Our regular round-up of recent and forthcoming developments in law and practice for in-house counsel.

  • Ukraine conflict – latest update on trade and financial sanctions and details of the new Economic Crime (Transparency and Enforcement) Act and the Register of Overseas Entities

  • Beyond Brexit – still work in progress. Our new Beyond Brexit knowledge portal discusses post-Brexit law reform proposals and other unfinished business

  • Data Protection, IP and Technology – international data transfer agreements, the aftermath of Lloyd v Google, the EU's approach to cookies, a new proposal for an EU Data Act and the progress of the Online Safety Bill

  • Consumer Protection – a tougher regulatory environment for consumer-facing businesses

  • Competition – trends in post-Brexit merger control and far-reaching reform proposals for the UK's competition regime

  • UK cases round up – the latest cases affecting UK-based commercial and M&A-related contracts

  • Capital Markets – we look ahead to a radical shake-up of the UK listing regime following our departure from the EU and discuss the reform of LIBOR for lending

  • Corporate Taxation – the new tax privileged UK regime for qualifying asset holding companies (QAHCs); the impact of the EU's draft shell entity directive and the OECD's BEPS scheme on UK businesses

  • Personal Taxation and Incentives – the Protocol on Social Security Co-ordination, news on taxation of contractors and a business levy to tackle the shortfall in healthcare funding

  • Employment Law – fire and rehire, post-Brexit immigration, ethical workplace issues and possible reform of non-compete covenants
  • UK Pensions – new requirements on the way on funding defined benefit pension schemes, legislation now in force to help ensure scheme benefits are not prejudiced by corporate activity and news on pensions dashboards

  • Real Estate – measures to deal with post-Covid rent arrears and improve building safety in the wake of the Grenfell fire, the impact of reforms in the residential market and planning regime

  • ESG - finally, later this month we will publish a separate ESG Newsletter reporting on our new ESG timeline, the EU directive on corporate sustainability due diligence, mandatory climate-related disclosures, the Environment Act, greenwashing in relation to consumer products, the CMA's view on "sustainability agreements" and measures to promote ethical practices in the workplace
Ukraine conflict

International sanctions update

Following the Russian invasion of Ukraine, the UK, EU and US imposed a coordinated package of trade and financial sanctions on Russia. We continue to monitor and report on developments as the situation unfold. Our most recent updates can be found on our Export Control and Sanctions knowledge hub. Further updates will follow.

Please also see our articles below under Company Law and M&A on the introduction of two new regimes to (i) require disclosure of UK real estate ownership by overseas entities and (ii) improve the quality and integrity of information about corporate ownership in the UK.


ESG and sustainability continues to be a priority for regulators and policy makers, and dealing with the resulting wave of new regulation and the associated legal and reputational risks as well as opportunities remains at the top of the agenda for many businesses.

Our ESG Newsletter to be published later this month contains a round-up of the latest news and views across the broad spectrum of ESG and sustainability issues, including:

  • the launch of our new, online ESG timeline, which covers UK and EU regulatory and legislative developments in the ESG space, including new requirements coming down the line as well as those implemented in the last 12 months

  • the latest on the roll-out of mandatory climate-related disclosure requirements for UK corporates, alternative asset managers and pension funds

  • news on the EU's proposed Corporate Sustainability Due Diligence Directive

  • an update on ESG regulation for alternative asset managers

  • an overview of the recently enacted Environment Act 2021

  • developments in the CMA investigation into greenwashing in relation to the marketing of consumer products

  • analysis of the CMA's view on the role of competition law in furthering environmental and wider sustainability goals

  • commentary on measures to promote an ethical workplace and

  • news of ESG-related events and resources from Travers Smith.

If you wish to subscribe to the ESG Newsletter going forward, please enter your details directly below. Follow our Spotlight on ESG LinkedIn page for regular updates.

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Beyond Brexit

For comprehensive coverage of issues related to the UK's withdrawal from the EU, see our new Beyond Brexit suite of materials. For a high-level overview, read on. 

Brexit: 1 year on

Earlier this year, we created a series of videos looking at the impact of Brexit, one year after the end of the transition period. Topics include regulatory reform, trade agreements, business travel, impact on goods and retained EU law.

Is Brexit finally done?

The UK has moved to a new trading relationship with the EU based on the UK-EU Trade and Cooperation Agreement (TCA). However, as the TCA was negotiated under very tight deadlines, there was a certain amount of "unfinished business." Progress on these issues in recent months has been somewhat mixed. See the textbox for details of the current status.

Brexit – unfinished business
  • Personal data: On the positive side, in June 2021, the European Commission adopted an adequacy decision in respect of the UK; this was important in ensuring that EEA data controllers could continue with existing arrangements to transfer personal data to the UK, following the expiry of a 6 month grace period in the TCA. For more information, see the Data Protection section.

  • Financial services: Less positively, although a Memorandum of Understanding on financial services has been agreed with the EU, it has not yet been signed and limited progress has made in relation to financial services equivalence for UK firms. The Government now appears to be focussing instead on reform of UK financial regulation following Brexit, and divergence from EU law has become something of an inevitability. More detail on this can be found in our New Year briefing on Financial Services Regulation.

  • State aid: The TCA also required the UK to put in place its own domestic subsidy control regime to replace the EU state aid rules. Whilst the Subsidy Control Bill is currently before Parliament, it will be some time before it comes into force. In the meantime, in order to comply with its commitments to the EU, the Government has given the TCA's state aid provisions a form of direct effect – but this is not sustainable in the long term.

  • Border formalities for goods: Having left the EU Customs Union and Single Market, the UK needs to introduce its own controls and border formalities (e.g. requirements for customs declarations) on goods entering the country from the EU – but this remains a "work in progress" and has been subject to repeated postponements. The latest position is explained here but the UK is not expected to have introduced full border controls on goods imported from the EU until mid-2022 (or possibly even later, if recent media reports of a potential further postponement are correct). As a result, there remains the possibility of disruption and delays for goods supply chains as new processes are introduced, together with uncertainty over the exact timing.

Northern Ireland

Discussions continue with the EU over the arrangements in the Brexit Withdrawal Agreement relating to Northern Ireland, which the Government would like to renegotiate. There had been concerns that if the UK carried out its threat to invoke "safeguard measures" (under Article 16 of the Northern Ireland Protocol), this would have resulted in a serious breakdown in relations, potentially prompting the EU to give notice to terminate the TCA. Towards the end of 2021, there appeared to have been a softening of the UK's approach to this issue and in the short term at least, the risk of a serious breakdown seemed to have receded somewhat.

The desire to show a united front in the face of the Russian invasion of Ukraine is also thought by many commentators to make a major dispute over Northern Ireland less likely. However, whether tensions between the EU and UK over this issue will be definitively resolved remains to be seen.

Retained EU law

Following Brexit, the UK now has a new category of "retained EU law", such as EU Regulations which have been "converted" into UK statutes in order to avoid leaving significant gaps in UK regulatory frameworks. Despite the Government's desire to regulate differently from the EU (see below), retained EU law is likely to remain a feature of UK law for many years to come; our briefing explains how it works, including the extent to which CJEU rulings may continue to be followed in the UK (despite Brexit). We also discuss the proposals for a "Brexit Freedoms Bill" which, if passed, would alter the status of retained EU law and make it easier for changes to be made in future (thus potentially accelerating divergence – see below).

We have also produced a 5-minute video on retained EU law.

Divergence from EU law

Having left the EU, the UK is in principle free to diverge from EU law (albeit that in some areas it remains constrained by the provisions of the TCA and other international commitments).  However, the Government has yet to articulate a comprehensive, long term vision of what areas it would like to reform – and as we note in this briefing, many recent proposed changes to UK law have been driven primarily by factors other than Brexit. That said, there are some areas where the Government has sought to take advantage of its newly-regained regulatory sovereignty.

UK regulatory reform proposals

We would particularly highlight:

Alongside these domestic initiatives, the Government has been pursuing new trade deals with Australia and New Zealand (signed but not in force), India (negotiations commenced in January 2022) and the United States (though rapid progress on this deal is thought unlikely). It has also applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). For more information on the UK's trade agreements, see our interactive maps.

For comprehensive coverage of issues related to the UK's withdrawal from the EU, see our new Beyond Brexit suite of materials.

For further information, please contact

Data Protection, IP and Technology

Data transfers

There has been a series of recent developments in relation to data transfers:

  • Adequacy decisions: In June 2021, the EU granted an adequacy decision in favour of the UK, allowing personal data to flow freely from the EEA to the UK, as we set out in this briefing.

    The UK also announced as part of its consultation on data protection reform that it plans to make it easier for organisations to transfer data internationally, speeding up the process for making adequacy decisions in respect of restricted transfers to third countries and taking a pragmatic view about ensuring equivalent standards of data protection.
  • New SCCs for restricted transfers out of the EEA:  For new restricted transfers where you propose to rely on model clauses, you now need to use the EU's new set of standard contractual clauses (SCCs). Our briefing discusses the new SCCs.

    For pre-existing (i.e. which pre-date 27 September 2021) data transfer agreements using the old model clauses, there's a grace period until 27 December 2022 to update to the new SCCs.
  • International Data Transfer Agreement and Addendum to SCCs: The UK's International Data Transfer Agreement (IDTA) and the Addendum to the new EU SCCs (Addendum) came into effect on 21 March 2022.

    For new restricted transfer arrangements, organisations relying on model clauses must use the new transfer agreements from 21 September 2022.  There's a grace period so that contracts concluded on or before 21 September 2022 on the basis of the "old" standard contractual clauses remain valid until 21 March 2024 "provided that the processing operations that are the subject matter of the contract remain unchanged" and "reliance on those clauses ensures that the transfer of personal data is subject to appropriate safeguards" (i.e. Schrems II requirements are met). Notwithstanding the grace period, it would be prudent to use these new transfer agreements, now that they are available for use, in order to limit the repapering exercise.  Moreover, organisations subject to both the EU GDPR and the UK GDPR regimes, looking to harmonise their contractual approach to restricted transfers and achieve efficiencies by doing everything in "one hit", should be mindful of the 27 December 2022 deadline under the EU GDPR for transitioning legacy arrangements to the new EU SCCs. 

    Our briefing looked at the new transfer agreements and the next steps organisations may now take.

  • A step towards replacement of the Privacy Shield?: On 25 March 2022, the European Commission and US reached an agreement "in principle" on a trans-Atlantic data privacy framework, with a view to addressing the ECJ's decision in Schrems II (which previously annulled the EU/US Privacy Shield – see our previous briefing). The aim is to create a replacement Privacy Shield that facilitates the flow of personal data from the EU to organisations in the US, which self-certify their adherence to it, without the need for standard contractual clauses. There are relatively few details at present as the publication of the legal text is still awaited. Max Schrems has already signalled that he's likely to challenge it.

Class actions in the wake of Lloyd v Google

As we noted in our briefing, the Lloyd v Google decision makes privacy class actions – and indeed other types of class action via the opt-out route - less likely, although the court acknowledged the possibility of bringing an opt-out representative claim to establish common liability followed by individual or opt-in group claims to prove damage (a "bifurcated approach"). Certain large representative actions over alleged data breaches (e.g. actions against YouTube in relation to alleged targeting of underage audiences and against Google in relation to access to confidential medical records) have been discontinued in the wake of Lloyd.  Meanwhile, we're keeping a watchful eye on the progress of SMO (A Child) v TikTok, a representative claim where the claimant seeks to distinguish Lloyd, claiming that the remedy under Article 82(1) of the UK GDPR is different from the remedy under s 13 of the Data Protection Act 1998 (that was applicable in Lloyd) - we can expect summary judgment on this later in the year.

Contrast the decision in Lloyd with collective proceedings recently brought under Competition law (for what is, in essence, a privacy claim). For more on these collective proceedings, see textbox.

What's the basis of claim in these collective proceedings?

In early March 2022, the Competition Appeal Tribunal (CAT) published an application, brought by Dr Liza Lovdahl Gormsen, to commence collective proceedings under section 47B of the Competition Act 1998 against Meta Platforms, Inc, Meta Platforms Ireland Limited and Facebook UK Limited.  The application claims that that Facebook has abused its dominant position by making users' access to Facebook contingent on the provision of personal data, by demanding an unfairly high "price" or "payment in kind" for the provision of social networking services and by imposing other trading conditions that were unfair and anti-competitive.

This claim seeks £2.3 billion in damages for Facebook UK users.  As an opt-out case, Facebook’s 4 million U.K. users will not need actively to join the case to seek damages but will be part of the claim unless they decide to opt-out from it. Financial backing for the case is coming from one of the largest litigation funders in the world, Innsworth.

While Dr Lovdahl Gormsen's application is undoubtably ambitious, the Supreme Court in Merricks v Mastercard has already lowered the bar for certification of this type of claim and the Competition Act1998 also empowers the CAT to make an award of damages without undertaking an assessment of damages recoverable in respect of each represented person, thus circumventing one of the hurdles where the claim in Lloyd foundered. 

Courts give short shrift to de minimis data breach claims

The High Court in Stadler v Currys in January 2022 handed down another useful judgment for data controllers facing multiple low value privacy/breach of confidence claims for trivial data breach incidents, often including claims for distress.  This follows the High Court's previous robust dismissal of the claims in Warren v DSG Retail Ltd and Rolfe v Veale Wasbrough Vizards. 

What did the court decide in Stadler?

The court in Stadler held that for misuse of private information (MoPI) and breach of confidence (BoC) claims to succeed there would have had to have been wrongful use by the defendant of the information in the form of some positive action (as opposed to Currys' failure to take steps to prevent the MoPI and BoC). The negligence claim was also dismissed on basis that there was no need to impose a duty of care on a data controller where a statutory duty existed under UK GDPR. The court considered that the claim under UK GDPR had sufficient prospect of success to avoid being struck out but transferred it to the county court and suggested that allocation should be to the small claims track. The court found that following Lloyd v Google damages for non trivial breaches under DPA 1998 are not recoverable unless there is proof of damage or distress and that this applies equally under Article 82 of UK GDPR.  It also noted the 2021 decision in Rolfe which confirmed that distress claims arising from fear of the unknown and losing sleep over a data breach were considered to fall below the de minimis threshold for recoverability. 

It is interesting to note here that, while Lloyd v Google was decided under the DPA 1998, the court in Stadler was willing to read across the Supreme Court's findings in Lloyd to claims under UK GDPR/DPA 2018.

Low-value data breach claims issued against data controllers in the High Court, pleading MoPI and BoC (alongside allegations of breach of data protection legislation), grew exponentially in recent years.  This was fuelled in part by claimant firms seeking to recover ‘after the event’ (ATE) insurance premiums.  ATE insurance is available in respect of MoP and BoC claims, but not for claims under UK GDPR.

These decisions make de minimis "no win, no fee" claims less attractive to claimant law firms. 

EU gets even tougher on cookies

We have seen a spate of hard-hitting decisions from Europe in relation to cookies. See our briefing about the CNIL's (France's data protection authority's) action against Google and Facebook and the substantial fines imposed. 

The data protection authorities in France and Austria have also found that the use of Google Analytics leads to unlawful transfers to the US, even where the Google Analytics "anonymise IP address function" is used (which it was not in the Austrian case). This is the first of 101 complaints that have been lodged across Europe by NYOB (co-founded by Max Schrems), and other regulators in the EU are hinting that the use of Google Analytics or other analytics tools will not be allowed to continue as long as identifiable data is sent to the US.

It's not just Google under fire - the European Parliament itself was recently sanctioned by the European Data Protection Supervisor for using Google Analytics in violation of data transfer regulations.

Max Schrems' position is that this is not just limited to cookies (and there's no reason why the implications of these decisions won't reach beyond cookies, albeit that cookies are the main focus currently).  

The Austrian and French Google Analytics decisions aren't final and can be appealed; we haven't seen fines yet on the back of them. CNIL gave the (undisclosed) website a month to comply – otherwise threatens penalties.

Short of bringing data back to Europe and ceasing to use Google Analytics, it leaves a slightly unsatisfactory "let's wait and see" approach as these outcomes are impractical for business.  It's not clear whether the ICO will take a more pragmatic stance, but if it decides to diverge from the EU's approach, it needs to have an eye to protecting the adequacy decision which the EU has granted in favour of the UK.

Internet of Things (IoT): Proposal for draft EU Data Act

The draft Data Act is a proposal for an EU regulation and is part of the EU's data strategy from February 2020. The new rules will make more data available for reuse and the EU hopes that it will create 270 billion euros of additional GDP for the EU by 2028. It includes non-personal data and is aimed at making data-sharing easier at an EU-wide level (i.e. a single market for data). It will mainly impact manufacturers of IoT devices (and their users). It applies in respect of tangible products and related services. It is also relevant to cloud service providers in the EU.

What does the proposed EU Data Act do?
  • It introduces the principle that every user/individual/organisation generating data should have a right of access to that data so manufacturers of connected products and related services must make data readily accessible to user.  This has implications for the design of products and transparency of information provided to a user at the point of sale.

  • A user can use that data or share it with third parties free of charge (presumably giving rise to more competitive prices for the aftermarket service and repairs of connected products).

  • Data holders and users can agree measures to protect trade secrets, and data cannot be used to develop products in competition with the data holder.

  • There's recognition of the imbalance of power between data holders and users so there's an unfair contract terms concept for terms governing the access and use of data to protect SMEs and a reverse burden of proof for a data holder to prove that terms are non-discriminatory. For SMEs, compensation for making data available must not exceed actual cost of request.

  • There are measures to allow public bodies to access data in exceptional circumstances (public emergency such as natural disaster, health emergencies and terrorist attacks).

  • In relation to cloud service providers, there are requirements to support cloud switching and interoperability.

  • There's also a safeguard against unlawful data transfers and access by non-EU governments; one can but hope that we're not heading into a Schrems II-type scenario for non-personal data as well.

  • It clarifies that data from IoT should not be subject to separate legal protection to ensure that it can be accessed and used.

It seems unlikely that the UK will follow the EU's lead, as this appears to be incompatible with the UK Government's desire to decrease the regulatory burden on businesses.

It's not clear when the Data Act will be implemented but it's safe to say that it's some way off; it's only a proposal at this stage and there are likely to be in-fights between member states over its content as well as resistance from industry.

Online Safety Bill

The Online Safety Bill was first published in draft in May 2021 (which we wrote about previously) and is intended to create a legal framework based on a series of duties of care for tech companies, such as social media platforms and search engines, to protect users from illegal or harmful content. Significant changes have been made to the new Bill presented to Parliament on 17 March 2022. See textbox for more detail.

Recent changes to the Online Safety Bill

The changes include:

  • a new standalone duty requiring certain providers to take action to minimise the likelihood of fraudulent adverts being published on their service

  • new priority offences on the face of the primary legislation (with a view to Ofcom taking faster enforcement action against tech firms which fail to remove the named illegal content, rather than waiting for the offences to be made a priority in secondary legislation). It also introduces a new offence of cyberflashing

  • further measures to tackle anonymous abuse by requiring the largest providers to ensure adult users are given the option to verify their identity, and tools to have more control over the legal content that they see and who they interact with

  • new harm-based, false and threatening communications offences

  • duties on publishers of pornographic content to prevent children from accessing this content

  • amendments to the definition of harmful content accessed by adults so that all categories of such content will be voted on by Parliament (in the hope that this will avoid service providers over-removing legal material), and

  • extending the role of Ofcom.

A Bill of compromises, it has been criticised for neither, on the one hand, adequately tackling illegal and harmful content in its many guises, nor, on the other hand, adequately protecting freedom of expression.

For further information, please contact

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Dan Reavill
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Helen Reddish
Consumer Protection

Proposed reform of UK consumer law

The Government has been consulting on plans to reform UK consumer law, including:

  • giving regulators powers to impose fines of up to 10% of global turnover for breach of consumer legislation; and

  • new rules regulating subscription contracts (whether for the supply of goods or services), fake reviews and practices such as "drip pricing" in an online context (e.g. where products are advertised at an attractive headline price but it does not include fees and charges that are added during the purchasing process).

If implemented, these changes are likely to result in a significantly tougher regulatory environment for consumer-facing businesses. For more detail, see our briefing on the proposals. 

Also of note, particularly for online consumer-facing businesses, is a new pro-competition regime for digital markets involving a special unit within the Competition and Markets Authority dedicated to this area.

CMA investigation into greenwashing: an update

Following its investigation into greenwashing (which we reported on last year), the Competition and Markets Authority has published a "Green Claims Code" which aims to provide guidance to businesses on environmental claims. This was accompanied by a warning that the CMA intends to carry out a review of such claims (both online and offline) in early 2022 and that businesses which have failed to comply with consumer law may face enforcement action.

For further information, please contact

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Dan Reavill
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Jonathan Rush
Contract Law

Recent case law developments

  • Standard terms: several recent cases highlight the importance of process for both customers and suppliers when contracting on standard terms (or a mixture of standard terms and "bespoke terms"). Our briefing highlights some of the key pitfalls for the unwary, particularly around the so-called "battle of the forms".

  • Software distribution and agency arrangements: A judgment of the Court of Justice of the European Union has significant consequences for software providers which sell software via agents, both in the EU and the UK (notwithstanding Brexit). Our briefing explains the ramifications.

  • Implied terms: In Nord Naphtha v New Stream Trading, the Court of Appeal ruled that a term requiring repayment in the event of non-performance could be implied into a contract for supply of fuel (even though there was no express right to repayment). This is an example of the English courts placing considerable weight on the wider commercial context of the agreement – but as our briefing explains, clearer drafting could have avoided the dispute altogether.

  • COVID-19: A High Court judgment suggests that, in the absence of an express force majeure clause (or similar), it will generally be difficult for parties obtain relief from their contractual obligations for reasons connected with COVID-19. In this case, the dispute was over rent payable for premises used as a cinema which was unable to operate during the COVID-19 pandemic; the court ruled that despite these extenuating circumstances, the rent was still payable.

  • Unjust enrichment: A Court of Appeal ruling has emphasised that the principle of unjust enrichment should not generally be used to circumvent the terms of a valid contract; the courts should normally only intervene where they were satisfied that a party had been enriched as a result of an "unjust factor" (such as mistake, incapacity or duress).
New Law Commission guidance on smart contracts

The Law Commission has advised the Government that existing law in England and Wales could accommodate smart legal contracts (see full paper and summary) without the need for statutory law reform.

A "smart legal contract" is one in which some or all of the contractual terms are defined in and/or performed automatically by a computer code/programme. Blockchain and distributed ledger technology and other emergent technologies have vastly expanded the potential scope of both use cases and users of smart legal contracts, as well as giving rise to novel issues arising out of the application of existing law.

The Law Commission concluded that current legal principles can apply to smart legal contracts in much the same way as they do to traditional contracts, albeit with an incremental and principled development of the common law in specific contexts, noting that the flexibility of the common law ensures that the jurisdiction of England and Wales provides an ideal platform for business and innovation in this area.

It remains to be seen exactly how the courts will resolve those novel issues, particularly where smart legal contracts are deployed on fully distributed blockchains in which the respective parties' true identities and location may not be known and there remains considerable debate as to the true nature, status and characterisation of the "on-chain" digital assets that are exchanged.

For further information, please contact

Dispute Resolution

Our article below discusses proposed reform of pre-action protocols in the UK Civil Procedure Rules. For a more comprehensive overview of key developments in the dispute resolution world over the last few months, please see the new year edition of our quarterly Disputes newsletter.

Reform of pre-action protocols

The Civil Justice Council has recently closed its consultation on proposed reforms to the Pre-Action Protocols in the Civil Procedure Rules, having produced a detailed interim report on the same topic. The Pre-Action Protocols presently contain a series of steps which parties should take, or at least consider taking, prior to commencing court proceedings, on pain of costs or case management consequences should they fail to do so.

Reform proposals

The possible reforms to the Pre-Action Protocols process include:

  • strengthening the existing requirements under the Protocols to detail the basis of claims/defences and provide supporting disclosure via pre-action correspondence within set timeframes, and possibly even requiring that correspondence to be supported by a Statement of Truth (albeit that it is acknowledged that this may be a step too far);

  • formally recognising that compliance with the Protocols is mandatory, save in cases where urgent court intervention is required;

  • imposing more stringent penalties for non-compliance with the Protocols, including in certain circumstances strike out of the relevant claim/defence;

  • imposing a new good faith requirement on parties to try to resolve or narrow their dispute at the pre-action stage;

  • imposing new requirements on parties to complete a joint "stocktake" report or list of issues prior as a final step before commencing proceedings; and

  • introducing a new summary costs procedure to deal with the costs of disputes resolved at the pre-action stage.

While the proposals could conceivably result in more disputes settling before they reach court, they could also result in a very significant front loading of costs before court proceedings have even been issued (and potentially an overall increase in costs over the life of a dispute as well). The new reforms, and in particular suggestions like the new overarching duty of good faith, also have the potential to give rise to satellite litigation. The Civil Justice Council will provide policy recommendations in its final report.

For further information, please contact

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Rob Fell
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Hannah Hartley
Competition Law

The National Security & Investment Act 2021: What you need to know

The new national security regime under the National Security & Investment Act 2021 ("NSI Act") commenced on 4 January 2022.

The Government has created an extensive regime to strengthen its powers to scrutinise transactions on the grounds of national security. The requirement to notify and obtain approval from the Government in respect of notifiable acquisitions came into force on 4 January 2022 (and certain aspects of the NSI Act also apply retrospectively, back to 12 November 2020).

The NSI Act introduces a hybrid mandatory and voluntary notification regime. Mandatory notification, and an associated stand-still obligation, applies to notifiable acquisitions (i.e. acquisitions of qualifying entities) in 17 key sectors of the economy. Those 17 mandatory sectors are defined in the National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021. It is unlawful to complete a notifiable transaction in any of these sectors without prior approval from the Secretary of State. Failure to notify will render the transaction void, and civil and criminal penalties may be imposed.

The regime also allows parties to notify transactions to the Secretary of State on a voluntary basis. Parties to transactions falling outside the mandatory regime will therefore need to weigh up the risks of not notifying i.e. that the transaction could be "called-in" for more detailed scrutiny (and ultimately, if found to raise national security concerns, ordered to be unwound). It will be possible to complete a transaction ahead of clearance in circumstances where parties have submitted a voluntary filing, unless the Government requires the parties not to do so by imposing an interim order.

Please see our briefing for more detail. 

Merger control: Key trends for 2022

Since the end of the Brexit transition period in December 2020, the UK's merger control regime has been untangled from the EU's one-stop shop and has therefore operated as a standalone merger control regime in parallel to the EU. Just over a year on, here are the 6 key trends that we expect to see in UK merger control during 2022, and the impact of those trends for corporate transactions. Please see our briefing for more details on each and a summary in the textbox.

Merger control – key trends
  • Trend 1: The CMA is likely to remain an active merger control authority.

  • Trend 2: Following Brexit, the CMA has been taking an independent line when investigating transactions in parallel with the European Commission, and we would expect that to continue.

  • Trend 3: The CMA will continue to take an expansive view of the scope of its jurisdictional tests.

  • Trend 4: New jurisdictional tests may be introduced, together with a new de minimis regime.

  • Trend 5: The CMA is likely to continue to pursue enforcement action and issue fines for procedural breaches.

  • Trend 6: Expect co-operation between the CMA and the Investment Security Unit (in relation to national security grounds).

Far-reaching reform of UK competition law proposed 

The Government has launched a raft of consultations proposing far-reaching reforms to the competition law space. The proposals include substantial changes to Competition Act enforcement cases and the UK regimes covering merger control and market investigations.  The Government is simultaneously consulting on specific proposals to govern the digital technology sphere, including enhanced scrutiny of mergers involving 'Big Tech' and powers for the new Digital Markets Unit within the CMA.

The deadlines for the consultation responses have now passed, and therefore next steps from the Government are keenly awaited. Please see further details on the proposed reforms in our briefings here:

Sustainability and competition law

Please look out for our ESG Newsletter which will contain an article on this topic.

For further information, please contact

Company Law and M&A

Corporate transparency and register reform

On 28 February 2022, the Government published a white paper on Corporate Transparency and Register Reform, following consultations in 2019/20. The white paper sets out proposed changes to improve the quality and integrity of available information about companies and other business entities.

Proposed Companies Register reforms
  • a fundamental change to the role and statutory powers of the Companies Registrar, from a passive administrator of company information to an active gatekeeper with powers to query and remove information in order to safeguard the integrity of the register;

  • requirements for identity verification for directors, PSCs (Persons with Significant Control) and others;

  • in place of the proposed ban on corporate directors, new restrictions imposing a maximum of one “layer” of corporate directors, which must be based in the UK, and requiring that the natural persons directing that corporate director will be subject to identity verification;

  • changes to improve the quality of financial information on the register, such as  requiring accounts to be filed digitally and to be fully tagged using i-XBRL; and

  • new "gateways" for data sharing with law enforcement, other Government bodies and the private sector.

Register of overseas entities

The Economic Crime (Transparency and Enforcement) Act, which will introduce a public register of beneficial owners of overseas entities that own UK real estate, was passed swiftly into law in reaction to Russia's invasion of Ukraine and regulations implementing the register are expected soon. Beneficial owners will be identified in a similar manner to Persons with Significant Control ("PSCs") under the existing PSC Regime.

The Government first proposed this register in 2016 as it saw the lack of transparency in foreign ownership of UK real estate as holding the potential for abuse by way of money laundering. For more detail, please refer to our briefing.

Warranty claims - lessons in clear drafting from recent UK court judgments 

In recent years, we have witnessed a trend in UK cases on contractual interpretation for courts to adopt a more literal interpretation of imprecise drafting, exemplified by the cases of Arnold v Britton [2015] and Wood v Capita Insurance Services [2017]. This represents something of a shift away from the approach taken previously by UK courts, which enabled "contextual factors" and “commercial common sense” to play a role in contractual interpretation. In essence, therefore, there is now less room for contextual and commercial factors to rescue unclear drafting.

So, for example, in the recent judgments in Equitix EEEF Biomass 2 Ltd v Fox and Butcher v Pike , the courts provided useful lessons on the need for clear drafting to exclude liability for warranty claims, in particular:

  • a warranty claim, where the buyer was aware of facts relevant to the claim prior to the sale
  • the buyer's duty to mitigate loss
  • financial caps on the seller's liability, and
  • in relation to the effect of disclosures.

In the Equitix case:

Buyer awareness: the Share Purchase Agreement (SPA) contained two relevant clauses on buyer awareness:

  • A broad confirmation that the buyer (as a whole) had no knowledge of any breach (there was a dispute about whether this was limited to the actual knowledge of the buyer's directors); and
  • A narrower exclusion of liability for any breach of which certain directors had actual knowledge.

The court decided that the asymmetry in the definition of awareness must have been intentional, highlighting the importance of drafting consistently. Where inconsistency is intentional, this should be made clear.

Mitigation of loss: The sellers argued that the SPA imposed a duty on the buyer to take steps to mitigate its loss after discovery of the breach of warranty. Under UK common law, the measure of damages will assess loss at the point of purchase so steps taken or not taken by the buyer in mitigation after purchase are irrelevant. The court rejected the sellers' argument for the extension of the duty to mitigate, as being inconsistent with common law. The key point here is that very clear wording is needed to impose a threshold higher than that at common law.

Financial caps on liability: The SPA capped the sellers' liability "in respect of"… "any claim under this Agreement for breach of the Warranties"at £11m. The sellers argued that this applied to interest and costs as well as damages. The High Court disagreed, as a claim for interest or costs is made pursuant to the court's jurisdiction to make ancillary orders, not under the SPA, so would fall outside the liability cap. The judge determined that the phrase "in respect of" is narrower than, for example, "arising out of or in connection with". Nor was there any specific mention of interest or costs in the contractual provisions.

Limits on effective disclosure: In Butcher v Pike, the UK Court of Appeal held that, in relation to a warranty claim, the sellers could rely on disclosures made outside the relevant disclosure letter. Under the SPA, the warranties were given subject to matters 'fully, fairly and specifically disclosed' in the disclosure letter and a six-month time limit on claims. These limitations would be ineffective in the case of fraud or ‘negligent non-disclosure’ in relation to the warranties. The sellers argued that the reference to 'non-disclosure’ could include disclosures made outside the disclosure letter as it did not explicitly limit the provision to disclosures set out in the disclosure letter. The courts agreed that this omission must have been intentional.

Again, this case highlights the importance of clearly defining the scope of the limitations on warranties and related exclusions.

Financial reporting by private equity-backed companies

At the end of last year, the Private Equity Reporting Group published its 14th annual report on the UK private equity industry's conformity with the Walker Guidelines and an updated version of its guide to good practice reporting by portfolio companies. The report noted a broad shift back to normal reporting timelines following the Covid-19 pandemic.

The Walker Guidelines will be reviewed later in 2022 to take account of changes in the broader narrative reporting landscape with revised guidelines expected in 2023-24. In the interim, PERG has published recommendations to be implemented now. Please see the text box for more details:

PERG's recommendations

These include:

  • Improving and enhancing the depth of disclosure on environmental matters.

  • Improving and enhancing disclosures on gender diversity to cover policies and actions to promote diversity (including other characteristics such as ethnicity and sexual orientation).

  • Improving the level of disclosure on non-financial KPIs that are monitored by the company to assess its performance, for example employee-related matters.

  • Focusing on improving the timeliness and accessibility of reports. Private equity firms are encouraged to be proactive.

  • Reviewing guidance to improve reporting. Firms are asked to consider linkage to other requirements, including reporting on how directors have complied with their duty to act in the company's best interests under s172 of the Companies Act 2006.

Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act

The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act came into force on 15 February 2022, extending the scope of the current disqualification regime to include former directors of dissolved companies and introduces new powers to investigate conduct and commence proceedings against former directors. The Act applies with retrospective effect to enable prior conduct to be investigated.

For further information, please contact

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Carys Clipper
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Andrew  Gillen
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Beliz  McKenzie
Equity Capital Markets

Changes to UK listing and prospectus regimes 

In early March, the Treasury published the outcome of its review of the prospectus regime. As proposed, the Government will be replacing the current prospectus regime inherited from the EU Prospectus Regulation. The aims of this reform include facilitating wider ownership of public companies, improving the efficiency of public capital raising and improving the quality of investor information. The Government will legislate when Parliamentary time allows, but as the FCA will need to undergo further consultations in order to make the necessary rule changes, it will be some time before we will see the full effect of the reform. Please see our briefing for further details.

In December 2021, the FCA introduced changes to its rules on dual class share structures, free float and minimum market capitalisation requirements – please see our briefing for further details. We await the outcome of the FCA's review of the current listing model – please see the last edition of Insights and our more recent briefing for further details.

For further information, please contact

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Jane Bondoux
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Andrew  Gillen
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Beliz  McKenzie
Banking and Finance

LIBOR discontinuation 

LIBOR, the reference rate of interest for many UK-based financial contracts, was for the most part discontinued on 31 December 2021. SONIA (the "Sterling Overnight Index Average") is the preferred replacement rate for LIBOR in sterling loan markets. Throughout 2021, parties to finance documents worked to transition existing LIBOR-priced debt. LIBOR exposures will inevitably remain, so some sterling LIBOR settings are now being published on a changed "synthetic" methodology for 12 months following 1 January 2022 (no longer relying on submissions from panel banks). In most cases a reference to "LIBOR" in an existing contract will be treated as if it has always provided for the reference to include the synthetic benchmark. For further details, see our Q3 2021 update.

Parties should continue to identify older contracts (not just loans) which reference LIBOR and engage with counterparties to amend affected contracts. Read our commentary on consequences for other commercial contracts which reference LIBOR (for instance in late payment clauses). This includes suggestions for alternative reference rates.

For further information, please contact

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Matthew Ayre
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James Bell
Corporate Taxation

Introduction of a new tax privileged regime for qualifying asset holding companies (QAHCs)

The UK is set to introduce a new tax privileged regime for qualifying asset holding companies (QAHCs) from this April (2022).

For an asset holding company to come within the regime it must meet several eligibility criteria including that (broadly) it is an investment company that is 70% owned by "good" investors (including, diversely owned funds, UK REITs, tax exempt sovereign wealth funds and most pension funds).

The wide-ranging tax benefits include a broad exemption from tax on gains from shares (other than in UK property rich companies) and non-UK land, a deductions regime that should keep taxable income very low (by giving deductions for profit-related interest) and a complete exemption for foreign property business income. In addition, there are tax benefits for investors, with normal tax rules disapplied to make it easier for returns from the QAHC to be passed to investors in capital form.

The new regime is an exciting development and should allow the UK to compete with vehicles on offer in rival European fund centres, in particular Luxembourg and Ireland. Its availability will be particularly welcome for many managers who have been concerned about the need to build substance in Luxembourg, especially in the light of the draft shell entity directive (ATAD 3).

International tax reform - OECD's BEPS Pillar One and Pillar Two proposals

International agreement has been reached on a two-pillar solution to address the tax challenges arising from the digitalisation of the economy. The two-pillar corporate tax reform plan forms part of the OECD's project tackling base erosion and profit shifting (or BEPS). See textboxes for more detail.

Pillar One

Pillar One aims to align taxing rights more closely with the location of customers or users. The Pillar One rules will reallocate 25% of the profits of a multinational enterprise (MNE) to market jurisdictions where the MNE has a substantial engagement in that market, regardless of whether it has a physical presence there. This measure will only apply to the largest businesses in the world - MNEs with annual global turnover above €20bn (reducing to €10bn in no earlier than seven years) that have a profitability threshold above 10% and do not fall within an exclusion. There will be exclusions for extractives and regulated financial services, the details of which are yet to be published.

The OECD envisages that this additional taxing right for local jurisdictions will be implemented through a multilateral convention, and where necessary by way of correlative changes to domestic law, with a view to allowing it to come into effect in 2023.

In addition, Pillar One also contains rules to simplify and streamline the arm’s length principle for related party distributors, as well as mechanisms to provide tax certainty.

Pillar Two

The main plank of Pillar Two is the Global anti-Base Erosion rules (GloBE rules). These rules seek to establish a global minimum corporate tax rate through a set of interlinked rules.  The rules will apply to MNEs that meet a €750m turnover threshold (determined under the BEPS country by country reporting rules). There will be various exclusions, including for pension funds and for investment funds that are ultimate parent entities of an MNE group (and any holding vehicles used by such funds).

The GloBE rules will impose top-up taxes where the effective rate of tax of a MNE in a jurisdiction is below the global minimum corporate tax rate (15%). The global minimum corporate tax rate will be effected by two rules: the income inclusion rule (IIR) and the under-taxed payment rules (UTPR). 

The IIR taxes a parent entity on its proportionate share of a low-taxed constituent entity’s income (similar to a CFC charge). Where top-up tax is required but the IIR does not apply (for example because the only parent is located in a low tax jurisdiction), the UTPR will apply.  The UTPR imposes top-up taxes on other group entities that meet various criteria.

In addition to the GloBE rules, Pillar Two also contains a subject to tax rule (STTR) which will allow source taxation (for example, withholding taxes) on certain cross-border related party payments that are subject to tax below a minimum rate of 9%.

The OECD's (ambitious) timetable is for jurisdictions to legislate the Pillar Two rules in 2022, with most of them taking effect from 2023 (the UTPR would take effect in 2024). To this end, in December 2021 the OECD published Model Rules for GloBE. Commentary on the Model Rules was published in March 2022.

From a domestic perspective, in January 2022 the Government launched a consultation on the implementation of the GloBE rules in the UK. As part of this, the Government is exploring whether to introduce a domestic minimum top up tax. Broadly, this would allow the UK to impose top up tax on low-taxed profits of a group’s entities in the UK, rather than allowing a foreign jurisdiction to do so. The Government anticipates that the parts of GloBE relating to the IIR would be included in Finance Bill 2022-23 and would have effect from 1 April 2023 and that both the UTPR and any domestic minimum tax would be introduced from 1 April 2024 at the earliest.

In addition, the EU has published a draft directive for the implementation of the GloBE rules in the EU. Under the directive, the GloBE rules would come into force in the EU on 31 December 2023, with the exception of the UTPR for which the application will be deferred to 31 December 2024.

EU directive on shell entities (ATAD 3)

The EU Commission has published a draft directive (ATAD 3) designed to tackle misuse of entities resident in EU member states that do not have sufficient substance. 

Entities within the scope of the directive are subject to adverse tax consequences. There are also increased information reporting requirements which extend to entities at risk of being within scope as well as those that actually are.

For more detail please see our recent briefing on the shell entity directive which includes a flowchart to help businesses navigate the new rules and assess whether the directive is likely to apply to them.

Notification of uncertain tax treatment

A new set of rules will be introduced from this April (2022) which will require large businesses (those with a UK turnover exceeding £200m and/or a UK balance sheet exceeding £2bn) to notify HM Revenue & Customs (HMRC) if they have adopted a tax treatment which is "uncertain".  A notification will be required if either of the following two triggers arise:

  • The taxpayer adopts a tax treatment that differs from HMRC's known position; or

  • A provision has been recognised in the accounts of the taxpayer to reflect the probability that a different tax treatment will apply to the transaction to that adopted.

A third trigger (substantial possibility that a court or tribunal would find the treatment adopted to be incorrect) was not included in the current rules but remains under review by the Government.

The threshold for notifications is £5m.

Economic crime levy

A levy (from the AML regulated sector) is to be introduced to fund combatting economic crime. It is likely to apply to many within the asset management sector including portfolio managers, collective investment undertakings and investment advisers. The levy will be paid as a fixed fee based on which of four size bands an AML-regulated entity's UK revenue falls. The bands range from entities with small UK revenue (not more than £10.2m), which will be exempt, to those with very large UK revenue (over £1bn), for whom the levy will be £250,000.

The levy is to first apply for entities that are regulated during the financial year from 1 April 2022 to 31 March 2023, and the amount payable is to be determined, broadly, by reference to their size based on their UK revenue from periods of account ending in that year. Amounts will be payable after the financial year, so the first payment will be due in the financial year from 1 April 2023 to 31 March 2024.

Please see the Incentives and Personal Taxation section directly below for more news on the UK's tax regime.

For further information, please contact

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Emily Clark
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Laura Hodgson
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Ian Zeider
Incentives and Personal Taxation

Taxation of contractors

Some workers in the UK provide their services on a self-employed basis through an intermediary, such as a "personal services company"("PSC"), where the worker is both an employee and shareholder of the PSC. This can have significant tax advantages for the worker and to combat tax avoidance in this area, legislation was introduced which made it impossible to avoid UK tax simply by providing services through a personal services company. The rules (known as the "off payroll working rules") deem payments made to a PSC to be employment income if, were it not for the existence of the PSC, the relationship between a business organisation and worker would be treated (for tax purposes) as one of employment. 

Until 2017, where the rules applied, it was the PSC that was responsible for accounting for the income tax and social security contributions due. The Government modified the rules in 2017 with the effect that, in the case of off-payroll workers in the public sector, it is the business (or other person paying the PSC's fee) which must collect the tax and social security contributions.

These changes were extended to large and medium-sized businesses in the private sector from April 2021 creating additional administrative and financial burdens for the relevant parties.  

Although HMRC announced that they would initially take a gentler compliance approach as companies adjust to the new rules, we understand that they have set up a new task force to look into unpaid tax.  It is therefore important that those engaging workers understand the supply chain through which they are provided, are aware of their obligations under the rules and have robust procedures in place to deal with the new rules.

The Government is currently considering the responses to a call for evidence on the use of "umbrella" companies; typically, these companies pay the employee's salary, operate PAYE and manage their employment rights with responsibility for sourcing the employee's work sitting with an employment business further up the labour supply chain.  While the Government understands the useful role that umbrella companies can play in supporting a more flexible labour market, it is concerned that some operators of these arrangements are abusing the system through poor employment practices and lack of tax compliance. 

New health and social care levy

On 7 September 2021, the Government announced the introduction of a new 1.25% levy which is intended to pay for adult social care reforms and enable the country's National Health Service to tackle the COVID-19 backlog.  The levy (to be called the health and social care levy) will apply from April 2022 and will initially be collected by way of a 1.25 percentage point increase to the rates of National Insurance contributions. From April 2023 the levy will be charged separately and the rates of NICs will return to their 2021/22 tax year levels. In the context of employments, the levy will be paid by both employees and their employers (i.e. an additional 2.5% in total). For the self-employed (such as contractors or partners) the levy is payable by the self-employed person only. The rates of tax on dividend income will also be increased by 1.25 percentage points from this April. 

Although there were calls for the NICs increase to be postponed given the recent rise in living costs, in his Spring Statement the Chancellor, Rishi Sunak, confirmed that the proposals will go ahead as planned. To ease the burden for lower earners, the Chancellor announced an increase in the threshold for employee NICs to £12,570 from 6 July which aligns it with the income tax full personal allowance. 

At this stage, we don't yet know whether it will be possible to transfer the employers' liability to pay the levy to an employee (once the levy becomes chargeable separately from 2023) nor whether it will be governed by the protocol on social security agreed with the EU (referred to below). 

National insurance contributions

For UK employers with workers in the EU, the EU/UK Trade and Cooperation Agreement (TCA) contained some welcome clarification on their social security obligations from 1 January 2021 following the end of the transition period.  Importantly, a new Protocol on Social Security Co-ordination was agreed, replicating many of the previously existing EU rules, including those for ‘posted’ workers (known as ‘detached’ workers). All EU member states have opted into these new rules which means that workers moving temporarily between the UK and the EU will continue to pay social security contributions in their home state and receive necessary healthcare treatment in the country where workers are temporarily posted.  It is still possible for EU Member States to opt-out at any time; however, they must give the UK notice and any postings that began before the opt-out will be protected.  In November the UK and Switzerland also entered an agreement on social security coordination which largely replicates the pre-Brexit rules.

Tax-advantaged share plans – no change to EMI but perhaps reform of CSOP?

The Government has stated that following its recent review of the tax-advantaged Enterprise Management Incentive (EMI) plan it considers the existing legislation to be "effective and proportionately targeted". Although it is good news that the EMI plan is here to stay, it is disappointing that the Government hasn't taken on board changes that we and others suggested to make this important share incentive accessible to more companies, including those with private equity backing. The Government has said that it will now turn its attention to the other discretionary tax-advantaged share scheme, the Company Share Option Plan, to see whether it should be reformed to support companies as they grow beyond the scope of EMI.   Nothing has been proposed at this stage but changes such as an increase in the individual limit (beyond £30,000) and the ability to grant options at a discount would be welcome.

For further information, please contact

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Kulsoom Hadi
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Mahesh Varia
Employment Law

Fire and rehire

The practice of "fire and rehire", which refers to an employer changing employees' terms by dismissing them and offering to re-engage them on new contracts, has come under the spotlight in recent months. Employers who have sought to change terms in this way have been criticised by trade unions, and there have been calls for the practice to be banned altogether, most recently in the wake of P&O's mass dismissal of ferry workers. There have been several recent developments in this area. Last year, Acas published guidance on changing employment contracts which states that "fire and rehire" should only be considered as a last resort.

The Government so far has indicated that it does not plan to legislate against the practice but has committed to producing a new statutory Code of Practice to detail how businesses should consult on proposed changes to employment terms.

In the recent case of USDAW v Tesco, the union obtained an injunction preventing Tesco from dismissing staff in order to reduce pay, but it should be noted that this arose due to a particular, and unusual, factual background (involving a previous contractual commitment to a permanent uplift in pay). In most cases an injunction is unlikely to be available and the dismissals would be effective, with the employees having potential claims of unfair dismissal and breach of collective consultation rules.

Although the legal position relating to "fire and rehire" has not changed so far, the process that employers should follow when seeking to change employees' terms may become more prescriptive once the Code of Practice is produced. But regardless of what the law requires, the reputational risks are likely to be an equally important consideration given the increased focus on this area, and employers may be reluctant to use this route unless they have no other choice.

Post-Brexit immigration

Following Brexit and the end of the Brexit transition period, new travel and visa requirements apply to all non-British and non-Irish nationals arriving in the UK since 1 January 2021. Our briefing on the Post-Brexit immigration regime contains an overview of the work visa rules for non-British and non-Irish nationals under the new system. Individuals travelling for business from the UK to the EU (or vice versa) now need to consider whether the nature of their travel is such that they require a visa or not. Our interactive map sets out a high-level summary of the business travel rules for the UK and each EU jurisdiction.

Workplace sexual harassment

The Government ran a consultation in 2019 on possible reforms to the law on workplace sexual harassment. It has now published its response to that consultation, saying that it intends to introduce a new positive duty on employers to prevent sexual harassment in the workplace, along with a statutory code of practice on what the duty means in practice. The Government will also introduce explicit protections from workplace harassment by third parties (such as clients, customers and suppliers) and will consider extending the time limit for bringing discrimination and harassment claims in employment tribunals from 3 to 6 months. The Government has not yet set out a timetable but has said the changes will be introduced as soon as parliamentary time allows.

Ethnicity pay gap reporting

In 2018/2019, the Government consulted on introducing a mandatory requirement for large organisations to report publicly on the ethnicity pay gap within their organisation. The Government has not yet formally responded to the consultation and has come under mounting pressure to act in this area. However, in its recent response to a report by the Commission on Race and Ethnic Disparities, the Government said that it would not be legislating for mandatory reporting at this stage, as it wants to avoid burdens on businesses as they recover from the pandemic. Instead, the Government will encourage more voluntary reporting. A number of employers already publish their data on a voluntary basis or are considering doing so as part of wider efforts to promote diversity and inclusion. The Government has not ruled out introducing a mandatory requirement for ethnicity pay gap reporting in the future.

Post-termination non-competes

During the winter of 2020/2021, the Government consulted on proposals to reform the law on post-termination non-compete clauses in employment contracts. Such clauses prevent employees from joining a competitor or setting up a competing business for a period after leaving employment. There are two options under consideration. Under option 1, employers would have to pay employees throughout any non-compete period (between 60 and 100% of pay), as is already the case in some other jurisdictions. Option 2 would prevent employers from using non-compete clauses altogether. The Government has not yet responded to the consultation or set out its proposals, but we may see developments in this area in 2022.

For an overview of forthcoming developments in UK employment law and business immigration, please see our In the Pipeline briefing.

For further information, please contact


The Pension Schemes Act 2021 requires those engaged in corporate activity involving a business with a UK defined benefit (DB) pension scheme to consider even more carefully than now whether any proposals could adversely affect the security of scheme members’ benefits. It will also soon impose new duties to notify the Pensions Regulator about some categories of corporate activity at earlier stages in the corporate planning process.

ESG requirements are affecting the pensions industry, with the largest pension schemes already subject to climate-related governance and disclosure obligations and many more in scope from 1 October 2022. Our forthcoming ESG Newsletter will provide more detail on this.

Schemes will have to do a substantial amount of work to be ready for the introduction of pensions dashboards.

Defined benefit schemes - Pension Schemes Act 2021

Some important aspects of the Pension Schemes Act 2021 are in force. These include: 

  • New grounds for the Pensions Regulator to issue a contribution notice, requiring an employer or associated or connected party to make a lump sum contribution to a defined benefit (DB) scheme, including where an act or omission would reduce the amount of 'section 75' employer debt likely to be recovered by the scheme from the employer in the event of insolvency.

  • New criminal offences and civil penalties up to £1 million, including for acts or omissions by anyone (not just connected parties) which put DB scheme members' benefits at risk, without a reasonable excuse.

  • In connection with the funding legislation, the Pensions Regulator will issue a new code of practice. This will focus on schemes having long-term objectives, for example: buy-out with an insurer, consolidation with another scheme or commercial consolidator, or self-sufficiency. Trustees will be expected to have a journey plan under which the scheme reduces its dependency on the employer as the scheme matures. Meanwhile, the Regulator is expected to continue its proactive focus on the level of deficit contributions made by employers compared with dividends and other shareholder distributions.

  • Those engaged in corporate activity will need to make notifications to the Regulator (and the pension scheme trustees) in more circumstances than at present and at an earlier stage.  These new circumstances are expected to include the sale of a material part of a business and the granting of security that has priority over debt to the scheme. The new criminal and civil penalties mean that they will also have to consider even more carefully than now whether any proposals could adversely affect the security of DB scheme members’ benefits. They may also need to declare to the Regulator how any detriment will be mitigated.

Pensions dashboards

The Government has recently consulted on proposed requirements for pension scheme trustees in relation to forthcoming pensions dashboards. The FCA is consulting on similar proposals for personal pension providers.

Pensions dashboards are intended to allow individuals to see all of their future pension entitlements from various sources in one online place. The public will not be able to access the initial dashboard until at least 2024 but most schemes are required to act well in advance of that. This is to ensure that, on launch, individuals will be able to find information about most, if not all, of their entitlements. The draft regulations include a staging timetable based on scheme type and the number of active and deferred members.

Getting ready to connect to the dashboard systems will be a major undertaking, affecting nearly all pension schemes and providers and those who provide them with support services.  Timescales are ambitious and many in the industry should now be taking initial steps to be ready. These include establishing the likely staging date(s) and discussing with scheme administrators how to go about complying.

ESG and climate change

Our forthcoming ESG Newsletter will contain details of legislation requiring climate-related governance and disclosures by pension scheme trustees.

For further information, please contact

Real Estate

2021 was a busy year for UK real estate, overshadowed by the ongoing impact of the Covid-19 pandemic. Other key trends included continuing residential leasehold reform and the Government's response to the Grenfell Tower fire. Also see our briefing for the real estate implications of the Environment Act 2021.

New landlord and tenant legislation regarding COVID rent arrears

New measures to facilitate the resolution of disputes over rent arrears due to forced closures during the pandemic are to be introduced in the UK under the Commercial Rent (Coronavirus) Act 2022, along with a new code of practice for commercial property relationships. The Act creates a binding arbitration process where the landlord and tenant are unable to reach agreement and is expected to be passed imminently. Read more information about this and the lifting of the Government's protective measures during the Covid-19 pandemic.

Residential leasehold reform

Future legislation: - The Government has committed to introduce legislation to:

  • reform the process of leasehold enfranchisement whereby tenants can extend a lease or buy the freehold of their building;

  • give leaseholders of flats and houses the same right to extend their lease agreements “as often as they wish, at zero ground rent, for a term of 990 years”; and

  • enable leaseholders, where they already have a long lease, to buy out the ground rent without having to extend the lease term.

Commonhold - The Government is taking advice from a panel of leasehold groups and industry experts on the implementation of a reformed commonhold regime and to prepare homeowners and the market for the widespread take up of commonhold for new supply of flats. Read more information.

Ground rents in leases of residential properties - The Leasehold Reform (Ground Rent) Act 2022 restricts ground rents to a token amount on most newly established leases of houses and flats with a term over 21 years, and will prohibit administration fees in relation to those rents, subject to certain exemptions.

Unsafe cladding

The major fire at the Grenfell Tower, found to have been caused by unsafe cladding, has resulted in various Government measures to improve the safety of high-rise buildings:

  • the introduction of a residential property developer tax;

  • the introduction of a new Building Safety levy

  • measures to facilitate mortgage lending for buildings under 18m in height where there may be fewer safety concerns; and

  • measures to protect leaseholders in buildings exceeding 11m in height from the cost of work to address safety issues with any cladding on their building. Housebuilders are negotiating with the Housing Secretary as to what they will contribute towards the cost of remediating cladding issues in the blocks they have developed.

Planning reform

In 2022 we are expecting to start to see the impact of various planning changes which were introduced in 2020 but were subject to an unsuccessful challenge in the UK courts in 2021. Occupiers are now able to move between retail, professional services, restaurant and business use without obtaining planning consent. They will still need to obtain planning consent for any facilitating works to the premises and, if occupying as a tenant, any consents required under their leases. At present, most leases still refer to the previous use class order, so it will be interesting to watch the extent to which tenants begin to make use of the new planning freedoms to change use. For more on this topic, see our reflections.

Charities Act 2022

The Charities Act 2022 was passed in February 2022. It is intended to allow charities to be run more efficiently, balancing between reducing time-consuming regulations on the one hand and maintaining appropriate regulatory safeguards on the other hand. In terms of real estate reform in the charity sector, it streamlines the processes in various respects. For more detail, see the textbox.

Charities Act 2022: real estate reforms

Measures include:

  • permitting the flexibility to obtain advice on disposals of land from a wider range of professional advisers including fellows of both the National Association of Estate Agents and the Central Association of Agricultural Valuers as well as members of the Royal Institution of Chartered Surveyors;

  • removing certain overly prescriptive and burdensome statutory requirements, such as the obligation on trustees to advertise a proposed disposition in the manner advised in the surveyor's report; and

  • creating certainty for purchasers when they buy land from charities. This will involve an obligation to include in every contract for a disposition or mortgage of charity land a statement that the charity has complied with the requirements of Part 7 of the Charities Act 2011, as well as the statement already required under s.122(2) and/or 125(2) of the Act. This new statement will be construed in favour of any purchaser or lender who has entered into the contract in good faith and will prevent a charity from relying on its own failure to comply with the statutory rules in order to avoid completing a contract for the disposal of an interest in land.

UK Land Registry changes

The Land Registry has continued to evolve its digital processes, having recently accepted electronically signed signatures and developing a platform whereby users can manage their portal applications and correspondence in one place. From November 2022 only digital applications (instead of customers uploading PDFs) will be accepted for simple updates to existing titles via the online customer portal. Read more details. 

We also expect to see further changes to registration requirements when dealing with overseas entities, in light of the Economic Crime (Transparency and Enforcement) Act 2022, as discussed in the Company Law and M&A section above.

For further information, please contact

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