TUPE transfers and early due diligence in sponsorship workers

This episode focusses on TUPE transfers, especially concerning migrant/sponsored workers and their rights under immigration law.

Peter Olszewski, in the Employment team and Chris Harber in the Immigration team discuss the importance of early due diligence in managing these often missed responsibilities. They highlight the urgency for sellers to grasp their sponsor licence duties and for buyers to pinpoint sponsored workers even before the acquisition takes place. 

The ripple effects of a transfer can be profound, potentially forcing families to return to their home country if new employers do not assume sponsorship duties. Peter and Chris emphasize the need for empathy, proactive support, and ample communication to ease the burden and provide families with the dignity and time to plan their futures. 

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Chapters

• 1:49 TUPE and the immigration system
• 2:59 Due diligence steps seller can take
• 9:14 How HR can assist

Transcript

Peter Olszewski: 0:00

Happy New Year and welcome to the January episode of the Boyes Turner Employment Law Podcast. My name is Peter Olszewski and I'm a Solicitor in the Employment team, and today I'm standing in for my colleagues Andrew Whiteaker and Helen Goss, and I'm joined by my other colleague, Chris Harber. 

Hi, Peter, pleasure to be here.

So we have an Employment Solicitor in the room and an Immigration Solicitor. Good combination, yeah, a fantastic combination, and a great way to put a slight twist on the podcast and give our listeners a different insight into the two areas of law and how they often collide but work well together.

Peter Olszewski: 0:42

And with that in mind, a problem I'm seeing a lot lately and it's coming across my desk, Chris is businesses are involved in TUPE transfers. That could be a transfer of a business or just a service provision change, they're kind of leaving it late in my mind, or perhaps doing it the wrong way around, but they're dealing with all of the commercial and business aspects of the transfer and then at last minute, or at least when we get involved, they're having a bit of a panic like oh, we have a number of migrant workers and what happens to them, and I completely get it, because there's so many areas of law at play here. There's the commercial aspect, the buying and selling of a business, contract law, employment law, immigration law and when you put it all together it's a real mishmash of different areas which can be problematic. But I think actually a lot of these problems surrounding the immigration aspect of the transfer can be avoided by just simple due diligence. So you agree with that?

Chris Harber: 1:49

Yeah, entirely, entirely. The way that TUPE is applied in the context of the immigration system, and particularly the sponsorship route so sponsor licences and skilled workers and the global business ability is something that isn't on most people's due diligence lists when they're going through either an acquisition or a service contract that's changing hands. So it is something that gets missed an awful lot and we do see quite a lot of firefighting for want of a better phrase where a client is coming to us with a scenario after the event rather than as being part of the initial conversations earlier on in the due diligence process.

Peter Olszewski: 2:30

Great. So, in order to avoid this firefighting, or the panic, as I call it, after the event, what are the steps either an incoming or an outgoing employer can do so they can actually manage and understand what their visa or migrant duties are?

Chris Harber: 2:49

Yeah.

Chris Harber: 2:49

So we'll start from the perspective of the seller and what obligations sit with the seller and then we'll move on to the buyer, or indeed the acquirer of a service contract, which I'll explain in a bit.

Chris Harber: 2:59

So, from the seller's perspective, you may have a sponsor license and you may be sponsoring a number of workers in your business, at the point of which there is a change in your direct owner, then that triggers a number of actions that need to happen on your sponsor license.

Chris Harber: 3:16

So a sponsor license is not a business asset that sits on your balance sheet, for example. So it cannot transfer to a to a new owner in the same way that your physical assets, your plans and equipment would transfer. It's linked to the entity that it was assigned to and that's it basically. So if there is a change in your direct owner, if the buyer has already has a sponsor license, then great, they could use that. If the buyer does not have a sponsor license, then they need to apply for a sponsor license fairly quickly after the acquisition. Now, the Home Office rule on this is that where the new owner does not already have a license, they need to apply for a new license within 20 working days of the acquisition.

Peter Olszewski: 4:04

Okay, but I think a key point there is for the buyer to be doing his due diligence as to the migrant workers that may be coming in as part of the transfer.

Chris Harber: 4:13

Absolutely, absolutely. So there is a huge emphasis in the way that the transfer works, on doing as much due diligence as you possibly can pre-acquisition, because the moment that the acquisition goes through, you are locked into a quite tight time scale. You effectively have four weeks to prepare an application and depending on the size of the business, depending on the complexity of the corporate structure I mean we, we sometimes have sponsor license applications that can take two to three weeks to prepare and that's two to three weeks of solid work. I hasten to add, it can be quite an extensive process just applying for a sponsor license. So if you're only discovering that after acquisition, then you're in a little bit of a pickle really. In the instance, and because the acquisition has already happened, because TUPE has already happened, the onus is on you as the buyer. There is the, the seller's obligations effectively finished once the acquisition happens. 

The seller has to report a number of things to the home office around no longer sponsoring the individuals, but from the buyer's perspective, it is your responsibility. So the more that you can do pre-acquisition, the better. So what things can you start to do? You can very simply just identify sponsored workers. Now, that's, that's.

Chris Harber: 5:33

That may be an easy task if you're acquiring a business with only a handful of employees. A simple check of their employee headcounts and their right to work data should reveal whether anyone's sponsored or not. If you're acquiring a bigger business of several hundred people, or indeed thousand people, then interrogating their right-to-work data is a lot more challenging and you may need to engage specialists to go through and examine the right-to-work data. You may need to invest in some degree of interrogation of databases to see what information is there, but it's in regardless of the size of the company. It's an important step because if you don't go through that first step, you're never going to know who a sponsored worker is. Most well-run companies, most responsible HR departments, will know who their sponsored workers are, so they will know in themselves. They'll have their own trackers and they should be able to give that to you as a single standalone piece of work effectively, so you should be able to draw the data from there. But really that is genesis. That's the actual starting point of figuring out the due diligence.

Peter Olszewski: 6:50

Great, and that’s from the buyer’s perspective, thinking of the sellers perspective I mean, if they have migrant workers, if they can't transfer they are, they are basically stuck with the migrant worker they can't transfer and ultimately it could very likely lead to a termination of that migrant worker. 

What are the due diligence steps the seller could be taking?

Chris Harber: 7:02

So, making the, the buyer, aware as early as possible as well. So it all comes back to awareness. It all comes back to addressing this as early as possible. And it is challenging because every area of due diligence, every area, is going to be competing for priority in this area. So your commercial team will be saying no, no, my area is of particular importance. And your employment lawyers are going to be saying no, this area is of particular importance. They're all of particular importance, they're all as important as each other. You just can't leave one until later on the process.

Peter Olszewski: 7:33

I agree. Now we've talked about buyers and sellers and their obligations but concentrating on HR and the actual worker. I think to most workers, whether they're migrant or or not, a TUPE process can be really daunting. You know people worry about is their job going to be secure? If it is secure, for how long? Will terms and conditions remain the same? But I think for the migrant worker this is probably a lot more daunting and there's lots of reasons for that.

Peter Olszewski: 8:03

You know, TUPE just might not be a thing in their country of origin, that they're just not familiar with it as a concept.

Peter Olszewski: 8:10

There could be language barriers and there could be lots of other things at play here, such as family matters. So I think for HR and hopefully you'll agree but I think there's a degree of pastoral care that they need to apply here and that pastoral care can be quite simple for us to apply but really beneficial to the worker. So things such as, you know, taking the extra time with those migrant workers to explain the TUPE process, perhaps drop-in sessions, so they can come back to you and say you know, how does this affect me directly? Will it affect my visa, my family, perhaps even interpreters, just to ensure that they really get the message and they feel assured. But on that point I am aware, and you know a lot more about this than me but many migrant workers come over on a visa. They're working for an employer, and they bring a partner with them, perhaps their children, and the partner and children. They will also have visas, but they're kind of very dependent on the main worker’s visa.

Peter Olszewski: 9:14 - snippet

Now, in those situations where the employee is not going to transfer across, let's just say that the buyer doesn't have a sponsorship license and they're not going to get one. What are the implications here for the, for the worker and his family, and how can HR sort of look to deal with that and assist them? 

Chris Harber: 9:37

They can be quite significant depending on the nature of the sale. So there's a number of different ways of looking at this. If you're selling off a part of your business, so another company is acquiring a division of your company, then you can consider maybe moving that sponsored worker somewhere else in your business, for example, if the buyer is not prepared to offer sponsorship to them. Quite often it's wholesale acquisition, so a bigger company is acquiring the entirety of a smaller company. If that bigger company either doesn't have a sponsor license or is not prepared to take on sponsorship responsibility for your sponsored workers, then you are in a difficult position and difficult conversations need to be had because ultimately, if the buyer is not prepared to take on sponsorship responsibility, then you have really have no option but to end the employment of that individual at the point of acquisition.

Chris Harber: 10:34

Now, as you say, a lot of people that will move to the country will come with family members. They'll come with their partners, with their children. So it's not necessarily just the employee that is at risk there, it's their partner, potentially their employment's, it's their children, potentially their schooling. And in many instances, certainly under the skilled worker routes, families move to the UK and a big reason for moving to come and work in the UK is not necessarily the job itself but the future prospects of living on a permanent basis in the UK, so using the education system, access to our universities, all things like this. So going through an acquisition can have really grave consequences on the future ability of an individual and working with it. And so when you go through this process with individuals and you look at the impact on them, again it goes back to the points I'm saying before about identifying these as early as possible, because it may be that the buyer is able to show a certain degree of flexibility and say well, in this particular instance, because of the wider impact, we are happy to accept a particular individual. It may be that you need to start helping that individual transition out of the business and give them as much time as possible.

Chris Harber: 11:51

So if the buyer is not prepared to take on sponsorship responsibility for them, from a moral perspective, you as the seller, you as the existing sponsor, I do think that there is a certain degree of obligation on you to make sure that that the sponsored worker has as much time as possible to think about what their future intentions are.

Chris Harber: 12:14

So, for example, is it possible to switch around their visas so that their partner becomes the skilled worker? If they're working in a skilled occupation, are they able to apply to move to another company that's willing to offer sponsorship to them to allow them to remain in the UK If they want to return back to their home country, giving them as much time as possible to plan what that transition looks like, moving back to a job back in their home country? Ultimately, again with the transfer, once the transfer has happened, you are locked into timelines. So when the transfer happens and the TUPE process happens for anyone that does not transfer over because the buyer is not willing to take on sponsorship responsibility, you are then in a phase where you need to notify the home office that you're no longer sponsoring that worker and you then enter the curtailment period. So the individual has 60 days in which to either apply to another company in the UK, vary their leave in the UK or indeed make provisions for their return to their home country.

Peter Olszewski: 13:16

So the consequences can be really, really grave with the particular individuals and their families. 

Peter Olszewski: 13:29

Yeah, no, I agree, and again, I think it all goes back to the same point, or the same points even. You know, preparation is key, yeah, so trying to, you know, identify all of these various issues as early as possible, not just because of the time limits but, again, as said, the pastoral care the more time we give the employee a chance to plan for this, the better it's going to be for them, and it could even result in in the situation being changed where, actually, we do find a way to either keep them or utilize them elsewhere.

Peter Olszewski: 13:53

Now, ideally, in all cases, the worker will transfer across, the new employer will have a sponsorship license and their employment will continue, and they will be happy in the UK. There are going to be situations, though, though, where, as we said, that just doesn't happen, and, very sadly, it could result in the worker and his family having to return back home, back to their country of origin. Now, legally my understanding, and we've had conversations about this in the past but legally, other than you know, complying with our home office reporting obligations, such as their employment's coming to an end, ending the visa and and ending their employment, I don't believe there's a great deal. Legally, we, as a company, we have to do for them. But we were discussing earlier then there might be things that we want to do on a moral level or to try and assist them because ultimately, you know, it was a joint decision.

Peter Olszewski: 14:52

We decided to recruit. We decided to recruit them. Um, we've usually helped them in their relocation. We've helped them with sponsorship fees, and this was all done with great intentions. We had a plan to work with them, you know, for the future. And then, for whatever reason, the business has changed or the contract has moved to a new provider and we don't really, if we can help it once, we just basically dumping them and leaving them on their own. So what are the things we could perhaps look to do morally to assist them, you know, in the event that we are going to end the visa and end their employment?

Chris Harber: 15:27

that's right. So, like you said there are, there are only very limited legal requirements on you as the seller, so obviously you need to notify the home office that you're no longer sponsoring this individual and that's a fairly quick process on the sponsor management system. However, from a moral perspective, there are I mean, the world's, your oyster really in terms of what you want to do to assist with individuals, and it comes down to a decision on cost. It's effectively how far you go. So there are fairly straightforward things that you can start to do. There are things such as having the conversation as early as possible. Again, going back to, as we've always said through this is having that conversation as early as possible in the process and identifying it nice and early. Offering with some assistance, possibly financial assistance with relocation back home so flight tickets, relocation of personal possessions, etc.

Chris Harber: 16:18

So there is a certain degree where you might want to say that we feel there's a moral obligation to make a financial contribution to your transfer back home. You could go as far as saying that we feel really bad what's happened to you, and this was never our intention when we recruited you. We feel bad because of all the wider impacts and so we want to help you find another job in the UK. So, using your contacts, using recruitment consultants, helping them look for another job, helping them prepare for the interview, for example, helping with coaching around interviewing techniques, cv skills and things like that. There's a lot of little things that you can do as a HR professional that you will know in yourself because of your own experience and qualifications and expertise that you can help them in terms of preparing them to move to another company in the UK.

Chris Harber: 17:10

Now, as I said, all of these are moral dilemmas that you need to confront. There's nothing in the book, apart from Notifying the Home Office, that says you have to do these things. But for many employers who are good, sensible, morally grounded employers, I know I would feel it If I invested a lot of time and money into bringing someone to the UK to work for me. If, in two years' time, I'm acquired by a bigger company maybe not necessarily through any real desire of my own I would feel a personal obligation to that individual to help make sure that the impact on them is as minimal as possible.

Peter Olszewski: 17:49

Now I agree.

Peter Olszewski: 17:51

So I mean, I think that the absolute key takeaways from this conversation is you know, we don't need to get ourselves in these firefighting positions. Planning is absolutely key and, you know, good forward planning should avoid a lot of these complications. Key, and you know, good forward planning should avoid a lot of these complications. But I think really importantly, and especially for our HR personnel that are listening in, is there's an absolute human element to this the, the worker themselves. They are going to be, in in many cases, panicked by the whole situation. The, the, the visa or the migrant worker especially, will have that, that concern and on the human level, it's just doing what we can to reassure them. Let them know that we are a good employer, a caring employer, and we want to work with them through this to obviously try and get them across and to keep them in the UK. But where that's not possible, really let them know that we're there for them and, within means and financial constraints as well, we will do everything we can to assist them in that transition well.

Peter Olszewski: 18:53

Thank you, Chris. I think that was a really helpful conversation. I've certainly learned from it as an employment lawyer. Hopefully our listeners would have learned from it as well and, as I say, key to key takeaways just plan and prepare and prepare and do all you can for your employees. 

Thank you, Chris, for joining me.

Absolute pleasure, thanks, Peter. 

Thanks for listening to the Employment Law Podcast. If you're interested in checking out more episodes in this series, then go to the Boys Turner website. You can also follow or subscribe wherever you listen to your podcasts. Goodbye.