27 July 2026

(First published in Global Mobility Lawyer)

A merger, acquisition, or other change in ownership of a UK business with international workers will necessarily entail consideration of immigration compliance.

A UK business with international employees is likely to rely on a sponsor licence to employ foreign talent. Corporate changes, such as mergers and acquisitions, potentially affect not only the licence itself, but also the status of every worker sponsored under that licence.

Acquiring businesses should also have regard to right-to-work check obligations relating to the target business’ workers, bearing in mind the imminent changes to the right-to-work regime.

If the business to be acquired relies on a sponsor licence to employ international talent, then it will need a new licence when there is a change in direct owner. Other organisational changes – such as changes key personnel on the licence or a change of address, for instance – must be reported on the business’ Sponsor Management System (SMS) to remain compliant.

The deadlines for reporting changes in ownership and submitting sponsor licence applications are short. These requirements should be considered during transaction planning and due diligence, particularly where the transaction may result in changes to a business’ ownership, directors, key personnel, or other individuals exercising significant control. Failure to act within the required timescales may affect the business’ ability to continue employing sponsored workers.

The Home Office now routinely cross-checks the details on the sponsor licence with Companies House records, so any discrepancies are likely to be picked up quickly. At the same time, it has lowered the bar for revoking sponsor licences and may now do so if it merely has reasonable grounds to suspect a breach.

The Home Office’s sharpening focus on compliance and enforcement means parties in mergers and acquisitions can’t afford to put sponsor licence changes on the back burner. Failure to make the necessary reports or applications within the specified timeframe may result in a sponsor licence being downgraded, suspended, or revoked and migrants’ immigration permissions being cancelled.

Key considerations and timelines for taking action

New licence applications

A sponsor licence is non-transferable. Organisational changes must generally be reported within 20 working days. Where a transaction results in a direct change in ownership, a new sponsor licence application is usually required.

Where there is a change in direct ownership of a sponsor – for example, if it is sold as a going concern, or a share sale results in the controlling number of shares being transferred to a new owner – the existing sponsor licence will either be revoked or, if sponsored workers have transferred to another sponsor’s licence, made dormant.

Reporting changes to the organisation

Businesses that hold a sponsor licence must also report organisational changes on their SMS account within 20 working days of a merger, takeover, or other significant structural changes.

Changes to the organisation’s details (name, address, etc), key personnel, the organisation’s structure, or the nature of the business will often require reporting through the SMS.

New linked entities or “branches”

It may be prudent to consider applying for separate licences for new related UK branches, particularly if these have separate HR functions or compliance processes. Failure to comply with sponsorship duties by one entity on a licence may expose the wider licence to Home Office scrutiny, potentially affecting all sponsored workers across the organisation.

Sponsored workers

 It is an essential part of the due diligence process prior to completion of a merger or acquisition to ensure that any sponsored workers who will be transferred to a business have had their Certificates of Sponsorship (CoS) correctly assigned.

If a sponsored worker’s employment circumstances change because of a merger or acquisition – for example, if their salary is less than on their CoS or there are significant changes to the terms of their employment – these changes must be reported within ten working days of the change taking effect.

 Right-to-work checks

Employers who acquire staff should undertake right to work checks on all transferred personnel within 60 days of the transfer. This is important because, although TUPE regulations specify that the buyer can benefit from any excuse against illegal working established by the seller, if the seller failed to adequately carry out right to work checks the buyer would be liable for any ensuing civil penalties.

The maximum civil penalty for engaging illegal workers is currently set at a staggering maximum £60,000 per worker.

New right to work regulations extending compliance obligations beyond traditional employment relationships will come into force on 1 October 2026. Acquiring businesses should assess whether any subcontractor, contingent labour, or flexible workforce arrangements within the target business may be affected by the new requirements. They should also review supplier and contractor arrangements and consider whether contractual documentation requires updating before the new regime takes effect (subject to employment law advice).

Top tips for business continuity and retaining foreign talent

• Sponsor licence review – evaluate the impact of the transaction on the licence. Consider the required changes to an existing licence, bearing in mind that it can take months for the Home Office to process some changes such as new work sites or branches;
• Right-to-work checks – conduct an audit on the workforce to identify transferred workers who are subject to immigration control and complete right work checks within 60 days of the transaction completing; prepare for expanded right to work requirements coming into force on 1 October 2026;
• Due diligence of sponsored workers – assess the details on CoS to ensure they were correctly assigned and identify any reporting requirements;
• Changes to a sponsored worker’s role – will the transaction result in changes to a sponsored worker’s role, triggering the need for reporting and/or a change of employment application;
• Timing – strategically plan the timing of actions. Applicants cannot travel while a change of employment application is being processed so be mindful of those frequent travellers and carve out time for this.