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Category Archives: Insight Article

Why is clear contract drafting important?

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In today’s fast-paced business world, contracts are the backbone of almost every commercial relationship. Whether you contract with suppliers, customers, or partners, a well-drafted contract can help avoid misunderstandings and protect your business from potential legal issues.

Parties often fail to have appropriate contracts in place – or, indeed, any contract at all. The familiarity between parties with well-established relationships can cause them to overlook the importance of clear and concise contract language, leading to costly disputes over misunderstandings, claims for contractual breach and a breakdown of party relationships.

Contract clarity matters

A contract is a legally binding agreement between parties that sets out the terms and conditions of a business arrangement. When drafted poorly, contracts can lead to confusion about each party’s obligations, misunderstandings, delayed payments, a breakdown of party relationships, and lengthy and costly litigation.

Focusing on clear and precise language ensures that everyone involved in the contract understands their rights and responsibilities.

Why is clear contract drafting essential

Preventing disputes: Clear terms help avoid confusion about what each party expects. Suppose the contract is vague or even poorly worded. In that case, it becomes easier for one party to argue that the terms are open to interpretation, which can result in costly disputes or legal action.

Defining expectations: Contracts provide an opportunity to set clear expectations, whether determining the scope of work, outlining payment schedules, or setting performance standards. Clear clauses ensure that all parties understand their roles in performing the contract and whether failure would constitute a breach of contract or termination of the agreement. This transparency creates a more efficient working relationship and minimises the chances of one party failing to meet their obligations.

Protecting your interests: Solicitors will design bespoke contract clauses to protect your business from potential risks. For instance, confidentiality clauses ensure that a party does not share sensitive information with third parties. Indemnity clauses can protect you from any losses or damages caused by the other party’s actions.

Standard clauses your business should consider

Payment terms: One of the most important aspects of any contract is how and when a party will pay. Being specific about payment schedules, invoicing procedures, and late fees can prevent payment-related issues.

Delivery and deadlines: When products or services are involved, the contract should clearly outline delivery timelines and deadlines. This clarity helps both parties stay on track and understand the consequences of not meeting deadlines.

Confidentiality clauses: Confidentiality is important in many business relationships. These clauses ensure that sensitive information shared during the agreement remains protected.

Dispute resolution: Clearly outlining how the parties will handle any disputes, whether through mediation, arbitration, or litigation, can save time and money in the event of disagreement.

Termination clause: This clause specifies the conditions under which either party can end the contract, including a plan of action for winding up or terminating a joint venture, partnership, company, or other entity.

How we can help

Partnering with us protects your business from potential risks with well-drafted, legally robust contracts. While clear contract drafting may seem simple, it requires precision and legal expertise to avoid ambiguities and enforceability issues. Our team ensures your agreements are comprehensive, legally binding, and tailored to align with your unique business needs, giving you confidence and legal security in every transaction.

Get in touch today with paralegal and author Anam Mohammed or Victoria Holland, who heads up our Corporate and Commercial team at West End law firm RIAA Barker Gillette (UK).

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Ensuring equality: A legal guide to responsibilities and compliance

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The Equality Act 2010 (the Act) consolidated multiple equal opportunities laws, including the Sex Discrimination Act 1975, Race Relations Act 1976, and Disability Discrimination Act 1995. It serves as a cornerstone of workplace equality, protecting individuals from discrimination, harassment, and victimisation. The Act was introduced following the formation of the Equality and Human Rights Commission (EHRC) in 2007, which promotes equality, diversity, and human rights in the UK.

While government guidance exists, what does “equal opportunity” truly mean in an employment context?

What do equal opportunities mean?

Equal opportunities in employment ensure that all workers are entitled to and can access all organisational facilities at every stage of employment. This principle applies irrespective of protected characteristics, including:

  • Age
  • Disability
  • Gender reassignment
  • Marital or civil partnership status
  • Pregnancy or maternity
  • Race (including colour, nationality, ethnic, or national origin)
  • Religion or belief
  • Sex
  • Sexual orientation

To uphold equal opportunities, every individual should have an equal chance to:

  • Apply and be considered for jobs during recruitment.
  • Receive training and promotions based on merit.
  • Experience fair and equal treatment throughout their employment, including termination.

Employers must make hiring, training, and promotion decisions based on merit rather than bias or prejudice. The push for workplace diversity, equity, and inclusion is not just a social expectation but a legal necessity.

Key equal opportunities responsibilities

The Act mandates employers to:

  • Prevent discrimination, harassment, and victimisation: Employers must actively safeguard employees against unfair treatment.
  • Make reasonable adjustments for employees with disabilities: Workplaces must be accessible and inclusive, ensuring fair participation.
  • Ensure equal pay: Employers must pay men and women the same for the same or equivalent work. Recent legal cases, such as the retailer Next’s six-year equal pay dispute, demonstrate the risks of non-compliance.
  • Protect employee health, safety, and welfare: Employers have a duty of care to ensure a safe and supportive work environment.

Who Is responsible for ensuring compliance?

Employers bear the primary responsibility for compliance. Simply having an equal opportunities policy is not enough. To avoid legal risks, businesses should implement effective training and monitoring programmes. These proactive measures can serve as a safeguard against discrimination claims.

Enforcing equal opportunities: how the law works

If an employee experiences discrimination, they may first raise a grievance with their employer. Many organisations have internal diversity and inclusion policies designed to address concerns before they escalate. If a resolution is not reached, the following legal avenues apply:

  • Employment Tribunal: Handles employment-related discrimination claims.
  • County Court or High Court: Deals with discrimination cases outside of employment.

Strict time limits apply for lodging claims, so prompt action is essential.

Final thoughts

Equal opportunities are not just about compliance—they help create fair, inclusive, and thriving workplaces. Employers must actively uphold these legal standards to ensure a discrimination-free environment. Staying informed and proactive can prevent costly legal disputes and foster a culture of equality and respect.

For expert legal advice on equal opportunities, contact Karen Cole, employment partner at RIAA Barker Gillette (UK).

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Estate planning: How not to make mincemeat of it!

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In an unusual twist, Malcolm Chenery set out his wishes using a Young’s frozen fish box and a Mr Kipling mince pie box. He left his £180,000 estate—including a three-bedroom house, jewellery, and a pottery collection—to the charity Diabetes UK. Despite the unconventional medium and the two pieces of card not being physically connected, the court upheld the will. The case highlights how effective estate planning can reduce delays and costs for your beneficiaries.

The words "estate planning" written in blocks

Under English law, a will is valid if it complies with the Wills Act 1837, which requires it to be in writing, signed by the person making it, and witnessed by two independent individuals present at the same time.

James McMullan, partner and Head of Private Client Services at RIAA Barker Gillette (UK) said:

“While this case highlights that a will doesn’t have to follow a traditional format to stand in court, unconventional approaches often lead to unnecessary stress and costs for executors and beneficiaries. Even with the family supporting the charitable donation, this case caused additional complications.”

Simple preparation can avoid such confusion. One important step is to organise financial documents and create a clear list of assets, which is kept up to date and in a place known to the executors.

“Executors must obtain valuations for all your assets — whether property, crypto currency, premium bonds, or pottery collections like Mr Chenery’s. Providing account details in advance can save time and stress.”

A delay in sending information about assets to HM Revenue and Customs following a death can have serious financial consequences. Executors are personally accountable for handling estates correctly, including paying inheritance tax (IHT) on time. IHT is due within six months of the month of death, with HMRC currently charging 7.5% interest after that time. Delays can result in penalties and mounting costs, which beneficiaries might expect executors to cover from their own funds.

Executors must also act within two years to claim some of the tax-free allowances for married couples or civil partners, who can combine allowances to pass up to £1 million tax-free. Missing this deadline can reduce the inheritance beneficiaries receive.

While a spouse does not have to claim the exemption for gifts between spouses as it is ‘absolute’, they must claim the transferred nil rate band, where the two-year time limit applies.

James added:

“Think of estate planning as a gift to your loved ones. Discussing your plans with family, whether they’re included or excluded, can help avoid disputes and ensure your legacy is handled smoothly. Attention to detail now can make a world of difference later.”

Ensure your estate is handled exactly as you intend without unnecessary complications. Proper estate planning can save your loved ones stress, time, and unexpected costs.

Speak to James McMullan today to secure your legacy.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

If you found this article interesting, why not read…

Six tips to make things simple for your executors

Six tips to make things simple for your executors

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Executors may be family, friends or professionals, but they must make sure everything is done correctly at every stage, from collecting details of all the assets, reporting to HMRC, obtaining probate, to distributing money and other assets to beneficiaries. Agreeing to the role and having the opportunity to discuss your wishes will help them prepare. Partner and Head of Private Client Services at RIAA Barker Gillette (UK), James McMullan, suggests some other simple steps.

Draft a clear, valid will

Ensure your will complies with all legal requirements and reflects your wishes clearly. You should check and discuss anything that could lead to a dispute with those involved. Consider consulting a solicitor to ensure all bases are covered, including provisions for guardianship, specific bequests, and how you want to share your estate. Whatever the cost of having a will drawn up by a professional, it is a small price compared to the costs involved if the validity of a homemade will is questionable.

Store your will securely

Keep your will in a safe but accessible place and inform your executors where it is stored. Options include a solicitor’s office, a bank’s safe deposit box, or a registered will storage service. You can also log its existence with the National Wills Register. You should avoid storing your will in a place that could be overlooked or difficult to access, such as a personal safe with an unknown combination.  

Review and update regularly

Life events such as marriage, divorce, the birth of children, or a significant change in assets can affect the validity or relevance of your will. Regularly reviewing your will ensures it remains aligned with your current wishes. 

Consider your digital assets

In today’s digital age, estate planning must include online accounts, digital assets, and even social media profiles. Leave instructions for accessing important accounts and consider appointing a digital executor if necessary.

Plan for taxes

While the tax-free threshold for inheritance tax (IHT) is £325,000 in the UK, estates exceeding this may be liable for significant tax payments. Proper estate planning can help mitigate IHT liabilities, for instance, by effectively using exemptions, gifts, or trusts.

Communicate with executors and beneficiaries

Discussing your plans with all involved reduces misunderstandings and surprises later. Executors should understand their responsibilities, and beneficiaries should know your intentions to help manage expectations.

Make life easier for your executors and ensure your estate is handled smoothly. With the right planning, you can prevent unnecessary stress, disputes, and tax burdens.

Start your estate planning today with expert guidance from James McMullan.

Staying ahead in a changing legal landscape

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The importance of regular reviews of employment contracts and policies

In today’s business environment, employment law is constantly evolving. From updates to statutory rights and obligations to shifts in case law and regulatory guidance, businesses must navigate a complex and ever-changing landscape. One critical step for employers to remain compliant and protect their interests is regularly reviewing employment contracts, workplace policies, and procedures—something that is easy to overlook.

Why regular reviews of employment contracts and policies are crucial

Legislative and regulatory changes

Employment law frequently changes because of new legislation, government initiatives, or societal shifts. In recent years, we have seen updates to laws regarding worker status, parental leave, minimum wage increases, and flexible working arrangements. Failing to update contracts and policies to reflect these changes can lead to non-compliance, employee disputes, or even costly tribunal claims.

Case law developments

Employment law is shaped not only by legislation but also by decisions made in Employment Tribunals and courts. High-profile cases concerning gig economy workers have significantly impacted how businesses classify employees and independent contractors. Regular reviews ensure contracts and policies align with the latest judicial interpretations.

Changing workplace norms

The workplace is evolving, influenced by remote work, diversity and inclusion initiatives, and mental health awareness. Businesses must adapt their policies to reflect these shifts, supporting employee wellbeing and fostering a positive workplace culture.

Mitigating risk

Outdated contracts and policies expose businesses to unnecessary risks, including litigation, reputational harm, and financial penalties. Failure to provide a written statement of terms and conditions containing certain key information might result in a claim against the business. Such risks can easily be avoided by regularly reviewing and updating documentation.

employment contract terms and conditions

Key areas for review

Employment contracts

The employment contract is crucial as it essentially governs the relationship between employer and employee. It incorporates the statutory particulars given to an employee (a written statement of key terms and conditions) as well as clauses that provide additional protection for the employer. Such clauses are likely to include a probationary period, permitted deductions, and, where relevant, post-termination restrictions. Regarding the latter, it is sensible to ensure such clauses are kept under review and confidentiality clauses are updated to reflect current business needs and legal standards.

Workplace policies and procedures

If not in the employment contract, there are policies and procedures that an employer is legally required to have elsewhere, such as disciplinary and grievance, sickness and holiday procedures. There is a compelling reason to house some policies outside of the employment contract, which gives the business flexibility in updating them. Some policies, whilst not mandatory, have strong legal reasons for being included, such as bribery and data protection policies. 

Training and implementation

  • Employee Awareness: Bring any changes to employees’ attention and ensure they understand updated policies and procedures.
  • Manager Training: Equip managers with the knowledge to apply changes consistently and fairly.

Best practices for conducting reviews

  • Set a Regular Schedule: Conduct reviews annually or more frequently if significant legal changes occur.
  • Engage Experts: Work with employment law specialists to ensure accuracy and compliance and have such documents tailored to the business’ needs.
  • Consult Employees: Involve employees in the review process to identify gaps or practical issues.
  • Document Changes: Record all updates and communicate changes effectively to staff.

Conclusion

Mutual rights and obligations form the foundation of the employment relationship, and employers must maintain up-to-date contracts and policies to preserve this balance. Regular reviews ensure legal compliance and demonstrate a commitment to fairness, adaptability, and best practices. In an era of rapid legal and societal change, proactive employers can safeguard operations, foster employee trust, and position themselves for long-term success.

By taking a strategic approach to reviewing employment contracts and policies, businesses can stay ahead of the curve and create a robust foundation for growth and resilience.

Contact Karen Cole to update or review your employment contracts and policies today.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

New sexual harassment rules may signal changes to office parties or a decline altogether

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The festive season is upon us, but businesses may need to rethink their approach to office Christmas parties following the introduction of stricter sexual harassment laws. The updated legislation, which came into effect in October, places a greater duty on employers to take reasonable steps to prevent sexual harassment in the workplace, including at social events.  Failing to do so means employers could face claims for unlimited compensation at the Employment Tribunal.

As a result, the new rules may spell the end of traditional alcohol-fuelled office celebrations, especially in any regulated sector such as financial services.

Head of Employment at RIAA Barker Gillette (UK), Karen Cole, highlights the impact on businesses.

“With increasing legal responsibilities for staff welfare and safety, some companies may feel such events are becoming too risky, too difficult to manage and too costly.”

The new legal duty represents a significant shift in how employers must act to prevent sexual harassment. Previously, employers could defend themselves by demonstrating they had policies and procedures in place and had taken reasonable steps after an incident occurred. Now, businesses must take action to anticipate and prevent sexual harassment, regardless of whether a complaint has been made.

Sexual harassment involves any unwanted sexual behaviour that causes someone to feel intimidated, degraded, humiliated, or offended, regardless of intent. This includes actions like inappropriate remarks about someone’s appearance, offensive jokes, unwelcome questions about personal matters, or non-consensual touching. It also extends to digital communication, such as unwanted messages, emails, or phone calls.

And the stakes are high for employers who fail to meet this new duty. If the Equality and Human Rights Commission (EHRC) receives a report that a business is not taking reasonable preventative steps, it can take enforcement action, even if no specific harassment claim has been made. Where a case proceeds to an employment tribunal, non-compliance could result in an increased compensation award of up to 25%.

In addition, businesses in high-risk industries may need to consider extra safeguards, such as in hospitality, where research has found more than half of women reporting workplace sexual harassment.  Measures could include ensuring employees never work alone, providing additional reporting channels beyond direct supervisors, and treating social events as extensions of the workplace. 

Karen warns:

“Waiting for something to happen is not an option: every employer needs to be able to show they have taken reasonable steps to prevent a situation arising.”

For employers, the message is clear: ignoring these risks could result in significant legal and reputational damage and simply scrapping social events like the Christmas party isn’t a solve-all action.  Instead, businesses need to mitigate risk by implementing clear policies, providing staff training, and promoting a culture of respect and inclusion.

Karen further explains:

“This legislative shift will be a wake-up call for many industries. Yes, festive gatherings can boost morale and foster team cohesion, but they must be carefully planned with an emphasis on safeguarding employee wellbeing.  

This is about looking at the bigger picture and taking action to foster a safe and respectful environment that protects both employees and the business.”

While the current legislation does not specifically allow for claims due to third-party sexual harassment, legal liability may arise if employers fail to act on inappropriate behaviour by clients or suppliers. Looking to the future, the Employment Rights Bill progressing through Parliament will increase employer responsibilities in this area.  

Are you concerned about how the new sexual harassment rules impact your business? Contact Karen Cole, Partner and Head of Employment Law at RIAA Barker Gillette (UK), for expert advice on ensuring compliance and protecting your organisation

Note: This article is not legal advice; it provides information of general interest about current legal issues.

What are trustee responsibilities? A guide to key duties and best practices

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Trustee responsibilities

What is a trustee?

A trustee is a person or a firm that holds and administers property or assets held in a trust for the benefit of a third party. Trusts can be created for a variety of purposes. For example, trusts can be established in bankruptcy situations, in certain types of retirement plans, or to manage assets for a minor or someone lacking capacity. Alternatively, you can establish a trust to hold assets with income and capital to be distributed to beneficiaries over time.

Trustees have a fiduciary responsibility to the trust’s beneficiaries, which means the trustee must act in the best interests of the beneficiaries when managing the trust’s assets.

Key trustee responsibilities

A Trustee’s duties are many and varied, and we set out some of the duties you can expect to undertake:

Making Decisions

Trustees must make all decisions regarding the trust. They must decide on the acquisition, application, and disposal of the assets. They also need to implement the purposes of the trust for the benefit of the beneficiaries. They must also make decisions within the trust rules and have a duty to exercise reasonable care, skill, and diligence when making decisions and managing the trust’s assets.

The Trustee Act 2000 extended the power of investment trustees whilst protecting the beneficiaries’ interests against abuse of these powers.

Unless otherwise provided for in the trust document, trustees’ decisions must be unanimous.

Managing assets

Trustees are responsible for managing the assets in a trust, be they money, financial instruments, property, or other asset types (for example, cryptocurrency). The assets must be managed for the benefit of the trust’s beneficiaries.

If the trust is a discretionary trust, the trustees will have more freedom to make decisions, provided those decisions benefit the beneficiaries.

The 2000 Act empowered trustees to acquire freehold or leasehold land in the UK.

Trustees can instruct professionals to act on behalf of the trust to assist in acquiring and disposing of assets.

Act in the best interests of the beneficiaries

The trustees must always act in the best interests of the beneficiaries. They must be impartial to ensure no single beneficiary benefits over others. They must also avoid any conflicts of interest concerning themselves, their affairs, and the trust estate under their charge.

Follow the rules of the trust

The trust deed establishing the trust will set out the trustees’ powers and rules designed to benefit the beneficiaries. Trustees cannot ignore those rules when making decisions and must always follow them, even if a beneficiary disagrees with them.

If the trust is a discretionary trust, the extent of the discretion will be specified in the trust deed. Again, trustees should ensure they do not exceed the powers or breach the rules set down in the trust document.

Keeping accounts and paying taxes

The trustees will be responsible for accounting to HMRC for any taxes due by the trust. These might include Inheritance Tax, Capital Gains Tax, and Income Tax. The Trustees will prepare accounts each year and submit returns to HMRC to account for any tax due. Trustees can instruct accountants to prepare accounts and advise on taxation matters.

Complying with the common law duty of care

All trustees must comply with the common law duty of care. That means they must take the precautions that an ordinary prudent person of business would take in managing similar affairs of their own.

Think carefully before accepting a trustee appointment

The duties and responsibilities of trustees are onerous and can take up a great deal of time. They may bring you into conflict with the trust’s beneficiaries, which can be challenging, especially when they are family members.

Before accepting the position, take professional advice about the duties and responsibilities and familiarise yourself with the rules under which you are being asked to act as a trustee.

Contact James McMullan, Partner and Head of Private Client at RIAA Barker Gillette, for expert advice on navigating trustee responsibilities and protecting beneficiaries’ interests.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

What is the Employment Rights Bill 2024?

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Employment Rights bill 2024

Despite its transformative potential, the Employment Rights Bill 2024 represents a gradual shift rather than an immediate overhaul. Many key reforms have been postponed, diluted, or subject to further consultation. The Bill’s staggered approach offers employers time to adapt, but it signals a new direction for worker rights in the UK.

A gradual introduction of reforms

Fulfilling the government’s election promise to publish the Bill within 100 days of their landslide election victory led to compromises and unfinished business. Several ambitious reforms outlined in the government’s Make Work Pay manifesto, aimed at addressing low pay, job insecurity, and poor working conditions, were scaled back under pressure from employers. Consequently, some of the most impactful provisions remain under consultation or will be phased in over time.

Alongside the Bill, a companion paper, Next Steps, outlines how the government intends to deliver on its election promises not yet covered by the Bill. With implementation unlikely before mid-2025 and some measures delayed until at least 2026, the Bill reassures employers that there will be no sudden shifts in the legal landscape.

Fundamental changes and what’s missing

Unfair dismissal rights from day one 

One of the most anticipated changes is the introduction of unfair dismissal protections from the first day of employment. Currently, employees need two years of continuous service to qualify for such protection. The Bill proposes a statutory probationary period, likely between six and nine months, giving employers time to assess an employee’s suitability. While media reports hint at this timeframe, the final details remain subject to consultation.

Flexible working as a day-one right 

Building on previous legislation, the Bill makes flexible working a statutory right from the first day of employment. Employers can still refuse requests based on the eight permissible business reasons for refusal, but the refusal must be reasonable. This shift is expected to encourage greater workplace flexibility and make it easier for employees to challenge refusals.

Regulation of zero-hours contracts 

While zero-hours contracts remain lawful, the Bill introduces protections for workers. Employers must provide contracts that reflect the average number of hours worked and give reasonable notice of shifts. Workers will also be compensated if shifts are cancelled without adequate notice, offering more security to those in precarious employment.

Protections against ‘fire and rehire’ 

The Bill introduces significant protections against the controversial practice of “fire and rehire,” where employers dismiss staff and offer reemployment on less favourable terms. Under the new law, dismissing an employee for refusing changes to their contract will be considered automatically unfair, closing a loophole that has allowed employers to pressure workers into accepting less favourable conditions.

Strengthened protections for new parents 

Pregnant women and new mothers will enjoy extended protections under the Bill. It will become unlawful to dismiss a woman on maternity leave and for six months after her return, except under specific circumstances. Additionally, paternity and parental leave will become day-one rights, with no qualifying period required, making it easier for employees to access these entitlements.

Reforms still in consultation

Single worker status 

A key reform absent from the Bill is the proposed single-worker status, which aims to simplify employment categories by merging the current distinctions between “worker” and “employee.” This proposal is still under consultation, but its implementation would represent a significant step toward greater clarity in employment rights, especially for the gig economy and freelance workers.

The right to disconnect 

Another highly anticipated reform, the right to disconnect, was left out of the Bill. Designed to protect employees’ time outside of work, particularly in an era of increasing remote work, this provision will be addressed through a forthcoming code of practice instead. Consultation on this issue is expected next year.

Other notable reforms

Statutory Sick Pay (SSP)

Under the current system, Statutory Sick Pay (SSP) is only available after four days of sickness and for those earning over £123 per week. The Bill removes both the waiting period and the earnings threshold, making SSP available to all employees from the first day of illness. This reform is expected to be one of the first to take effect.

Tougher harassment laws 

The Bill significantly strengthens employer responsibilities regarding workplace harassment. Employers will now have a duty to take “all reasonable steps” to prevent harassment, a marked increase from the current standard. This includes liability for harassment by third parties, not limited to sexual harassment, making it easier for employees to seek redress.

The Fair Work Agency 

A new Fair Work Agency will be established to oversee the enforcement of workers’ rights, including issues such as holiday pay. By unifying various enforcement bodies, this agency aims to streamline the process for employees seeking justice and ensure greater compliance with employment law across the board.

Implications for employers

While many reforms will not take effect until 2025 or later, employers should begin preparing for the upcoming changes. The phased approach gives businesses time to review their policies, contracts, and dismissal procedures to ensure compliance with the new laws. Particularly important areas of focus include:

  • Revising employment contracts to reflect new rights around dismissal, flexible working, and zero-hours contracts.
  • Implementing stronger anti-harassment policies to meet the higher legal standards.
  • Monitoring developments around pending consultations on single worker status and the right to disconnect.

Key Takeaways for Employers

  1. Unfair dismissal protections will apply from day one, with a probationary period allowing employers to assess new hires.
  2. Flexible working becomes a day-one right, with stricter criteria for employers refusing requests.
  3. Zero-hours contracts will remain lawful but must reflect actual working patterns, and cancellations will require compensation.
  4. Fire and rehire practices will be significantly restricted, making enforcing contract changes harder.
  5. Statutory sick pay will be available from day one, and parental leave rights will apply immediately without a qualifying period.
  6. Stronger harassment laws will require employers to take all reasonable steps to prevent harassment, including from third parties.
  7. The Fair Work Agency will be established to enforce workers’ rights and provide guidance on employment law.

For expert advice on navigating these changes, speak to us to stay ahead of developments and ensure they are fully prepared when the Employment Rights Bill 2024 comes into force.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Disclosure against warranties in UK corporate transactions

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woman ticking a safety shield regarding corporate warranties

Warranties, which are contractual promises or statements of fact, are typically given by sellers to prospective buyers in a purchase agreement. These warranties cover various aspects of the target company, business, or assets being sold. If any warranty proves to be inaccurate or untrue, the buyer may have grounds to pursue a claim for breach of warranty, seeking damages from the seller.

To mitigate the risk associated with such claims, sellers employ disclosure mechanisms. These disclosures, usually made through a disclosure letter and a virtual data room, allow sellers to provide information and documents that may be inconsistent with the warranties provided.

Mechanisms of disclosure

Disclosure letter

  • General disclosures include information of a broad or general nature or details already available in the public domain (e.g., records at Companies House).
  • Specific disclosures pertain to specific information, documents, or matters the seller identifies as relevant to and inconsistent with particular warranties.

Virtual data room (VDR)

The VDR is an online repository where sellers, typically through their professional advisers, upload documents containing information relevant to the warranties and the overall disclosure exercise.

Standard of disclosure

Disclosures must meet a certain standard to effectively protect sellers. The concept of ‘fair disclosure’ is central to this standard and has been examined in various court cases.

Courts usually refer to the definition of ‘fair’ agreed between the buyer and seller and set out in the purchase agreement. Typically, fair disclosure requires providing information or documentation with “sufficient detail to enable the buyer to identify the exact nature and scope of the matter disclosed.” If the disclosures meet this standard, sellers are protected against claims arising from the warranties. However, if sellers later attempt to argue that matters that were not fairly disclosed should be inferred from documents or information, the courts are unlikely to side with them.

To meet the standard of fair disclosure, sellers should:

  • Clearly and adequately disclose important issues in the disclosure letter, providing all relevant facts to ensure the buyer fully understands the matter’s significance and its implications on the warranties.
  • Avoid relying solely on broad or generic information or merely referring to documents in the VDR, as this does not normally satisfy the required standard of disclosure.
  • Ensure that information is not hidden or inaccurately described in the VDR, as this would not constitute fair disclosure.

Furthermore, any deliberate concealment of crucial information by the seller may be considered fraudulent. In cases of fraud, the courts often disapply the limitations of liabilities that are usually set out in the purchase agreement, which could result in severe consequences for the seller.

Conclusion

Disclosure is a critical element in UK corporate transactions, serving as a key mechanism for sellers to protect themselves from potential warranty claims. Sellers who fail to make fair disclosures risk facing significant legal and financial liabilities. It is, therefore, essential for anyone involved in the sale of assets or shares to seek legal advice to fully understand the mechanics of disclosure, navigate the disclosure process effectively and enhance protection against possible warranty claims.

Speak to corporate solicitor Evangelos Kyveris today.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

Non-Disclosure Agreements (NDAs): An Overview

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non-disclosure agreement (NDA) writte words being pealed back from an envelope

Non-Disclosure Agreements (NDAs) are versatile and can be used in various scenarios. They may also be incorporated into other documents, such as employment contracts or settlement agreements, to safeguard trade secrets or commercially sensitive information, especially during employee terminations.

Types of NDAs

There are two primary types of NDAs:

1. Unilateral NDA: This agreement imposes confidentiality obligations on only one party.

2. Bilateral (Mutual) NDA: Both parties agree to keep shared information confidential.

When are NDAs used?

NDAs are essential in various business situations. Common examples include:

  • Pre-contract Negotiations: These are discussions during tender or contract negotiations where sensitive data is exchanged to finalise an agreement. Mutual NDAs are typically used.
  • Mergers and acquisitions (M&A): The acquiring company signs an NDA to prevent the disclosure of the target company’s confidential information.
  • Employment Contracts: Employees with access to proprietary company information may sign NDAs to protect trade secrets and prevent unauthorised disclosures.
  • Product Development & Collaborations: NDAs are crucial in joint ventures or R&D partnerships to safeguard intellectual property.
  • Settlement Agreements: These are often used during employment terminations to reiterate the confidentiality provisions in the employment contract or impose new obligations where the employment contract is deficient and where the employee leaves.

Key elements of an NDA

Regardless of the context, NDAs follow a consistent structure with key provisions, including:

  • Parties Involved: Identifies the parties and their representatives, such as advisors or subcontractors.
  • Definitions: Clarifies what constitutes confidential information.
  • Obligations: Outlines each party’s responsibility to protect confidential information.
  • Return/Destruction of Information: Specifies how confidential information will be handled after the contract ends.
  • Exclusions: Lists information that isn’t protected, such as data already in the public domain.
  • Duration: Defines how long the NDA remains in effect.
  • Remedies for Breach: Specifies penalties or actions in case of a breach.

Are there circumstances where NDAs are unenforceable?

In certain situations, particularly in employment, NDAs may not be enforceable. These include:

  • Whistleblowing
  • Reporting a Crime
  • Discussing Pay with colleagues for Equal Pay reasons

Abuse of NDAs

NDAs have been misused in high-profile cases, such as the Harvey Weinstein scandal, where they were used to silence victims of sexual harassment. Recently, the UK Treasury Select Committee has heard concerns about NDAs being used to cover up discrimination and sexism. While legislation to prevent NDA misuse was proposed in 2024, it was delayed due to the general election. However, Guidance has been issued by the Solicitors Regulation Authority and the Law Society to lawyers on good practice in the use of confidentiality provisions and NDAs in settlement agreements, reflecting the scrutiny they have come under.   In May 2024, the Victims and Prisoners Act 2024 received Royal Assent.  Whilst a date for it coming into force is still awaited, the Act will make void provisions in agreements that prevent victims of criminal conduct from disclosing certain information. 

The proper use of NDAs

When used correctly, NDAs respect and protect confidential information for legitimate commercial reasons. They are essential tools in safeguarding business interests and come with legal consequences for breaches.

If you need guidance on drafting or enforcing an NDA, contact our corporate partner, Victoria Holland or our employment partner, Karen Cole, for expert assistance.

Note: This article is not legal advice; it provides information of general interest about current legal issues.

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