TUPE and Business Acquisitions: Transferring Sponsored Workers and Notifying UKVI Procedures Explained

When your business is acquired or goes through a merger, handling sponsored workers correctly is crucial. You must have a valid sponsor licence and notify UKVI within 20 working days of the transfer to maintain sponsorship and avoid visa issues for your employees. If you don’t, sponsored workers risk losing their visas and your licence could be suspended.

The Transfer of Undertakings (Protection of Employment) regulations (TUPE) protect employees during ownership changes, but this does not automatically transfer their sponsorship. Your new or existing licence must cover these workers, and you need to confirm responsibility through the Sponsor Management System. Understanding these rules helps you keep compliant and protect your workforce during business changes.

TUPE Transfers and Business Acquisitions Overview

When a business is sold or merges with another, certain rules protect employees during the change. These rules cover what happens to workers' jobs, pay, and contracts. It’s important to understand when these protections apply and what types of business events trigger them.

Transfer of Undertakings (Protection of Employment) Regulations 2006 Explained

The Transfer of Undertakings (Protection of Employment) Regulations 2006, known as TUPE, ensure employees keep their existing contracts and rights when a business or part of it changes hands. Under TUPE, employees automatically move to the new employer on the same terms and conditions.

You cannot change employees’ contracts just because of the transfer, unless there is a valid economic, technical, or organisational reason. TUPE also preserves continuity of employment, so workers don’t lose their length of service or related benefits.

TUPE creates clear responsibilities for both the old and new employers, including informing and consulting employees before the transfer happens.

When TUPE Applies in Corporate Transactions

TUPE applies in several types of corporate transactions where the business or part of it transfers to a new owner. This includes sales, mergers, and acquisitions involving a complete or partial change of the business.

The rules protect employees who work in the business unit or service being transferred. Even if the company changes its legal entity, TUPE ensures you retain your job terms.

However, TUPE does not apply if the work simply stops, or if the contract is ended and a new, unrelated hire is made. The transfer must involve a relevant change to employees’ working conditions due to the business move.

Types of Events Triggering TUPE: Business Transfer, Service Provision Change, Mergers and Acquisitions

There are three main events that trigger TUPE protections:

• Business Transfer: When the whole or part of a business moves to a new employer, such as in a sale or acquisition of a company or department.

• Service Provision Change: When a service contract moves from one provider to another, like cleaning, catering, or security services.

• Mergers and Acquisitions: When two companies combine or one company buys another, leading to a transfer of employees to the new entity.

Each event requires the new employer to take on employees with existing rights. You should expect to be informed about the transfer details and any changes affecting your job before the change happens.

Transferring Sponsored Workers Under TUPE

When a business with sponsored workers is acquired, you must manage employment and immigration rules carefully. This includes transferring workers' rights, updating sponsorship licences, and maintaining compliance with UKVI.

How TUPE Affects Sponsored Employees

TUPE protects the employment terms of sponsored workers when a business or part of it transfers to a new employer. The employment contracts move directly from the old employer (transferor) to the new employer (transferee). This means the transfer does not break the sponsored workers' continuous employment.

If the transfer involves skilled workers, their right to work and sponsorship status must stay valid. TUPE ensures their immigration status is preserved during the switch, avoiding gaps that can lead to illegal working.

However, you must check whether TUPE applies strictly, such as ensuring the business or service keeps its identity and the workforce transfers. Not all changes in business ownership trigger TUPE, so careful assessment is needed.

Responsibility of Transferor and Transferee

Before and after the transfer, both the transferor (old employer) and transferee (new employer) have duties. The transferor must provide relevant information about the sponsored workers to the transferee. This includes employment contracts and details about sponsorship licences.

The transferee must hold a valid sponsor licence before the transfer or apply for one within 20 working days after the transfer. They become responsible for continuing sponsorship duties, including confirming sponsorship acceptance to UKVI.

You must carry out right-to-work checks for the sponsored workforce to avoid illegal working. The Home Office typically grants a 60-day grace period after transfer for these checks but maintaining compliance throughout is your responsibility.

Continuity of Employment and Immigration Status

The sponsored workers’ employment continues without interruption when TUPE applies. Their continuous employment is preserved for immigration law and employment rights, which means their skilled worker visa applications or extensions remain valid.

You cannot treat the transfer as a break in employment or require workers to reapply for sponsorship. Any changes must comply with immigration rules to avoid invalidating workers’ status.

You must notify UKVI of the change in employer to keep the sponsorship licence active. Failing to update UKVI can lead to penalties for the new employer and potentially affect the sponsored workers’ lawful status in the UK.

Sponsor Licence and UKVI Notification Requirements

When a business acquisition involves sponsored workers, you must manage your sponsor licence carefully and keep UKVI fully informed. This means maintaining compliance with sponsor obligations, reporting changes on time, and submitting the correct documents.

Sponsor Licence Obligations in TUPE Transfers

When sponsored workers transfer to your business under TUPE, your sponsor licence obligations remain strict. If your company already holds a sponsor licence, you must accept responsibility for the sponsored workers transferred.

You need to ensure that all sponsored roles meet UKVI requirements, including the right job role and salary criteria. Your duty to monitor and report any relevant changes in sponsored workers’ status also continues uninterrupted.

If your current licence does not cover certain sponsorship routes related to transferred employees, you must apply to expand it. The licence cannot be transferred as part of the acquisition, so you must maintain or update your licence accordingly.

Reporting Changes Through the Sponsorship Management System

You must use the Sponsorship Management System (SMS) to report any changes affecting sponsored workers. This includes transfers of sponsorship responsibility after your business acquires another.

The SMS is the official portal where you confirm taking on responsibility for the transferred workers. All updates must be precise, including worker details and any changes to their employment conditions.

Keep your SMS submissions clear and timely. The system helps UKVI track compliance and conditions like the workers’ right to work, changes in job roles, or if a worker leaves your business.

Home Office Notification Timeframes and Documentation

After an acquisition, you must notify the Home Office within 20 working days that you have taken responsibility for the sponsored workers. This is done via the SMS account linked to your sponsor licence.

You should prepare relevant documents for this notification. These typically include confirmation of the acquisition, details of the workforce transfer, and evidence that you meet sponsorship duties.

Failure to report on time or provide the right information can lead to compliance problems or jeopardise your sponsor licence. Keep a clear record of all correspondence and notifications made to the Home Office throughout the process.

Due Diligence and Immigration Compliance in Business Acquisitions

You must carefully review immigration compliance before completing a business acquisition, especially when sponsored workers are involved. This includes checking right to work records, confirming that immigration rules have been followed, and preparing for any risks posed by illegal working or redundancy. Proper protection through warranties and indemnities is also essential.

Pre-Transfer Due Diligence for Sponsored Employees

Before the transfer, you need to conduct thorough checks on sponsored employees’ immigration status. This should cover the validity of their sponsor licences, right to work documentation, and compliance with Home Office regulations.

Review records to ensure all notifications and reports to UKVI (UK Visas and Immigration) have been made on time. Missing deadlines or non-compliance may lead to licence revocation or bans. You should also check if the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) applies. TUPE means that sponsored workers’ contracts transfer automatically, so you inherit their immigration responsibilities.

Thorough due diligence helps you identify potential issues early. This allows you to plan for the legal steps to maintain compliance after the transfer.

Warranties and Indemnities in TUPE Transfers

You should negotiate clear warranties and indemnities around immigration compliance as part of the acquisition contract. Warranties protect you by confirming the seller has complied with sponsor licence conditions and immigration laws.

Indemnities provide financial protection if unexpected immigration liabilities arise later. For example, if non-compliance is uncovered after the transfer, indemnities can cover fines or loss of licence. This risk-sharing is vital because the buyer takes on responsibility for the sponsored workers once TUPE applies.

Ensure the contract explicitly covers right to work checks, licence status, and ongoing reporting obligations to UKVI. This reduces uncertainty and helps protect your business from future immigration penalties.

Managing Risk of Illegal Working

Illegal working risks can disrupt your business and cause serious penalties. You must confirm that all transferred employees have valid legal status to work in the UK.

Check right to work documents thoroughly and retain copies to meet audit requirements. Any gaps or late checks might lead to fines or affect your sponsor licence.

You should also have plans for handling redundancy when sponsored workers cannot continue employment. This includes notifying UKVI and managing licence obligations to avoid licence breach.

Taking proactive steps to manage illegal working risks ensures smoother compliance and protects your access to skilled global workers.

Employee Rights, Consultation and Post-Transfer Considerations

When a business is acquired, your rights as an employee are protected, but important rules about informing, consulting, and dealing with any changes apply. These rules help you understand what happens to your job and how you can raise concerns.

Informing and Consulting Affected Employees

Both the old and new employers must inform you and your representatives about the transfer. This means sharing clear facts on what the transfer involves and how it will affect your role. They must also consult with you before the transfer happens, allowing you or your representatives to raise questions or concerns.

This consultation is a legal duty meant to reduce uncertainty and help resolve problems early. It applies to individual employees and recognised trade unions or elected representatives. For smaller businesses with fewer than ten employees, direct consultation might take place without representatives.

Protection Against Unfair Dismissal and Redundancy

After the transfer, you cannot be dismissed unfairly just because the business changed hands. Any dismissal linked to the transfer itself may be automatically unfair unless there is an economic, technical, or organisational reason that involves changes to the workforce.

If redundancy is necessary, the new employer must follow fair procedures. This includes offering alternative roles within the business where possible and consulting with employee representatives about selection criteria and timing.

Managing Measures and Changes Post-Transfer

The new employer can make changes to employment terms only in limited situations, such as for valid business reasons unrelated to the transfer. You should be informed and consulted about any planned measures that affect your job.

Employers must manage changes carefully to respect your existing contract and avoid actions that could be seen as unfair treatment. Emphasis should be on maintaining continuity of employment and working conditions during and after the transfer.

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