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Buying or Selling a Business
When you buy a business you may also take on responsibility for its employees under the Transfer of Undertakings (Protection of Employment) Regulations (‘TUPE’).
This means that you could automatically acquire new responsibilities as the employer of people from outside the European Economic Area. You may need to conduct additional right-to-work checks, or become a licensed Sponsor, in order to continue their employment lawfully.
As an employer you should ensure that you are familiar with your duties to check your employees' right to work in the UK as a matter of course. However, it is important to remember these duties in any business transfer negotiations so that you can allocate any risks appropriately between the parties, and make sure that you do not receive any surprises after the transfer date.
After a TUPE transfer, a new employer has 28 days in which to carry out right-to-work checks. However, as part of due diligence the seller should be asked for a full list of employees who will transfer to you, including records of their:
- Nationality and/or basis of stay in the UK
- Start date
- Right-to-work checks conducted
You can then take your own advice on any possible problems, and negotiate any indemnities that might be required.
If you are a licensed sponsor under the Points-Based System you must use the Sponsor Management System to inform the Home Office if you buy or take over another business, or if you sell your business as a going concern or by sale of controlling stake.
It is important to remember that if you are a licensed sponsor, you have an ongoing duty of good practice in ensuring that you do not employ anyone who does not have a right to work in the UK.
If you are not a licensed sponsor and you buy or take over a busines that is licensed to sponsor non-EEA employees, you must apply to the Home Office to become a sponsor within 20 working days. If you do not apply, or if the application fails, then sponsored employees may have their leave curtailed.
We provide specialist immigration advice in business transfers, so that you are fully aware of your responsibilities under immigration law.