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Matt Green comments on the Digital Assets Bill in eprivateclient

Posted on: November 18th, 2024 by Hugh Dineen-Lees

Director and Head of Blockchain and Digital Assets Matt Green comments on the introduction of the Property (Digital Assets etc) Bill, and argues that this legislation will provide greater clarity to the treatment of cryptocurrencies and digital assets under UK law.

Matt’s comments were published in eprivateclient, 15 November 2024, and can be found here.

“Property rights allow individuals to identify and demarcate ownership. In turn, being deprived of property creates a right in either damages or for that exact property to be owed. This ensures there’s greater market confidence when dealing with property, as there are clearer legal rights to ownership, control and general treatment of that property.”

“Historically property fell into two main categories – things that are tangible and exist physically or a contractual right enforced by a legal system (such as a debt claim or contractual right to goods). Digital assets (including cryptocurrencies, digital files and records, email accounts and certain in-game digital assets, domain names, even verified carbon credits) do not fall neatly into either category.”

“Use of a negative definition as proposed in the Digital Assets Bill, future proofs how property is treated, preventing the need to return to the issue for decades to come. To give an exhaustive list of what property is limits what may or may not exist going forward, so the wording is designed to ensure policymakers and the public at large are given that freedom to treat “things” as property when required, as well as the ability to sensibly divert from the rigid definition of property when required.”

“Although a welcome change for a legal system previously often unequipped to deal with such matters, enabling a “thing” to be property even where it is not tangible or creates a legal right may create inconsistencies at common law given the broad strokes definition. However the benefit of future proofing far outweighs the potential for inconsistencies and the Law Commission included guidelines as to what may constitute property under this Bill to assist decision makers.”

“As more “things” become property at a legal level, we may see the implementation of further laws, or even Judge’s decisions, which sweep up any unanswered issues. Overall, this Bill is a huge win for those dealing in digital assets, providing much needed clarity in an economy already utilising this technology at large.”

Effects of the budget changes on owner managed businesses

Posted on: November 5th, 2024 by Hugh Dineen-Lees

Rachel Reeves finally delivered the first budget of the new Labour Government on 30 October 2024. Following intense speculation beforehand (including our own!), industry commentators in the aftermath of the announcements were suggesting that the budget was not as dramatic as they had expected. Perhaps this was more down to the carefully thought-through campaign leading up to the announcements and an excellent presentation of the changes on the day.

Most commentators have, however, pointed out that these changes will mean that businesses and entrepreneurs will be paying more tax, in some cases as soon as today. Now that the dust has settled and further analysis has taken place, we can take a look at the key changes introduced and their implications for owner-managed businesses.

Capital Gains Tax (CGT)

Business owners considering selling their company will be very interested in any changes to CGT. These were keenly anticipated, and it was confirmed that these and the tax on carried interest will rise from April 2025.

With immediate effect, the rates of CGT increased from the current 10% (for basic rate taxpayers) and 20% (for higher and additional rate taxpayers) to 18% and 24% respectively. There are special provisions for contracts entered into before 30 October 2024 but completed after that date. Anti-forestalling rules were also introduced with immediate effect which can, in certain circumstances, apply to unconditional contracts entered into before 30 October 2024 which were not completed by then. The rates for selling second properties remain at 18% and 24% respectively.

The CGT rate for Business Asset Disposal Relief (BADR), which can apply to lifetime gains of £1m on certain disposals by employees and directors in their unlisted businesses, will continue. However, the tax rate will increase from the current 10% to 14% for disposals made on or after 6 April 2025, and from 14% to 18% for disposals made on or after 6 April 2026. It has been calculated that this will mean an increased bill of up to £80,000 for those planning to sell their businesses after April 2026.

Investors’ Relief (IR) provides for a lower rate of CGT to be paid on the disposal of ordinary shares in an unlisted trading company where certain criteria are met, previously subject to a lifetime limit of £10m of qualifying gains for an individual.

It is aimed at encouraging entrepreneurial investors to inject new capital investment into unquoted trading companies.

The CGT rate for IR, which applies in similar circumstances to BADR but where the investor is unconnected with the business, will increase in parallel with the BADR rates. Furthermore, the lifetime limit for this relief will also reduce from £10m to £1m for disposals made on or after 30 October 2024, significantly limiting its financial benefit going forward.

Carried interest changes

Carried interest refers to the performance-related rewards received by fund managers, primarily in the private equity industry. Previously, carried interest was taxed at lower capital gains tax rates, compared with income tax rates. The Budget changes included an increase in the CGT rate for all carried interest gains to a new flat rate of 32%, applying to carried interest arising on or after 6 April 2025. This is a temporary measure ahead of wider reforms that will apply from the following tax year. From 6 April 2026 a specific tax regime for carried interest will be introduced, moving it from the CGT framework to income tax. All carried interest will then be treated as trading profits and subject to Income Tax and National Insurance Contributions (NICs). However, the amount of ‘qualifying’ carried interest subject to tax will be adjusted by applying a multiplier resulting in an effective tax rate at 34.1% including NICs. Some might see this change as somewhat cosmetic, but it seeks to deal with some of the negative perceptions about carried interest representing remuneration rather than true capital gains.

These are all significant changes but, according to an analysis by Grant Thornton, this “still presents an attractive environment for management incentives and investors and is unlikely to discourage ongoing deal activity”. They “therefore expect the impact on M&A to be less severe than anticipated with the announcements ensuring the UK remains an attractive and internationally competitive environment for investors”.

Changes to Inheritance Tax (IHT)

While the CGT announcements were not as drastic as some had been speculating, the IHT reforms present a substantial shift in the tax landscape, especially for entrepreneurs and business owners. The changes introduced in the budget have particularly alarmed farmers and small business owners as from 6 April 2026, a 20% tax rate – half the headline inheritance tax rate of 40% – will be applied to the value of farms and businesses worth more than £1m when they are passed on.

The existing 100% business property relief and agricultural property relief will continue only for the first £1m of combined agricultural and business property after 6 April 2026. The rate of relief will be 50% thereafter, effectively making this a 20% IHT charge.

This presents a risk for family business owners as well as their companies, which will no doubt have to play a major part in funding any IHT that is due.

Changes to National Insurance contributions

From April 2025, employers’ NICs will increase from 13.8% to 15%. The threshold at which employer NICs become payable will fall from £9,100 to £5,000. To help mitigate these additional NICs costs for smaller employers, the employment allowance (which allows businesses whose annual NICs bill is less than £100,000 to reduce their NICs costs) will increase from £5,000 to £10,500 per year, and will apply to all businesses as the £100,000 threshold will be removed.

These changes present a challenging scene for our retailer and hospitality clients. The changes in NICs will be accompanied by increases to the National Minimum Wage and National Living Wage rates. This rising cost base will be particularly felt by people heavy businesses, perhaps making life on the high street even harder.

Autumn Budget: Potential changes of concern to owner managed businesses.

Posted on: October 24th, 2024 by Hugh Dineen-Lees

As the Autumn Budget approaches on 30 October 2024, speculation is rife about potential changes. Labour has pledged to make the tax system fairer, delivering economic stability with tougher spending rules, and growing the UK economy at the same time.

There has been much commentary regarding how to address the ‘£22bn black hole’ in the government’s finances identified by the incoming government. But having ruled out changes to the rates of the UK’s major taxes, the government has been left with fewer options to raise revenue. The implications of these for owner managed businesses could be significant, particularly changes to Capital Gains Tax (“CGT”), Business Asset Disposal Relief (“BADR”), increases to National Insurance Contributions (“NIC”) from Employers, and changes to Inheritance Tax (“IHT”) Business Relief (“BR”).

Here’s a look at what might be on the horizon:

Increase in CGT rates

Presently, the CGT rate for basic rate taxpayers is charged at 18% on disposal of residential property and 10% for all other assets. The CGT rate rises to 24% on residential property and 20% on other assets for higher or additional rate taxpayers.

In addition, if you qualify for BADR, CGT is charged at a reduced rate of 10% for the disposal of qualifying business assets.

Compared to income tax, where higher and additional rate taxpayers are charged 40% and 45% respectively, CGT is significantly lower.

As such, it is widely speculated that the Government may increase the rates of CGT. There are two potential methods being considered. The first approach involves aligning the lower CGT rate on all other assets with the higher rate applied to residential property, thereby creating a uniform CGT rate for all asset disposals. Alternatively, the Government might adopt a more aggressive strategy by aligning CGT rates with income tax rates.

Reducing or removing the CGT annual exemption

Individuals currently benefit from an annual exemption of £3,000 for CGT. In recent years, the annual exemption has gradually decreased, with the latest reduction to the CGT annual exempt amount taking effect in April 2024, lowering it from £6,000 to £3,000.

In line with recent trends, where the annual exemption has gradually diminished, it would not be surprising to see the annual exemption being reduced further or even being removed altogether.

Reduction or removal of the lifetime limit for BADR

As set out above, BADR entitles certain individuals (if they qualify) to benefit from a reduced rate of CGT. Currently, there is a lifetime limit of £1 million, thereby allowing entrepreneurs to benefit from a lower rate of CGT on the first £1 million of lifetime chargeable gains.

It is speculated that the Government may either lower the £1 million lifetime limit, reducing the tax savings available for investors or entrepreneurs.

Alternatively, the Government may opt to abolish BADR entirely. Business owners would have to pay the standard 20% (if not more if the government decide to increase the CGT rate) on all gains.

Increases to National Insurance Contributions from Employers

The Labour party committed in its manifesto not to increase national insurance contributions for working people. However, it did not rule out increasing the contribution from Employers which has led to speculation from informed commentators that they may increase this by 1%, making the new rate 14.8%.

While on the face of it, the predicted increase affects only employers, however there are concerns that raising employer NICs in an already stretched economy would negatively affect growth, ultimately leading to businesses having less money to invest in their staff, so that the burden would nevertheless ultimately fall largely on working people.

The Office for Budget Responsibility has commented that any rise in employer NICs would be passed onto workers and ultimately to consumers. Businesses may respond to the rise by limiting pay rises, reducing staff numbers, freezing recruitment and scaling down employee benefits. There are also arguments that the increase may complicate and distort the tax system and the jobs market, stymying the economy.

Changes to Inheritance IHT Business Relief

When children are an integral part of the running of a business, many business owners choose to gift or transfer shares in their business to them. Gifts such as this may not only be subject to CGT, but may also be subject to IHT. In these instances, BR may be available to reduce any unexpected IHT arising.

Where available, the relief reduces the taxable value of qualifying assets by either 50% or 100% depending on the circumstances.

Rumours ahead of the upcoming Budget are suggesting that we could see changes to IHT BR. This could now be capped at anywhere between £500,000 and £1m per person, removing the reliefs that currently apply without limit on qualifying assets meeting certain requirements. IHT Business Relief changes could the have a significant impact on business legacy.

When will these likely changes happen?

It is unclear what date that these changes will take effect from. There is potential that these changes may be brought in with immediate effect following the conclusion of the Autumn Budget from 30 October.

Alternatively, the Government could choose for any changes to the CGT rates to take effect upon the commencement of the new tax year – 6 April 2025.

The Government’s final decisions will be revealed on 30 October 2024 and there is considerable uncertainty what the upcoming changes may be. Please do not hesitate to contact us for further details about how the upcoming Autumn Budget may impact you.

Danny Schwarz and Stephen Dodge discuss the redevelopment of Oxford Street in Property Week

Posted on: October 2nd, 2024 by Hugh Dineen-Lees

Head of Commercial Real Estate Danny Schwarz and Trainee Solicitor Stephen Dodge explore the proposed pedestrianisation of Oxford Street, and discuss its potential impact on London’s retail and hospitality sectors, in Property Week.

Danny and Stephen’s article was published in Property Week, 2 October 2024, and can be found here.

Facelift will revive Oxford Street

Some shops may lose out, but pedestrianisation plan will broaden iconic retail destination’s tenant mix.

Last month, London mayor Sadiq Khan announced radical plans to pedestrianise London’s iconic Oxford Street. This proposal, Khan’s second for the famous high street, appears likely to succeed thanks to a Labour-led Westminster council, and for Oxford Street the timing could not be better; it is ripe for revitalisation.

The pandemic resulted in a slew of notable Oxford Street shop closures. With tourism statistics showing footfall is still yet to fully recover, it is clear that the retail district is struggling. This is hardly surprising; Oxford Street is often not London’s most desirable destination. Its pavements are cramped, the thoroughfare is plagued by antisocial drivers and the shopfronts are infested with much-derided American candy shops.

So, how will pedestrianisation breathe new life into Oxford Street? Case studies on the pedestrianisation of locations such as nearby Carnaby Street or Copenhagen’s Strøget Street are telling. Despite objections from business owners, particularly restaurateurs, these streets were closed to traffic and experienced significant increases in footfall. Local businesses benefited from an increase in customers.

However, there are risks involved in this latest proposal for Oxford Street. Prior to the announcement of plans for pedestrianisation, the post-pandemic rebound was in full swing on the street. Property vacancies are down 40% from 2023, with leasing activity breaking records in that year and remaining high now. With rents rising for commercial tenants on and around Oxford Street, mere speculation on the pedestrianisation proposal is likely to see rents continue to spike. The value of freehold titles could similarly creep upwards.

Tenants subject to upcoming rent review may see rates rise far beyond their short-run means and there is a risk that landlords may see an opportunity to trade up tenants, exercising break clauses to hike rents. Property lawyers will be busy with a flurry of breaks, renewals and disputes.

However, tenants on fixed rents may be buoyed by increased footfall and have a highly profitable few years. Tenants with high-volume businesses also stand to win regardless of their rents, as greater footfall will correlate directly to sales.

Winners and losers
Unfortunately, not everyone will be a winner as a result of Khan’s proposal. Low-volume luxury shops are often more reliant on patronage from customers who arrive by car and may prefer to move elsewhere, as their clients will not wish to brave crowds. At the other end of the spectrum, accessibility will be hampered by pedestrianisation, further inconveniencing those reliant on cabs or buses.

If these long-standing and successful luxury businesses fail, landlords will be seriously affected. Those who relied on the status quo, and did not obtain adequate guarantees or security at their last lease renewal, may also find themselves as low-ranking creditors in protracted insolvencies.

What is clear is that disruption creates opportunity and Oxford Street has already begun to change – no longer are all leases on the high street exclusively for retail use. Parts of John Lewis and similar buildings are being converted to office space, bringing a new type of consumer to the area, while parts of Debenhams are being converted for leisure use, alongside the openings of new entertainment venues. Spaces left behind in the ongoing – and welcome – retreat of American candy shops are similarly ripe for conversion into cafés, which could apply for pavement seating.

A new type of tenant, with a new clientele and different priorities, is coming to Oxford Street. Landlords may find it difficult to adjust to this new normal, but those who can be flexible and see the potential in their new tenants stand to gain from the new face of London’s iconic retail district.

If you would like further information regarding your obligations as tenants/landlords of retail spaces, please contact a member of our Commercial Real Estate team.

Employment law insight: New obligations regarding the fair distribution of tips

Posted on: October 1st, 2024 by Hugh Dineen-Lees

October 2024

The Employment (Allocation of Tips) Act 2023 (“the Act”), supplemented by a statutory code of practice and associated non-statutory guidance, comes into force today, 1 October 2024.

The Act significantly impacts the hospitality industry by introducing new rules governing how employers must deal with tips paid by customers, and it is estimated it will lead to an additional £200m being taken home by millions of workers in the UK.

The new requirements

The new legislation affects all retail and hospitality businesses including restaurants, cafes, hotels, hairdressers and taxi firms.

Businesses must now ‘fairly allocate’ all tips received. In addition, tips must be paid straight to workers and cannot be retained by the employer for any reason, including for business expenses.

“Tips” includes gratuities and service charges. However, it does not include cash tips if those are received by a worker and not declared to the employer. It does not matter if the tip is made by card, cash, or via an app.

In addition, employers must not make any deductions from tips except for tax, and where appropriate, National Insurance.

Tips must be paid to the worker/employee no later than the end of the month following the month in which it was paid by the customer.

What does fairly allocating tips mean?

The statutory code states that allocating and distributing tips fairly does not necessarily require employers to allocate the same proportion of tips to all workers, providing there are legitimate reasons why different workers are allocated different proportions.

The code provides examples of the criteria that employers may consider when allocating tips, such as:

  • the number of hours worked in the period the tips were collected;
  • individual and team performance;
  • level of responsibility and/or seniority;
  • customer intention;
  • length of service;
  • type of role (e.g., front of house or back of house); and
  • rate of basic pay.

The code prevents employers from pooling tips from multiple sites and all individuals who are involved in providing a direct service to customers should be considered as part of the distribution, including agency workers.

What do employers need to do?

Unless employers only receive tips on a very occasional or exceptional basis, they will need a written policy in place relating to the collection and distribution of tips.

They will also need to decide on their chosen method of tip distribution. How employers distribute is up to them, as long as it is fair. Some employers may choose to allow each individual worker to retain 100% of their tips received, whereas some employers may choose to implement a tronc system. However, using a tronc does not absolve employers of their responsibilities, so they will need to be careful to ensure the use of a tronc system is appropriate and that it is properly and fairly implemented. Employers should consider whether it is appropriate to seek the agreement of their staff as to which system of allocation will be used.

Employers must keep records of the qualifying tips received and how these are distributed. These records must be kept for three years from the date the tip was received and staff may request copies.

It is recommended that regular checks are made to ensure tips are being distributed in line with policies. It is also recommended that policies are regularly reviewed in line with business changes, such as restructurings or redundancies.

Connected obligations

Employers should be mindful of their data protection obligations when sharing records of tips. Employers should not provide details of the specific amounts paid to other workers, nor other people’s personal data, such as their bank details. Instead they should provide the total amount of qualifying tips received and the amount paid to the worker making the request.

Tips do not form any part of the National Minimum Wage. Employers must ensure that workers are paid in line with the National Minimum Wage and National Living Wage requirements regardless of any tips the worker may receive. 

How should an employer deal with complaints relating to tips?

The code of practice states that parties should attempt to resolve issues relating to tips between themselves. It is therefore imperative that any complaints are investigated and dealt with properly, either informally (if appropriate) or under a suitable grievance procedure.  

If the matter cannot be resolved internally, a member of staff may make a claim in the employment tribunal and they may be awarded up to £5,000 to compensate them for any financial losses relating to their employer’s failure(s).

If you have any questions on the fair distribution of tips or need assistance regarding your compliance with the new legislation, please contact a member of our Employment team.

Emma Cocker comments on ageism in the private wealth sector in eprivateclient

Posted on: October 1st, 2024 by Hugh Dineen-Lees

Senior Associate in the Employment team Emma Cocker comments on ageism in the private wealth sector, and how firms should be proactive in tackling this form of discrimination, in eprivateclient.

Emma’s comments were published in eprivateclient, 27 September 2024, and can be found here

“Employing older workers brings tangible benefits. These individuals often possess a depth of experience that younger workers may not, as well as an ability to connect with older clients. This is particularly important as statistics show that older individuals hold the bulk of private wealth within the UK. As such, workplace ageism ought not to be a problem in the private wealth sector, but this is unfortunately not the case. 

“The Equality Act 2010 protects against age discrimination in all aspects of employment including recruitment, terms and conditions, promotions, training and dismissals. Treating a worker less favourably simply because of their age, or in any way connected to their age, is (with very limited exceptions) illegal and should be avoided. Employment Tribunals are quick to root out issues of age discrimination, even in cases where employers attempt to dress up ageism as a legitimate reason for less favourable treatment. Compensation can be high, and cases attract adverse publicity.

“Leaving aside the risks of litigation, firms should be proactive in tackling age discrimination because of the noted benefits of employing older staff. This starts with the recruitment process where “blind recruitment” should be used to eradicate bias based on an applicant’s personal characteristics, including their age. Firms should also use initiatives such as discrimination and diversity training, as well as ensuring workplace policies do not discriminate on the grounds of age. Employee rewards ought to be based on performance and not length of service, and assumptions regarding “slowing down”, or older people being more likely to accept redundancies, should also be avoided.”

Danny Schwarz and Sophie Levitt discuss the proposed outdoor smoking ban in The Times

Posted on: September 26th, 2024 by Hugh Dineen-Lees

Director and Head of Commercial Real Estate, Danny Schwarz, and Solicitor Sophie Levitt discuss the potential impact of the proposed outdoor smoking ban on the hospitality sector, as well as the legal implications for landlords and tenants, in The Times.

Danny and Sophie’s article was published in The Times, 26 September 2024.

Ministers are considering imposing stricter rules on outdoor smoking to reduce the number of preventable deaths connected to tobacco use. There are no final plans, but smoking could be banned in pub gardens, outdoor restaurants and sports grounds.

The proposed ban appears as a puritanical tendency to reach for authoritarian solutions to complex public health problems. When politicians choose to cement their intolerance of the behaviour of others through legislation, it restricts individual freedom, further eroding people’s right to choose what they can do and where they can do it.

Arguably, such misuse of state control is antidemocratic: an extreme anti-smoking agenda which is not supported by scientific evidence that smoking in the open air creates any quantifiable threat to public health.

And now the British Beer and Pub Association (BBPA) is pleading with the government to abandon plans for greater smoking restrictions in pubs since it would affect their viability as businesses. But not all pubs would be impacted equally by such a ban. For instance, gastropubs are less worried about a slowdown following the ban, given the focus of their business on serving full meals, typically indoors.

While there is some disagreement within the hospitality industry regarding the precise impact of such a ban, there is a broad consensus that beefed up rules need to be clearly worded and ‘outdoor area’ must be precisely defined to minimise uncertainty.

A pub garden smoking ban could affect both landlords and tenants. If the ban has a heavy impact on the viability of tenants’ businesses, they may be unable to generate enough income to pay their rent. Landlords may have to forfeit leases, leaving them with vacant possession and the need to remarket the property.

Tenants would be obliged to comply with the smoking ban, which could be outlined expressly in leases or implied under a compliance with laws clause. If the tenant used the property in a manner which was not permitted, the landlord could forfeit the lease and end the unlawful use. Alternatively, the landlord could claim damages if they suffered any loss because of the tenant’s breach.

While the government’s proposals have received support from public health experts, many landlords, operators and customers have voiced concern that the rules would be unenforceable.

Bar staff would have to police this ban in addition to their existing obligations. Smokers would crowd on pavements outside of pubs, which would cause disturbance and nuisance to neighbours, or breach licence conditions, particularly in residential areas. Smoking could also be prohibited in parks and therefore create confusion in public spaces as it would be difficult to police.

If you are needing advice on matters relating to the hospitality sector or the legal obligations of landlords and tenants in commercial real estate, please contact a member of our Commercial Real Estate team.

Employment law insight: Mohammed Al Fayed allegations and an employer’s duty to prevent sexual harassment at work

Posted on: September 20th, 2024 by Hugh Dineen-Lees

A recent BBC article highlighted that more than 20 female former employees have come forward to report their experience of sexual assault (and in five cases, rape) whilst working at Harrods.

This is unfortunately the latest in a series of high-profile sexual harassment cases in the workplace. The effect of such behaviour is extremely damaging, not least because of the risk of costly employment tribunal claims against employers, but also because the significant reputational damage inflicted affects the ability of organisations to attract and retain staff, as well as potentially losing them valuable customers. Cases of sexual misconduct undoubtedly affect businesses’ “bottom line”.

What is the law on preventing sexual harassment in the workplace?

While these latest allegations relate to cases of sexual assault and rape, these cases are thankfully rare. What is much less rare is allegations of sexual harassment at work.

Sexual harassment is unwanted conduct of a sexual nature which has the purpose or effect of either violating the person’s dignity, or creating an intimidating, hostile, degrading, humiliating or offensive environment.

The scope is broad and includes a wide range of behaviours. As the effect of sexual harassment is viewed subjectively (i.e. through the eyes of the victim) it is not uncommon for accused individuals to claim their behaviour was “banter” or, “a compliment” when it was, in fact, sexual harassment.

As well as the accused individual’s responsibility for sexual harassment, employers may also be responsible (or “vicariously liable”) for the conduct of their employees (and in some cases, other third parties such as customers). This can be the case even where they did not condone, or even know, the conduct had occurred.

Legislation will shortly come into force which increases the burden on employers to prevent sexual harassment in the workplace, making it even more important that employers are aware of, and acting in line with, their duties.   

The new duty

The Worker Protection (Amendment of Equality Act 2010) Act 2023 is due to come into force on the 26 October 2024 and creates an anticipatory duty on the employer to take reasonable steps to actively prevent the sexual harassment of their employees; not just to investigate them if they arise.

This is a law which was passed by the last government, but the current government is considering further extending this duty to require employers to take ‘all’ reasonable steps, rather than the reasonable steps that will be required from 26 October 2024.

What should employers do to comply with their new duties?

Having clear sexual harassment policies and procedures, providing anti-sexual harassment training and encouraging a “speak-up” culture are all critical steps for employers. Taking time to consider where the risks lie in a specific working environment, as well as the sector in which the organisation operates will help determine what further action needs to be taken. All of the above should be regularly reviewed and monitored.

Supporting HR managers in dealing with sexual harassment claims is also crucial. They are likely to be the first employee in a senior leadership position to whom such claims are reported and they must be well equipped to deal with allegations appropriately to avoid further potential damage to the organisation.  

What should a business do if a claim of sexual harassment is raised at work?

Any allegations should be properly investigated under an anti-harassment policy or grievance policy and appropriate action should be taken, based on the conduct identified.

Employers that are regulated, such as financial services organisations regulated by the FCA and/or PRA must remember that a failure to investigate and resolve such allegations could lead to regulatory investigations, as well as possible enforcement action.

The behaviour did not take place at their place of work – does this matter?

No. Employers may be liable for sexual harassment committed by their employees ‘in the course of employment’, meaning any place the employee is working, not just their regular place of work. Liability can also attach to acts committed when employees are not working but they are somewhere connected with work. This could include, for example, social drinks after work and Christmas parties.

Creating a culture of acceptable behaviour

It is important that employers create a workplace culture that minimises the risk of sexual harassment. Sometimes sexual harassment can stem from other inappropriate behaviours not being properly investigated and addressed. Turning a blind eye to these behaviours can fail to set the tone as to what is appropriate and inappropriate in the workplace, leading to costly claims against employers.  

If you have any questions on the new duty to prevent sexual harassment, or how to investigate allegations of sexual harassment, or if you require workplace training, please contact a member of our employment team.

Abtin Yeganeh comments on the Renters’ Rights Bill in Property Week

Posted on: September 18th, 2024 by Hugh Dineen-Lees

Head of Real Estate Disputes, Abtin Yeganeh, comments on the Renters’ Rights Bill and how the proposed legislation must carefully balance the rights of tenants and security for landlords.

Abtin’s comments were published in Property Week, 11 September 2024, and can be found here.

“While the proposed Renters’ Rights Bill will be welcomed by the majority of UK tenants, providing them stronger legal protections and implementing a ban on ‘no-fault evictions’, the proposed reforms must strike a balance between the rights of tenants and security for landlords.

“No-fault evictions create a degree of uncertainty for many, with landlords able to evict their tenants without cause at the end of the fixed term of the tenancy. The new bill proposes to abolish this practice, and provide tenants with greater peace of mind.

“No-fault evictions have previously provided landlords with security, as they know they can obtain possession at the end of the tenancy without cause, and the banning of no-fault evictions may therefore provide them with cause for concern. However, importantly, the bill will reform the grounds of possession, with new grounds being introduced to address repeated serious arrears, and situations where possession is required to allow the landlord to sell a property or for the landlord and/or family members to occupy the property.”

If you would like further information on the implications of the Renters’ Rights Bill or have any questions regarding landlord/tenant matters, please contact Abtin Yeganeh

Matt Green comments on D’Aloia v Persons Unknown and Others

Posted on: September 18th, 2024 by Hugh Dineen-Lees

Head of Blockchain and Digital Assets, Matt Green, comments on the recent case of D’Aloia v Persons Unknown and Others and discusses how this case will impact future cases involving the recovery of stolen or hacked cryptocurrency.

Matt’s comments were published in Law360, CDR Magazine, CoinTelegraph and CoinLive.

“This is a lesson for all blockchain analytic report providers to ensure evidence is articulated and evidenced in the clearest terms. It is vital that legal teams understand the fact patterns carefully in order to advance proprietary claims and ensure mixing issues are dealt with accordingly. Legal teams need to scrutinise evidence, using experience and knowledge of blockchain technology and movements of funds, in order to ensure cases are put forward properly.

“The heads of case need to be carefully considered with an understanding of how purported organised criminal gangs may operate, and the potential mixing processes at play.

“As a strategy, it is always best to follow the funds and then seek to work cooperatively with exchanges who can play vital roles in assisting asset recovery.

“This is an unfortunate outcome if the relevant purported money mule Defendants are indeed laundering money, but the team failed to evidence it to the Court’s satisfaction. Hopefully, there will be more positive open judgements that show that the cryptoasset recovery process is real and effective, when done right.

“The targets should be those who receive the funds – in this instance it appears as though the Claimant was pursuing the wrong parties.”

William Bowyer comments on Brazilian clubs signing European players in City A.M.

Posted on: September 16th, 2024 by Hugh Dineen-Lees

Will’s comments were published in City A.M., 16 September 2024, and can be found here.

“Investment in football from the Americas has grown substantially in recent years, with a move to Brazil’s top flight becoming an increasingly viable and profitable route for players.

“There is a strong argument to say that the standard of clubs (facilities, funds, squad quality and academies) in Europe is still growing and attracting the best global talent. However, as a result, European leagues are becoming increasingly saturated, with players now looking to other leagues to play their football and progress their careers.
 
“The growth of the Saudi Pro League is also hard to ignore. As noted recently by Ronald Koeman in relation to the moves of Steven Bergwijn to Al-Ittihad and Memphis Depay to Corinthians, the former effectively “closed the book” on his international career whilst the latter remains available for selection. Moving to Brazil is therefore an attractive option for players who want a move away from Europe but to keep their international aspirations alive.

“Importantly, Brazil’s Série A clubs have experienced a period of growth in revenue since 2010 which has meant that they have been able to offer higher wages than they had historically for the right players.

“Larger European clubs are also increasingly looking at Brazilian leagues for potential talent. For a young player or a player struggling to get minutes at a European club, playing in Brazil could therefore be a good opportunity to get some game time in a competitive league, with the view to hopefully returning to Europe later in their career.

“With football being the number one sport in Brazil, a move to Brazil is a chance for a player to broaden their own fan base, social media following and personal brand which could lead to brand deals and image rights related work.”

If you would like more information on how our Sports and Entertainment team help protect and innovate for top athletes, please contact a member of the team below.

Mohit Pasricha explores the UFC antitrust case in Law360

Posted on: September 11th, 2024 by Hugh Dineen-Lees

With the UFC receiving an unexpected setback in its $335 million settlement with former fighters, Head of Sports & Entertainment Mohit Pasricha discusses whether this case could set a bold precedent for sporting class actions. 

Mohit’s article was published in Law360, 10 September 2024, and can be found here.

By refusing to accept a $335 million settlement agreed between Ultimate Fighting Championship and a group of former fighters, the U.S. District Court for the District of Nevada has delivered an unexpected knock-down requiring all parties to get back into the legal ring early next year.

In late July, U.S. District Judge Richard Boulware rejected the settlement reached in two class actions, Le v. Zuffa LLC, and Johnson v. Zuffa[1] in a dispute over a number of UFC fighters’ ability to negotiate other promotional opportunities. The judge had stated during a previous hearing that he was seeking a “life changing” settlement for fighters who had fought through 10 years of litigation. The ruling stated that the settlement amount that had been agreed between the parties was too low and, as a result, the settlement lodged with the court was rejected.

Prior to this decision, it had been hoped that the offer by UFC’s parent company, the TKO Group, would have resolved the long-standing dispute once and for all. Instead, a trial date has been set for February 2025.[2]

This is a seminal ruling that may have huge ramifications for UFC, a global business that merged with World Wrestling Entertainment in 2023 to form the TKO Group. It also sets a bold precedent within antitrust case law that will undoubtedly affect the sporting world more widely; there is not only the prospect of new claims arising, but also the risk of the floodgates opening on a long line of established antitrust case law.

In March, UFC had agreed to the $335 million sum in response to two class actions that represented about 1,200 former UFC athletes. These fighters had principally claimed, among other matters, that their UFC contracts suppressed their chances of taking advantage of other potentially lucrative options acquired through their sporting fame.

By way of background, there are currently two separate lawsuits, one filed by fighters Cung Le and Nate Quarry in 2014 representing fighters from 2010 to 2017, and a second filed by fighters including Kajan Johnson that represents fighters from 2017 to the present.

Zuffa, the predecessor entity that owned and operated UFC, was also the defendant in five related class actions filed between December 2014 and March 2015, which were consolidated into a single action in June 2015 — Le v. Zuffa.

The lawsuits alleged Zuffa violated antitrust laws by paying UFC fighters far less than they were entitled to receive and thereby eliminating or hurting other mixed martial arts promoters. UFC fighters Le, Quarry and Jon Fitch filed their initial complaint against Zuffa in federal court in the U.S. District Court for the Northern District of California in December 2014; that was subsequently joined by fighters Brandon Vera, Luis Javier Vazquez and Kyle Kingsbury.

On June 23, 2021, Johnson and C.B. Dollaway filed another antitrust class action with similar allegations that UFC engaged in illegal anticompetitive action.

Of the proposed $335 million settlement, 90% was to have been paid to the plaintiffs represented in Le v. Zuffa. Under the proposed settlement, fighters in this case were to receive on average $200,000, with a median recovery of $73,000 and a minimum of $13,000 — with 36 class members to have been paid more than $1 million.

UFC said at the time that they had reached a joint settlement that encompassed both cases. In such circumstances, UFC would have certainly hoped and very much anticipated that this was the end of the matter; unfortunately, none of the parties expected the District of Nevada’s decision, which, as rare as it was, remained fully within judicial discretion.

Following this ruling, which refused the negotiated settlement, UFC publicly announced that it disagreed with the decision. Nonetheless, it was evident from UFC’s public statement that the parties could reach a new settlement agreement — as a result, we would fully expect UFC to engage in new settlement discussions with regard to both class actions.

Plaintiffs in both cases also stated that they too are open to reengaging with UFC over a new settlement or moving forward with the trial. Eric Cramer, an attorney for the plaintiffs, said in a statement that the fighters in the case “respect the court’s ruling” but “are keeping an open mind with respect to a potential new resolution.”

As with any matter that proceeds to trial, there is always litigation risk to be considered and a settlement for both parties would be the most favorable way to resolve the disputes in question.

There is therefore a clear desire for both parties to get back up from the proverbial canvas and continue to build upon the momentum of the settlement position that had already been reached to find a new resolution — one that should avoid the need for a further costly and lengthy trial.

Beyond the high-octane world of professional fighting in the U.S., this case is one that may have far-reaching implications for entities involved in such lawsuits across the sporting world. In addition, this case also serves as an important and emphatic reminder that, regardless of the specific case background, the filing of a settlement does not automatically mean it will be approved or accepted, and it is likely that those involved in future sporting class actions will tread with caution as a result.

Going forward, and with the alarm bells sounded by this recent ruling, it is highly likely that UFC will not want to be exposed to any future litigation risk. The likelihood, therefore, is that a new settlement will be negotiated, as both sides seem extremely keen to avoid being counted out and suffer a defeat at the mercy of a trial. On this basis, both parties are undoubtedly going to remain keen to reach acceptable settlement well in advance of any trial.

In such circumstances, and given the time pressures involved, we may very well see a settlement sum agreed in excess of $1 billion to remove any possibility of a final knockout blow ahead of the next year’s trial.