September 2020 - MLP Law

Child Maintenance – The impact on Corona Virus you should not ignore

For those who receive child maintenance, this money is important now more than ever with the current pandemic, however for those paying child maintenance, this can lead to stress of having to find money to pay this support.

The Child Maintenance Service are part of the DWP (Department of Work and Pensions) and are responsible for most welfare benefits. It has been reported that there has been an increase in benefit claims, including child maintenance, which inevitably puts strain on the resources within the Welfare Benefits system. This also given that a lot of agencies are working on reduced staffing levels.

There has to been a formal assessment by the Child Maintenance Service not just parties using their online calculator for the assessment to be enforceable. This involves a payment of a £20 fee. Child Maintenance will be calculated from the date the Child Maintenance Service writes to the non-resident parent.

If the resident parent has an open file with the Child Maintenance Service and child maintenance stops, then the Child Maintenance Service can be instructed to pursue arrears, if the arrangement with the service is “Collect and Pay.” This means that money is collected at source from the non-residents employer. It should be noted there is a 4% fee for this service.

As a non-resident party it is important that if you do have a change in financial circumstances i.e: you lose your job or have reduced income, you must inform the Child Maintenance Service if there is an open case with them to stop arrears accruing.

It is more difficult for those who are self-employed as the Child Maintenance Service look at current income, most recent tax returns often won’t show a downturn in income. There is of course the option to have 2020 accounts up to April drawn up and send these to the Child Maintenance Service for re calculation.  

Should you require and further advice or assistance with regards to the above, please contact Rachael Wood, head of our MLP Law family department on 0161 926 9969.

Share-based Incentives for Private Companies

When a company is considering share-based incentives for employees, it is key to take appropriate advice and determine an effective plan.  An effective plan must consider both the commercial design and the tax treatment of the structure.  Although many consider the tax structure as the most important feature of any share plan, the tax efficiency should be less important than the commercial purpose of the plan.

Purpose of the incentive plan?

Consider what is the main purpose of the plan and what is the company looking to achieve:

  • Recruit and retain staff
  • Incentivise staff
  • Enforce good/positive behaviours
  • Reward performance
  • Support the culture of the company
  • Enforce the structure of the company and employee based ownership
  • Performance based or only exercisable upon an exit event

Once a company has considered the above and determined the main purpose(s) of the plan, then advisors can look at tax structures which best suit what a company is looking to achieve.

The purpose of a plan will differ from company to company and, in light of COVID, an existing plan or a proposed plan may not have the same commercial impact.  For example, due to the labour market in the COVID crisis, the recruitment and retention of staff may be less important, but incentivising the right behaviours in staff may be more important.  So existing plans should be reviewed, in addition to these considerations given to proposed plans.

Different types of plans

  1. EMI Schemes

These are one of the most popular share-based incentive plans and are often the best approach.  They are very flexible and very tax efficient.  However, they are not available to all companies, due to the qualifying criteria, which we look at briefly later in this blog.  These are a HMRC plan.

  • CSOP, SAYE and SIP

These are alternative HMRC plans.  They are less flexible than EMI but still provide capital gains opportunities and income tax reliefs.

  • “Geared Growth” Arrangements

These refer to growth shares and similar arrangements introduced more recently by HMRC.  They allow for income tax to be chargeable at the outset (if elections are made), then capital gains tax if performance is high (so valuation is key).  These are more complex, but gaining popularity in private limited companies.

  • Unapproved Share Schemes

If HMRC schemes are not available or not suitable, a company can still look to put in place income-taxed arrangements including non-tax advantaged options, phantom options, etc.  These are much more flexible arrangements as a company does not have to meet any qualifying criteria or seek elections/approval from HMRC. They are, by their nature, less tax-advantaged than the HRMC schemes detailed above. Income tax will be charged when an individual makes a gain.

Effects of COVID when considering Share-based Incentives

For many companies, share values will now be lower and there may be changes in business strategies, for example, there may be more focus on short to medium-term plans rather than long-term strategies.  Many companies will have reduced workforces.  There may be cash constraints on the company.  All these things will require consideration before determining the best options for a company. 

The Chancellor, Rishi Sunak, announced in July that there will be a review of capital gains tax and this may have the effect of reducing the tax benefit of some/all incentive arrangements, so we will need to await the outcome of this review.

This emphasises the importance of getting the commercial structure right, so the incentive gives the best available tax outcome, even if tax benefits change.

Effects of COVID on EMI Schemes

In terms of EMI schemes, which are one of the most popular type of share-based incentives schemes, the qualifying criteria for companies is briefly as follows:

  • £30m gross asset limit; and
  • 250 employee limit

It may be that due to COVID, a company’s gross asset value has reduced and/or the employee numbers may be lower due to a reduced workforce.  So a company which may not have qualified for EMI previously, may now qualify.

Concerns have been raised about disqualifying events under EMI and whether individuals on furlough or whose hours have been greatly reduced could be disqualified.  However, HMRC have confirmed that these risks will not affect qualification if due to COVID.

If you would like more information or if you have any questions or queries relating to the above, please contact Rachel Owen from our Commercial and Commercial team on 0161 926 1579 or rachelo@mlplaw.co.uk to receive expert legal advice for your business.

Job Support Scheme Announced

Rishi Sunak has announced various measures to support employers and employees, amidst the continuing Covid-19 Pandemic.  Here are the key points of the Job Support Scheme:

  • To be introduced from 1 November 2020 and to run for 6 months thereafter.
  • Employees will need to work a minimum of 33% of their usual hours.
  • For every hour not worked the employer and the government will each pay one third of the employee’s usual pay, and the government contribution will be capped at £697.92 per month.
  • Employees using the scheme will receive at least 77% of their pay, where the government contribution has not been capped.
  • The employer will be reimbursed in arrears for the government contribution.
  • The employee must not be on a redundancy notice.
  • Open to all employers with a UK bank account and a UK PAYE scheme.
  • All Small and Medium-Sized Enterprises (SMEs) will be eligible; large businesses will be required to demonstrate that their business has been adversely affected by COVID-19, and the government expects that large employers will not be making capital distributions (such as dividends), while using the scheme.


Please don’t hesitate to contact the team at MLP Law with ideas about topics or for detailed advice in connection with any of the issues raised. You can reach us at employment@mlplaw.co.uk or @HRHeroUK or on 0161 926 9969.

Everything You Ever Wanted to Know about….Managing Sickness Absence…but were too afraid to ask

Sickness absence can have a disruptive effect on a business and should therefore be managed well, not only to minimise any negative impact on the employer but also to safeguard the welfare of staff. 

We have therefore set out answers to some frequently asked questions by employers on the topic.

How does an employer know when to take action in connection with an employee’s sickness absence?

The first step in managing any absence process is ensuring that you have adequate employee reporting procedures, to allow any concerning patterns of absence to be identified.  In particular, problematic short-term/intermittent absences or long term absence. 

Moreover, due to the current climate, with many employees working from home, absence notification policies should be reviewed and amended to make certain employees understand that they must still inform their employer if they are unable to work, due to ill health.

How should an employer raise a concern about an employee’s sickness absence with them?

Where an employee has a certain level of absence (usually outlined in the sickness absence policy), you should write to them, setting out the concern and arranging to meet with them to discuss it further.  You must then continue to communicate both in writing and in person with the employee, setting out your concerns and the steps you intend to take to investigate and tackle the issue.  This may include seeking the employee’s consent to obtain a medical report regarding their ill health. 

As with any formal process, it is important to keep a paper trail of the communication and consultation process that you undertake with the employee and minutes of any meetings.

How much information is an employer entitled to when investigating an employee’s ill health?

An employer is entitled to obtain access to an employee’s medical records or commission a medical report in respect of a specific health concern, only where the employee’s consent has been obtained.  If an employee refuses to give their consent to medical evidence being obtained, the employer has to make any decisions in relation to the employee’s ill health and related absence(s) with regard to their continued employment, based on the limited information it does have.  Employers can include a clause in the employment contract highlighting this and outlining that to refuse to co-operate with such a process may have adverse consequences for the employee’s continued employment with the business.

Where medical reports/records have been obtained, it is important to share and discuss the contents of such documents with the employee.  Overall, medical evidence can assist in determining future action by the employer, including making reasonable adjustments.

Can an employer discipline an employee who is frequently off ‘sick’ on a Monday?

In some cases, frequent short term absences are not really caused by an employee’s ill health, necessitating disciplinary action for misconduct.  This should only be done after a suitable investigation of the employee’s alleged health issues has been undertaken. 

When can an employer dismiss an employee who has been absent on a long term basis?

Once you have sufficiently investigated an employee’s ill health you can consider dismissal.  Dismissal is the last resort, once you have established:

  • that the employee’s absence cannot reasonably be sustained by the business in the long term,
  • there is no hope that the employee will sufficiently recover their health to be able to return to work at all or in a reasonable time frame,
  • in the case of a legally disabled employee, that there are no reasonable adjustments that can be made to accommodate the employee and their health condition, within their role at work.

When an employer is determining what is reasonable when considering these issues, the size and resources of the particular business or organisation can be taken into account.  

What happens if an employee is sick during annual leave?

In such circumstances, the employee is entitled to take any annual leave at a later date, as they have not been able to take full advantage of the annual leave by having a rest from work.  Annual leave also continues to accrue during sickness absence.

As is often the case, having comprehensive policies in place and well trained managers to deal with absence management can help to avoid costly mistakes and damaging employee morale. 

Please don’t hesitate to contact the team at MLP Law with ideas about topics or for detailed advice in connection with any of the issues raised. You can reach us at employment@mlplaw.co.uk or @HRHeroUK or on 0161 926 9969.

GDPR and sharing personal data: are you sufficiently protected in a post-Brexit world?

Despite Brexit being all we seemingly heard about towards the latter end of 2019, the events of 2020 make it seem like a distant memory. No doubt your main focus in 2020 has, understandably, been how to navigate and deal with the impacts that Covid-19 had on your business. 

Nevertheless, the effects of Brexit should not be ignored. The UK officially left the EU on the 31st of January 2020, however, until 31st December 2020 we are still in the ‘transition period’ i.e. that period whereby the UK must still comply with all EU laws. It is during this transition period that the UK is negotiating their new relationship with the EU, including how the EU will continue doing business with the UK after this period.

Adequacy decision

Following the Information Commissioner’s Office’ recent publication, it is clear that no deal has yet been made with regards to how the UK and the EU will continue to trade with the EU from a data protection point of view.

At present, and until the end of the transition period, the GDPR is still part of UK law under the European Withdrawal Agreement. therefore, the UK is able to send and receive data from the European Union in the same way it did prior to Brexit.

Part of the current ongoing discussions centre around whether the UK’s Data Protection Act 2018 (which implements the GDPR) offers an ‘adequate’ level of data protection. Ideally it will be, as personal data will then be able to continue flowing between the EU and the UK, without any safeguards having to be put in place. By way of example, the European Commission has already approved countries such as Canada, Japan, and New Zealand has being adequate. 

Prepare now

Whilst we hope that the European Commission will decide that the UK is adequate, until a decision has been reached, there is a risk that it won’t.

If you only trade within the UK and are already compliant with the GDPR, the lack of an adequacy decision will not be much of an issue for you.

However, if you are a UK business that sends or receives data from the EU, you will need to ensure you have sufficient protections in place, otherwise risking non-compliance, which may result in a hefty fine.

If you think this may apply to you, you need to ensure that steps are taken which will allow you to continue this data flow. This will likely involve implementing either:

  1. Standard Contractual Clauses (SCC): This will likely be the best option for you. These are simply data protection clauses which have been pre-approved by the European Commission and, once incorporated into your contracts, will allow the flow of personal data between a non-adequate country and the EU. There are various sets of SCCs, and which one you should use will depend on whether you are sharing data with another data controller or a data processor (or vice versa). We can advise you on this accordingly and if so required, help you implement the SCCs into your EU trading contracts.
  2. Binding Corporate Rules (BCR): If your business is part of a multinational group, these may be appropriate for you. BCRs are a code of conduct which apply between data transfers between an organisation’s EU bodies and its non-EU / non-adequate body or bodies. BCRs are legally binding and need to be approved by an appropriate data protection authority before you can use them. Similar to the SCCs, there are various versions of BCRs which will depend on whether you are a data controller or processor. Again, if you think your business could benefit from BCRs, we can advise accordingly.

How we can help

In light of the above, are your current trading terms protecting you from a personal data point of view in a post-Brexit world?

If you would welcome further advice or would like us to review your current terms to ensure they are compliant, contact our Commercial and IP team on 0161 926 9969 or commercial@mlplaw.co.uk to receive expert legal advice for your business.

Live Q&A Session: Moving Forward from Lock-down and the Challenges We Face

  • Have you been made redundant? What are the next steps going forward?
  • What does the future look like in terms of working full time back in the office?
  • We discuss changes to the Furlough Scheme for September and October.
  • What are the plans and preparations we can take in order to prepare for the end of the furlough scheme?

Join us on October 1 to discuss the next steps in preparing to come out of lock-down and moving into a brighter future for us all!

Date: 1 October 2020 from 9:30 to 10:30 am

To Register email: Tanyam@mlplaw.co.uk

Pre-nuptial agreements – what if my wedding had been cancelled due to Covid 19?

The government gave the go ahead for small Weddings of no more than 30, from 4th July 2020. For some people they will be celebrating while others have not been so enthusiastic and have taken the precautions deciding to postpone until restrictions ease.

Some couples have taken that decision later than others. This then ponders the question that if a Pre-Nuptial Agreement was entered into, what is the effect of postponing the wedding on the validity of the agreement?

Most Pre-Nuptial Agreements give provision for delay of a few months, therefore if the postponed wedding date takes place within this time scale, then the original agreement will stand. Failing which a new agreement would have to be prepared and signed.

What if one party’s finances have changed due to the pandemic? The change would have to be a significant change such as a decrease in assets. Then it might be advisable to try and renegotiate the agreement.

Some people may have used lockdown to reconsider their options and now wish to enter into a Pre-Nuptial Agreement, but concerned it may be perceived as a pessimistic approach and are not legally binding in any event.

Pre-Nuptial Agreements, if entered into following the correct procedure are deemed to be persuasive by the courts, and can avoid the cost and stress on prolonged litigation if marriage does not work out which can only be for the benefit of both parties.

Should you require and further advice or assistance with a Pre-Nuptial Agreements, contact Rachael Wood, our head of MLP Law family department who has extensive experience in preparing Pre-Nuptial Agreements on 0161 926 9969.