Mergers & acquisitions can increase skills shortages

Mergers & acquisitions

On 17 January 2022 our managing director Jonathan Beech shared his insights in CEO digital on how mergers and acquisitions can increase skills shortages in some enterprises and how they can be avoided.

Read the full article here.

Last year there were a record breaking number of mergers and acquisitions, especially in the tech, media and telecom (TMT) sector. With numerous tech companies still being bought out or merged, many IT businesses have shifted their focus on valuations and sales contracts and are forgetting to exercise due diligence regarding the compliance duties associated with their sponsor licence.

Non-compliance with record keeping and reporting duties can further increase tech skills shortages by preventing overseas talent from joining or continuing to work for the organisation due to the revocation of the sponsor licence. Illegal working penalties of up to £20,000 per employee could also be incurred by the employer depending on the scenario.

During the research conducted by Migrate UK it has been found that 93% out of 1,000 UK companies are in danger of having their sponsor licence revoked. As a result of Brexit from 1 January 2021 organisations need to have a sponsor licence to employ most workers from outside the UK. Therefore, it is crucial for sponsor licence holders to continue to be compliant.

Revoked licences

When a sponsor licence is revoked not only can the business no longer sponsor new workers or continue to employ current sponsored workers but it also damages the organisation’s reputation as an employer. Details of the revocation are made publicly available, the organisation gets removed from the register of sponsors and gets barred from reapplying for another licence for 12 months from the date of revocation.

Sponsored workers employed by the organisation would have their leave to remain in the UK curtailed at the date of revocation. They will have 60 calendar days to leave the UK, find a new sponsor or apply for a new visa under a different category provided they are eligible. If a sponsored worker was asked to leave the UK and failed to do so within 60 days, they could be detained and removed from the UK and could be banned from re-entering in the future.

Sponsor licence holders undergoing mergers and acquisitions have a duty to report any changes to the organisation as a result. These can include changes to company name, employee numbers, address and share ownership. Businesses should be aware that depending on the change of ratio in share ownership they me be required to apply for a new licence.

Compliance guidance

From Migrate UK’s research it also transpired that only a third of companies out of those holding a Tier 2/Tier 5 licence knew what documents should be kept on file for sponsored workers and 93% were not performing the required reporting duties.

Earlier during the pandemic the Home Office temporarily suspended compliance audits. However, spot check audits can still occur at a pre-licence stage of the application, at any time during the 4-year period of a licence or during the renewal process of a licence. Checks can also be initiated online by requesting documents to be provided within a set deadline.

UKVI use a range of systems to monitor compliance, including digital checks via HMRC and Companies House. If information held on the sponsor licence does not match with HMRC and Companies House records it can trigger a compliance visit.

If you are unsure about the latest legislation and sponsor licence duties sign up to our HR Department Training by getting in touch with us.

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