Although it may not be top of the list of concerns when a company goes into administration, there are important immigration issues to consider if the company holds a sponsor licence. There are action points for both the company and its insolvency practitioner, with tight timescales to make notifications to the Home Office. Failure to meet these immigration obligations could mean that sponsored employees lose their right to work in the UK.
Any buyer acquiring a company in administration should also check if the company holds a sponsor licence and if there are any sponsored workers. If so, the buyer should take immigration advice as soon as possible to ensure it is possible to continue employing the sponsored workers.
What are the company’s obligations if it holds a sponsor licence and is in administration?
Where an entity holds a sponsor licence, it has the following obligations:
- To advise the administrator or administrative receiver that the company holds a sponsor licence as soon as possible, and
- To inform the Home Office (usually via the sponsorship management system) within 20 working days that the company has gone into administration. Failure to do so could result in the revocation of the sponsor licence.
In addition, the insolvency practitioner (who has been appointed administrator or administrative receiver) must be appointed as the new authorising officer (the role with overall responsibility for the sponsor licence).
Top tips for insolvency practitioners
- Before accepting instructions or immediately on appointment, check whether the entity holds a sponsor licence. You can check the current list of registered sponsors using the link below (but also check directly with the company directors, as the sponsor licence may be held in a different trading name or by another group company) –https://www.gov.uk/government/publications/register-of-licensed-sponsors-workers
- Check whether the entity can access the online sponsorship management system – i.e. do they have a current level 1 user who can log into the sponsor licence?
- Find out who the authorising officer is. The administrator will need to be appointed as the new authorising officer.
- If anyone is being dismissed, check if they are key personnel on the licence and take advice as new key personnel will need to be appointed.
- Check whether there are any workers currently sponsored under the sponsor licence.
- If any sponsored workers are being dismissed, take advice as notifications need to be made to the Home Office.
- If the assets of the company in administration are being acquired, we recommend taking advice, especially if there are any sponsored workers. Various notifications will usually need to be made to the Home Office.
- The company in administration will also need to consider whether it wishes to or whether it must surrender its licence, for example if there are no longer any sponsored workers or if the company ceases trading.
Top tips for those acquiring a company in administration
- Check if the company has a sponsor licence and if there are any sponsored workers.
- If a buyer is acquiring the assets of the company in administration we recommend the buyer takes advice at an early stage – especially if any sponsored workers are transferring to the buyer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (known as TUPE). The buyer will need to make various notifications to the Home Office and, if the buyer does not already have a sponsor licence, it is likely it will need to apply for one within 20 working days of the transfer.
- If there is any proposed restructuring (including mergers, de-mergers, takeovers) it is also likely to impact the sponsor licence, so advice should be sought as soon as possible on what action needs to be taken. This could involve applying for a new sponsor licence even where, for example, a holding company becomes the new immediate parent company of the entity holding a sponsor licence. Again, there is often a tight deadline of 20 working days to take action so early input is critical here.
- If there has been a TUPE transfer, right to work checks should be undertaken in relation to the transferring employees within 60 days of the transfer to establish a statutory excuse against a civil penalty and to ensure all of the transferring employees have the right to work in the UK.
This can be a complex area so we recommend seeking advice as soon as possible to ensure that all immigration obligations are met and any sponsored workers can continue to work in the UK.