TUPE Transfers and Sponsored Workers: The Immigration Risk Most Employers Miss
When a business acquisition or service transfer is underway, legal teams focus on warranties and indemnities, HR prepares for consultation, and finance maps the headcount. One issue routinely falls through the gap — and it carries penalties of up to £60,000 per worker.
If any transferring employees hold a Skilled Worker visa or another sponsored route, the acquiring business faces strict immigration obligations outside the scope of TUPE entirely. Most employers are unaware until the 20-working-day window has already closed.
The Core Misunderstanding
TUPE — the Transfer of Undertakings (Protection of Employment) Regulations 2006 — preserves employees’ terms and conditions when a business or service changes hands. What it does not do is transfer the sponsor licence.
A sponsor licence is granted by the Home Office to a specific legal entity. It cannot be transferred, inherited, or assumed by a new employer. When sponsored workers move under TUPE, their employment contracts carry across — but the new employer’s right to sponsor them lawfully does not follow automatically. That creates an urgent compliance obligation most acquiring businesses discover only after completion.
The 20-Working-Day Rule
Where the acquiring business does not already hold a sponsor licence covering the relevant route, the Home Office requires it to apply for a new licence — or extend the scope of an existing one — within 20 working days of the TUPE transfer date. This deadline is absolute.
If the transferee already holds an appropriate licence, it must still notify the Home Office via the Sponsorship Management System (SMS) and formally confirm acceptance of responsibility for each worker within the same timeframe. Sponsored employees are not passively absorbed — the new employer must act. Miss the deadline and the Home Office may curtail those workers’ permission to remain in the UK.
The 60-Day Grace Period: What It Does Not Cover
When leave is curtailed for a sponsored worker, the Home Office ordinarily allows a 60-calendar-day period to find a new sponsor, apply to vary leave, or prepare to depart the UK.
This is a concession for the individual — not a compliance remedy for the employer. It does not permit the worker to continue working for a business that failed to secure a licence. Sponsorship breaks on the day of transfer if no valid arrangement is in place. If the Home Office determines the worker was complicit, curtailment can be immediate.
Unlawful Employment and the Financial Stakes
Employing someone without the right to work in the UK attracts a civil penalty of up to £45,000 per worker for a first breach, or £60,000 for a repeat breach within three years — figures that tripled in February 2024.
If the acquiring business holds no sponsor licence when the transfer completes, sponsored workers are unlawfully employed from day one. There is no automatic statutory excuse simply because employment transferred under TUPE. The obligation to hold a valid licence and verify the right to work falls on the new employer the moment the transfer takes effect.
A civil penalty also typically triggers a Home Office review of any existing sponsor licence, which can result in suspension or revocation. Employer penalty data is published quarterly. Reputational damage can far outlast the fine itself.
Certificates of Sponsorship After a Transfer
A Certificate of Sponsorship (CoS) is tied to the licence that assigned it. Where roles, duties, SOC codes, and salary remain materially unchanged, a fresh CoS need not be assigned — provided the new employer holds a valid licence and has formally accepted responsibility through the SMS. Where anything material has changed, a new CoS must be assigned and the worker may need a change of employment application. Acquisitions involving restructuring frequently alter roles; any such change triggers a fresh sponsorship requirement that must be managed within Home Office timescales.
Why Immigration Due Diligence Must Happen Before Completion
Every acquisition or outsourcing/insourcing exercise should include an immigration audit as standard pre-transaction due diligence — not an afterthought. Under TUPE Regulation 11, the transferor must provide employee liability information, but that is only the starting point. The acquiring business needs clear answers before signing: How many employees hold a sponsored visa? When does their leave expire? What SOC codes apply? Does the acquirer already hold a licence covering those routes? If the answers are unclear before completion, the risk transfers with the workforce.
A Realistic Scenario
Company A is acquired by Company B through an asset purchase. Thirty-eight employees transfer, six holding Skilled Worker visas. Company B’s HR team has handled the TUPE consultation. Nobody has flagged the immigration position.
Company B has never held a sponsor licence. On Monday morning, those six workers are unlawfully employed. A licence application takes roughly eight weeks — far beyond the 20-working-day deadline. Their leave may be curtailed. Company B faces civil penalties of up to £270,000 for a first breach, plus potential criminal exposure. This sequence of events is not unusual.
Instruct Immigration Lawyers Before the Transfer Completes
Every risk described in this article is avoidable. What makes it dangerous is that immigration law and employment law are treated as separate workstreams — and the collision point goes unmanaged until it is too late to act.
If your business is involved in a TUPE transfer with sponsored migrant employees — whether as the acquiring entity, the seller, or an HR or in-house legal team advising on the deal — instruct NA Law Solicitors before the transfer completes. NA Law is an SRA regulated firm advising businesses on sponsor licence compliance, immigration due diligence, and the immigration dimensions of corporate transactions.
Contact NA Law Solicitors today to arrange a pre-transaction immigration audit.
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