This is part of a series on how to manage the employment law issues associated with hiring and managing migrant workers. For more information on the tensions between employment law and immigration law, including links to our other content, see The employment and immigration intersection.

TUPE

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) safeguard employee rights in the transfer of a business. It switches staff and liabilities from the transferor (the employees’ employer before the transfer) to the transferee (the entity that acquires the business or takes over providing services). In other words, the transferee steps into the shoes of the transferor and absorbs all the rights and obligations in relation to the transferring employees.

Most employment lawyers are familiar with TUPE. However, the ways in which TUPE interacts with immigration law are less well understood. Consequently, it is not uncommon to overlook a couple of important immigration-related issues in corporate transactions.

Post-transfer right to work checks

Under TUPE, right to work (RTW) checks that were done by the seller of the transferring business are deemed to have been done by the buyer. In other words, the buyer will get the benefit of a statutory excuse that the seller obtained in relation to a transferring illegal worker. The flip side of this is that, if the seller did not do proper RTW checks, and so did not obtain a statutory excuse for a transferring illegal worker, the buyer will potentially be liable for a civil penalty in respect of that illegal worker.

For this reason, the buyer would be well advised to undertake due diligence on whether the seller has done compliant RTW checks. The transaction paperwork (e.g. the asset purchase agreement) should address the issue in the form of appropriate warranties and/or indemnities. 

Then, after the transfer, the buyer should ensure that it conducts fresh RTW checks on those transferred employees. There is a grace period of 60 days from the transfer date to do so.

If the TUPE transfer involves the transfer of sponsored employees, both the transferor and the transferee must notify the Home Office of the change of sponsor. They must do so within a relatively short period: 20 working days from the date of the transfer. 

If the transferee does not already hold a sponsor licence of its own, it must apply for one from the Home Office and prepare to assume responsibility for the sponsorship of those employees. The window for applying is, again, 20 working days from the date of the transfer. 

A failure to make an application will likely mean that the Home Office cancels the sponsored employees’ immigration permission. Both parties to the TUPE transfer must therefore be alive to their post-completion obligations. The transaction agreements should be drafted accordingly.

If a sponsored employee’s duties and responsibilities will change, such that the transfer is outside the scope of TUPE, this would usually require a fresh ‘change of employment’ application to be made to authorise them to start working in the new position.

For further guidance, please contact Andrew Osborne, Tom McEvoy or Despina Stoimenidi.