The Business Immigration Perspective
When the ownership of a business changes, and especially if that business holds a sponsor licence, vigilance is needed. Whether there is a merger, de-merger or takeover, or a sale of share or assets, sponsored workers may be transferred as part of TUPE (Transfer of Undertakings (Protection of Employment) Regulations 2006 (as amended)) or similar protection. If so, the entity holding the licence to which they are attached will have a short window in which to make appropriate reports, surrender or make dormant its current licence and / or apply for a new Sponsor Licence.
A buyer will want to know that Right to Work checks have been completed in the correct manner and that the seller has accurate and complete records of compliant checks. Those checks are the crucial line of defence against a civil penalty for unlawful employment. Given that liability for illegal employment can transfer with the sale, the buyer is likely to seek warranties and indemnities, so the seller should be prepared well in advance.
Why are Right to Work checks so important?
All UK employers should know they have a responsibility to prevent illegal working, and for licensed sponsors that is a condition of holding the licence. Completing Right to Work checks before hiring an individual in the manner prescribed by the Home Office, and prior to the expiry of time-limited immigration status, fulfils this duty. This includes checking someone has suitable immigration status for the role in question.
Carrying out Right to Work checks as set out in guidance and codes of practice establishes a statutory excuse against liability for a civil penalty. In practice this means that if it is found that you have employed someone who does not have the right to work, but you have correctly carried out Right to Work checks and had no reason to believe you were given false documents or information, you will not be liable for a civil penalty.
What are the potential penalties for illegal working?
On a personal level, directors and managers could be sent to jail for up to 5 years and receive an unlimited file if found guilty of the criminal offence of employing migrants they knew or had ‘reasonable cause to believe’ did not have the right to work. The Government is increasing its intelligence led operations in this area.
More commonly, businesses are subject to a civil penalty (fine). From January 2024, the maximum civil penalty is increasing from £20,0000 to £60,0000 per illegal worker employed if the worker had no right to work in the role and Right to Work checks were not carried out properly, or at all.
The organisation’s details may also be published by Immigration Enforcement. Those holding a licence can expect it to be downgraded or revoked with direct consequences for continued employment of sponsored migrants. Reputational damage, inability to service customer contracts and liability to employees quickly load the business with costly problems which could overwhelm it.
Sponsor licences and compliance – the responsibilities and risks
A licenced sponsor must have suitable key personnel in place on its licence at all times – a UK based authorising officer who has senior-level oversight of recruitment activity and is ultimately responsible for licence compliance, a key contact who is the first liaison point with the Home Office and at least one in-house Level 1 user with secure access to the Sponsor Management System who is British, Irish or settled in the UK and not subject to UK immigration control.
Changes in sponsor circumstances, which may include operating address, ownership, linked entities, and migrant circumstances including termination, name and role changes usually require a report within 10 working days as a licence condition.
A licence which does not have key personnel in place and where reporting and record keeping duties have been neglected is a liability a buyer will not want to assume without protections.
Sponsorship, Right to Works Checks for Sponsored Employees with the sale of a business
Immigration considerations when preparing to sell or buy a business are:
- Does the business hold a valid sponsor licence?
- If there is a sponsor licence, what reports will be needed because of this sale and purchase?
- Is your licence compliant – are appropriate key personnel in place and is there a clear and complete record of timely reporting and compliance with sponsor duties?
- Have Right to Work checks been carried out in the prescribed manner?
- Are there any non-settled workers in the workforce?
- Are there accurate, accessible records of when follow up checks will be needed and of those that have been carried out?
- Are there any EEA-national employees who do not yet have settled status? Is so, when were they first employed by the business?
- Could evidence of compliant Right to Work checks be provided if the Home Office conducted an audit or inspection of the business?
If you have concerns about completing Right to Work checks or about conducting an internal audit/ maintaining records, contact our Business Immigration team. We can help with training, mock audits and ensuring compliance.
This article was written by Matthew Davies, Partner and Head of Business Immigration and Stacey Lambert, Associate.
The information provided in this article is provided for general information purposes only, and does not provide definitive advice. It does not amount to legal or other professional advice and so you should not rely on any information contained here as if it were such advice.
Wright Hassall does not accept any responsibility for any loss which may arise from reliance on any information published here. Definitive advice can only be given with full knowledge of all relevant facts. If you need such advice please contact a member of our professional staff.
The information published across our Knowledge Base is correct at the time of going to press.