature of the changes needed, including:

  • The replacing and/or removal of key personnel listed on the licence
  • Updating the address details associated with a licence and individual key personnel
  • Disclosing registration details of a governing body

Fresh sponsor licence application

In some cases, where a business restructure has taken place, a fresh sponsor licence may be needed. The most common situation for this, and often the most misunderstood, is when the direct ownership of the business changes.

A change of ownership may occur when a business is sold to a new owner, or if a share sale results in a controlling number of shares transferring to a new owner.

Should this happen, any existing sponsor licence will become void. If a new owner wants to continue sponsoring existing workers or sponsor new overseas employees in the future, a fresh sponsor licence will be required.

Another situation where a new sponsor licence might be needed is when part of a sponsoring business is sold off, and existing sponsored workers are moved to the new business that has been created, or the new business may wish to sponsor workers in the future.

Right to work checks

Businesses with a UK sponsor licence are also required to maintain compliant right to work checks across their entire workforce as part of their duties.

Where staff are acquired by a business under Transfer of Undertakings (TUPE) – meaning the transfer of an organisation, or part of it, from one employer to another -  the Home Office allows 60 days’ grace from the date of the transfer of the business for the new employer to carry out repeat right to work checks for acquired staff.

Besides sponsor licence compliance, doing this will enable the acquiring business to proactively tackle any instances of illegal working, and ensuring that reminders for follow-up checks are put in place for all workers with limited immigration permissions. can help with Sponsor Licences

If you need help with employing Skilled Workers and help to apply for a Sponsor Licence, including complying with your Sponsor Licence obligations, can help.