Sponsor Licences and Changes in Company Ownership

Sponsor licences are now generally indefinite – but that does not mean they are permanent

Why ownership changes matter for sponsor licence holders

The key principle: a sponsor licence is not transferable

The starting point is simple: a sponsor licence cannot simply be transferred from one owner to another. 

If there is a relevant change, the sponsor must report it to UKVI through the Sponsorship Management System, usually within 20 working days of the change taking place. 

UKVI will then consider what has changed and what action is required. Depending on the circumstances, this may involve the existing sponsor reporting the change; the new organisation applying for a sponsor licence; sponsored workers moving to another sponsor; the old licence being made dormant, being surrendered or revoked. 

The correct action depends on the type of transaction and whether there has been a change in direct ownership.

What is a change in direct ownership?

TUPE transfers and sponsor licences

Does TUPE remove the need to consider UKVI requirements?

A common mistake is assuming that because TUPE protects the employment relationship, immigration compliance is automatically protected as well. 

That is not the case. 

TUPE may transfer the employment contract, but it does not transfer the sponsor licence. 

The new employer still needs to consider the type of licence held and whether a new licence is required, whether there are any changes to the roles being sponsored and what reports need to be made via the SMS. 

For this reason, TUPE and sponsor licence planning should be handled together.  

Employment law advice and immigration compliance advice should not be treated as separate afterthoughts. 

Complete takeover or merger

Where a sponsor organisation is completely taken over or merged into another organisation, and sponsored workers move to the new organisation, the existing sponsor must report the change to UKVI within 20 working days. 

The report should include details of the sponsored workers who are moving to the new organisation. If any sponsored workers are not moving to the new sponsor, this must also be reported because their permission may be affected. 

The new organisation must then consider whether it already has the correct sponsor licence. If it does, it must report that it has accepted sponsorship responsibility for the workers. If it does not, it must apply for the appropriate sponsor licence within the required period. The previous sponsor’s licence may then be made dormant where appropriate. 

Partial takeover, de-merger or sale of part of a business

A partial takeover or de-merger can be more complex. 

Some sponsored workers may move to the new organisation while others remain with the existing sponsor. In that situation, both organisations may have sponsor duties. 

The existing sponsor may need to: 

• report which sponsored workers are transferring; 

• continue sponsoring and reporting on any workers who remain with it; 

• consider whether its CoS allocation should be reduced; and 

• decide whether it still needs the licence. 

The new sponsor may need to: 

• apply for a sponsor licence if it does not already hold the correct licence; 

• report that it has accepted full sponsorship responsibility; 

• request an increase in CoS allocation if needed; and 

• report future changes affecting transferred sponsored workers. 

Where the new sponsor cannot see the transferred workers on its SMS account, it may still need to report relevant changes to UKVI by email. The duty to report does not disappear simply because the worker does not appear on the new sponsor’s SMS in the usual way. 

Do internal group restructures affect a sponsor licence?

Internal restructures can also trigger sponsor licence issues. 

Businesses often assume that no UKVI action is needed where the ultimate ownership remains the same. That assumption can be dangerous. 

The key question is not only whether the ultimate owner has changed. The more important question may be whether the direct owner of the sponsor licence holder has changed. 

For example: 

• If the sponsor licence holder remains directly owned by the same immediate parent, a new licence may not be required, although the change may still need to be reported. 

• If the sponsor licence holder is transferred to a new immediate parent company, this may be a change in direct ownership and a new sponsor licence may be required. 

• If sponsorship responsibility is moved to a parent company while the worker’s actual employer remains the same, UKVI may allow this in some circumstances, but the sponsor must still obtain UKVI approval and demonstrate that the parent company can properly discharge sponsor duties. 

This is why corporate restructuring should always include a sponsor licence impact assessment. 

What happens if the new owner does not have a sponsor licence?

If sponsored workers transfer to a new employer and the new employer does not have the correct sponsor licence, the new employer will usually need to apply for one within 20 working days of the transfer or change.

This is a strict and important deadline. UKVI will assess whether the new sponsor is genuine, suitable and capable of meeting its sponsor duties. This may include reviewing HR systems, right to work processes, payroll arrangements, reporting structures, key personnel and compliance history. 

If UKVI refuses the application, the sponsored workers’ immigration permission may be affected. Businesses should therefore consider sponsor licence requirements before completing any acquisition involving sponsored workers.

Conclusion

Changes in company ownership can have a major impact on a UKVI sponsor licence. Although sponsor licences are now generally indefinite, employers must still meet ongoing compliance duties. A sponsor licence also cannot transfer to a new owner.

Mergers, acquisitions, share sales, TUPE transfers or group restructures can all trigger reporting duties. In some cases, the new owner must apply for a brand-new sponsor licence. Whether this is necessary often depends on whether there has been a change in direct ownership. 

The most important issue is often whether there has been a change in direct ownership. If there has, the existing licence may be revoked or made dormant, and the new owner may need to apply for a new licence to continue employing sponsored workers. 

Businesses that rely on sponsored workers should treat immigration compliance as part of their transaction planning from the outset. Early advice, proper due diligence and timely UKVI reporting can protect both the business and its sponsored workforce.