Consolidation in the services sector is gathering pace, particularly in professional services, with independently owned firms seeking to join private equity-backed businesses and networks. Whilst deals are driven by price, clients and people, the immigration status of key employees is often overlooked – and that can cause challenges for firms with an international workforce and sponsored employees.
It often starts with the mistaken belief that a sponsor licence held by one firm will automatically transfer to the acquiring firm, with sponsored staff able to seamlessly continue working for the new combined organisation
The TUPE rules do mean that, depending on how the acquisition is structured, staff will automatically takentransfer to the new business alongside all HR obligations including immigration compliance. But it does not automatically mean that employers can simply carry on as if nothing has changed.
If the acquiring business has a sponsor licence, it will be able to continue to employ sponsored staff by simply notifying the Home Office confirming that it has taken responsibility for those sponsored employees.
But it is important that the roles of sponsored employees stay the same. If the acquirer restructures the team, changes job descriptions or pay grades, it may find the roles no longer fit the original sponsored role. This could trigger the need for a new certificate of sponsorship and visa applications for the affected employees – and the costs associated with that.
If the acquiring business does not have a sponsor licence, it must apply for one within 20 working days of the deal completing. If successful, the business can continue to employ those sponsored employees. If it does not, the individual worker’s permission to remain in the UK risks being cancelled.
It is also important to note that the acquired business has a responsibility to inform the Home Office of its changed status and the transfer of sponsored employees to the new business.
These issues often only come to light once the deal is agreed and integration is underway. As HR systems change, responsibilities for sponsor licence compliance can fall between the cracks. Additionally, and often overlooked, is the need for right to work checks on all employees, not just those working in the UK via a sponsor licence. And with the clock ticking from the moment the deal completes, timing matters.
It is not uncommon for the Home Office to carry out compliance visits following a merger or acquisition. If the Home Office finds fault, such as a failure to notify, it can suspend or revoke a sponsor licence and that can create real challenges for both the business and valued employees. Where employees are found to be working illegally, employers can face fines of up to £45,000 per illegal employee for the first breach, rising to £60,000 per illegal employee for repeat breaches.
Post-acquisition integration is critical to the success of any deal, and immigration compliance can throw a costly spanner in the works. The best time to identify these issues is at the due diligence stage, meaning integration can proceed smoothly with a focus on realising the benefits of the deal.
Contact our Immigration Lawyer
Our Immigration lawyer Shareena Rahman is widely respected for her proven expertise in representing both individuals and corporate clients, delivering consistently successful outcomes.
Please email immigration@bishopandsewell.co.uk or contact us on 020 7631 4141 and ask to speak Shareena Rahman.
The above is accurate as at 01 October 2026.
