December 2020 - MLP Law

Employee Benefit Trusts

What is an Employee Benefit Trust (EBT)?

An EBT is a discretionary trust usually set up by a company under which property (often shares in the company although there is usually an initial amount of cash) is held on behalf and for the benefit of a class of beneficiaries, which is usually employees and former employees. 

Why consider an EBT?

In addition to the general benefits of employee ownership as detailed in our blog on EOTs, the EBT:

  • Is useful if a company wishes to make share awards to employees without the employees having to pay anything for their shares
  • Allows a long term holding of a number/percentage of shares on behalf of employees  
  • Can create an internal market for the company’s shares
  • Can buy shares back from participating employees who wish to sell because they are leaving the company
  • Is a more flexible scheme than an EOT

Who is the trustee?

Trustees can be individuals or a company. As there are many obligations and responsibilities of trustees, it is common to have a corporate trustee, which can either be a company established specifically to be a corporate trustee, an existing subsidiary of the company, or an independent company administered by a third party.

Who are the beneficiaries?

Usually, this will be the employees and former employees of the relevant company (and sometimes dependents of such employees). The beneficiaries will be defined in the trust deed.

Who is the Settlor?

The settlor is the individual(s) or the company that transfers property to the trustees of the EBT for the benefit of the EBT beneficiaries.

Establishing an EBT

For an unquoted company, the directors of the company have the power to establish an EBT. The trust deed will be the main document establishing the trust and empowering the trustees to operate the trust for the benefit of the beneficiaries. There may be an operating agreement or a loan agreement, depending upon the circumstances. There will usually be a letter of recommendation or letter of wishes giving recommendations for awards. HMRC will need to be notified of the establishment of the EBT.

Tax benefits

There are inheritance tax benefits, provided the EBT meets the statutory criteria, including exemption from the ten-yearly charge on the value of assets in the trust fund and exemption from the exit charge on the value of assets leaving the trust fund. CGT and income tax rules will apply although there may be ways to mitigate this. Appropriate tax advice should be sought.

If you would like more information or if you have any questions or queries relating to the above, please contact Stephen Attree, Rachel Owen or a member of our corporate commercial team on 0161 926 9969 or email:



Key dates for employers with EU employees

Although we have left the EU, the UK is currently in a transitional period, which will end on 1 January 2021. So, what does this mean for employers?

One live issue is that of employees and workers who come from the EU/EEA or Switzerland (EU) but currently work in the UK.

The overarching principle in the UK is that employers have a duty to ensure that ALL employees have the right to work in the UK, including EU employees.

Checking your EU employees have the right to work in the UK

All employers should ensure that every member of staff has the right to work in the UK when they commence their employment. 

This must be done by undertaking certain checks. 

Current rules – applicable until 30 June 2021

To check an EU citizen has the right to work in the UK, employers can: 

  • check original documents, such as a passport or national identity card 
  • check biometric residence card or permit number, or
  • use the online system, which can be accessed if the employee gives you their share code.

New rules – applicable after 1 July 2021

These are the rules required for EU citizens who currently work for you and for whom you will have already conducted the above checks. Such employees will require to apply for ‘settled status’ (granted when living and working in the UK for 5 years plus upon application) or ‘pre-settled’ status (where the residence is less than 5 years). This can be done online.

Employers will therefore have to check that EU employees have either settled or pre-settled status from 1 July 2021.

Employers may therefore want to remind and encourage all relevant employees and workers of this deadline, as EU citizens will not be eligible to work in the UK without it from 1 July 2021.

Contract clause 

Finally, once an employer has verified that an employee has the right to work in the UK this is often underpinned in the employment contract. Such a clause normally requires the employee to warrant that they do have such a right and also obligates the employee to notify the employer if this changes for any reason.

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 or @HRHeroUK or on 0161 926 9969.

Protecting your copyright

Copyright is a type of intellectual property, which allows the owner to prevent others from using it without their express permission. In the UK, copyright is dealt with under the Copyright, Designs and Patents Act, 1988

Copyright arises automatically upon the creation of the work itself and can exist in various forms, including (but not limited to) original literary, dramatic, musical, and artistic work, non-literary work (such as web content and databases), and music, tv and film recordings. 

Generally speaking, it will be the person who creates the work in question who owns the copyright in the work. However, if the work is produced as part of an individual’s employment, then (unless otherwise stated) the owner of the copyright will be the employer and not the individual.

Your work is an asset

You (or your employers) will likely have spent a considerable amount of time and money producing your copyright. It is an important asset in your business and should therefore be protected accordingly from misuse. 

What can you do to not only protect your copyright but enforce it should others be in breach of it?

Mark it as copyright

By letting others know that your work is copyrighted will hopefully act as a deterrent. Potential infringers will note that you have an awareness of copyright law and that may take action against them should they use your work without permission.

Marking your work as copyright is a simple exercise. For example, it could be as simple as using the © symbol, which is recognized worldwide as the standard symbol for copyright. 

We would also advise stating the year the copyrighted work was created. If there are any disputes as to the owner of the copyrighted work at a later date, being able to show that you created the work first will strongly help your case. 

Finally, we advise that you include the person or organization who owns the copyright. Again, this will help you assert ownership if your copyright is infringed. 

  1. Keep evidence

We strongly advise keeping supporting evidence and records of not only your finished work but at various stages until completion of the work. 

For example, we recommend keeping records that show how your copyrighted work has progressed. This can include keeping copies of drafts (if the work is written work), sound recordings (if it is a musical work), or beta versions (if the work is computer software). Together, this will help you establish that the copyrighted work is yours and that you have created it over time. 

2. Consider licensing your copyright

If you consider your copyrighted work to be of value and potentially appealing to others, you may consider licensing it to them, either on an exclusive or non-exclusive basis. This can result in a significant source of additional income for you. It will simply permit the other party to legally use your copyrighted works. By licensing your copyrighted works, you will not only retain control and ownership of your copyright, but you will also receive an income for doing so. Also, if you find that a party has infringed your copyright, negotiating a license for their ongoing use of it may be an amicable (and financially beneficial) way to resolve the dispute. 

In light of the above, have you taken appropriate steps to ensure your copyright is protected? Furthermore, have you considered ways in which you can exploit your copyright and receive income?

If you would like advice on protecting or exploiting your copyright, please contact our Commercial and IP team on 0161 926 9969 or to receive expert legal advice for your business.

Construction Adjudication

Most people who work in the construction sector are likely to be aware of adjudication.

A recent decision in the Technology and Construction Court (which is a specialist division of the High Court) highlights the need to make sure that, if you’re going to use it, you need to get the basics right or the whole process runs the risk of being declared invalid.

What is adjudication?

Introduced by the Housing Grants, Construction and Regeneration Act 1996, it is a statutory scheme designed to settle disputes quickly.

In brief, adjudication:

  • applies to parties to a “construction contract” (what is taken in by construction is interpreted quite widely), who cannot contract out of it;
  • is intended to produce a binding decision within 28 days (although the parties can agree to extend this period);
  • is frequently described as a “pay first, argue later” mechanism for resolving disputes;
  • was introduced to try to protect cash-flow during construction, rather than requiring parties to go through expensive litigation which may take 18-24 months to resolve, by which time the dispute may well have put the aggrieved party out of business.

The detailed rules about how adjudications are to be carried out are set out in the Scheme for Construction Contracts (England and Wales) Regulations 1998. While the parties can agree between themselves how adjudications should be dealt with, they cannot exclude it completely and, if a contract makes no provision, then the Scheme rules apply by default.

So, adjudication as a means of dispute resolution has been around for almost 25 years now. You could be forgiven for thinking that parties to adjudication would be clear by now about how to go about referring a dispute to adjudication.

The decision in Land End Developments Construction Limited v Kingstone Civil Engineering Limited shows that it’s still easy to come a cropper if you’re not careful in following the Scheme rules to the letter.

What was the issue in this case?

The contractor, Kingstone, had issued an interim payment application for around £350,000 to the employer, Land End Developments. The contract required Land End Developments to serve a pay less notice within a specified period if it disagreed with the amount sought, and if it did not do so it was deemed to accept that amount and could not then challenge it.

Land End Developments did not serve a pay less notice within the required period, and nor did it pay the £350,000 Kingstone had applied for, and so Kingstone gave the notice to refer the dispute to adjudication.

The adjudication proceeded and the adjudicator found in Kingstone’s favor, determining that Land End Developments should pay the amount set out in the interim application. Land End Developments still did not pay it and instead issued court proceedings challenging the validity of the adjudication decision.

Specifically, it did so (among other grounds) on the basis that the request to appoint the adjudicator had been made before Kingstone had served formal notice on Land End Developments of its intention to adjudicate.

This is relevant because the Scheme specifically provides that notice to adjudicate MUST have been served BEFORE any request is made to an adjudicator-nominating body to appoint an adjudicator to determine the dispute.

The judge in the Technology & Construction Court agreed with Land End Developments and held that the adjudicator’s decision was invalid and therefore unenforceable because the request to appoint him had been made before notice to adjudicate had been served – even though evidence showed the request to appoint him had been made just 18 minutes before the notice to adjudicate had been served. The adjudicator, therefore, had no jurisdiction to determine the dispute.

It is not uncommon for parties to make procedural and jurisdictional challenges during adjudication and to reserve their position. Typically, applications to the High Court to enforce adjudication decisions based on jurisdictional points such as this are challenged on the basis that the opposing party has waived any alleged procedural failure and is therefore stuck with it. However, the judge in this case went further to say that Land End Developments could not have waived this error even if it wished to do so. This was not just a procedural defect in the adjudicator’s appointment, but rather it was so fundamental that he “was not appointed to act in the adjudication at all” and so the process was a nullity.

So what should we take from this case?

There is nothing revolutionary in this case in terms of the legal principles but it is a stark reminder that some requirements within the Scheme are so fundamental to an adjudication being valid, and an example of how easy it is to fall foul of the most basic of the Scheme’s procedural requirements.

If you would like more information or if you have any questions or queries relating to the above, please contact our Dispute Resolution team on Mark Turner from our Dispute Resolution team on 0161 926 1534 or to receive expert legal advice for your business.

22 weeks later – Probate delays causing heartache and distress

An article in The Sunday Times caught the eye of our Wills, Trusts, and Probate team. The article, hidden beneath the overwhelming amount of Coronavirus-related news, explains that Christine Reek, acting as the executrix in her late father’s estate, applied for a Grant of Probate online on 16th April and 22 weeks later, the date the article was published (10th October 2020), a grant had still not been issued.

Christine’s late father Douglas Crosby organised his financial information and made a Will, hoping to make Christine’s job of administering his estate as straightforward as possible. However, the delays at the Probate Registry complicated matters for Christine, as she has struggled to deal with her father’s affairs without the Grant of Probate. Christine still cannot close her father’s bank accounts or sell his bungalow.

Sadly, the MLP Law team, like all other practitioners, are facing the same frustrations with the Probate Registry causing unnecessary delays in the process and causing additional and prolonged heartache for families.  

Solicitors for the Elderly recently undertook a survey asking all their affiliated legal practitioners to give feedback on their experiences dealing with the Probate Registry. The shocking results are as follows;

  • 57% are experiencing delays with probate applications of between 9-20 weeks – the Probate Registry guidance is that applications take up to 8 weeks to be processed.
  • 8% have experienced delays longer than 32 weeks.
  • 96% said the new online probate application system ‘isn’t currently fit for purpose’.
  • 95% said the changes to the probate system will mean ‘grieving families face unacceptable extra heartache’.
  • 93% said their clients are suffering extra distress.
  • 57% have seen a clients’ house sale fall through due to the delays.
  • 31% said the delays have led to unpaid inheritance tax or additional interest and penalties being imposed.

These findings are very concerning for probate practitioners as they demonstrate that the delays at the Probate Registry are having a worrying impact on estate administration, causing unnecessary stress to clients, during an already stressful time after the loss of a loved one. Having an impact on inheritance tax will put a financial strain on the estate administration and may result in the estate losing money in inheritance tax penalties – time really is money in this scenario.

As if the impact on clients wasn’t concerning enough, the Probate Registries’ plan to streamline the process online seems to be defective, which unfortunately will only cause further delays and stress for grieving families.

Our Wills, Trusts, and Probate team are actively and regularly chasing the Probate Registry for updates on all current applications to ensure the best service to our clients as usual. We’re able to take the stress and worry away, deal with the Probate Registry and clearly explain the process and expected timescales to our clients with regular updates. 

We’re all ‘online ready’ well ahead of compulsory use of the online application process – even during lockdown. 

For any advice or assistance in respect of Probate or estate planning, please contact us on 0161 926 9969 or send an e-mail to our Wills, Trusts & Probate team to

 If you wish to read The Sunday Times article, please find a link here:

Divorces see the biggest rise in 50 years

Recently, The Office of National Statistics has released the statistics for relationships that dissolved in 2019.

The key 2019 statistics for heterosexual divorces:

• There were 108,421 divorces, from 2018’s total of 91,299. This is the largest annual percentage increase in the number of divorces since 1972 when The Divorce Reform Act 1969 was introduced to make it easier for couples to divorce.

• 42,274 divorces were during the first marriage.

• Divorces were on a petition by or granted to more women than men.

• Divorce was most common in men and women aged 45-49.

• The highest number of divorces granted for fact proven was for ‘unreasonable behavior’ granted in the favor of women.

• The divorce rate among couples was 8.9 divorces per 1,000 married men and women, an increase from 7.5 in 2018.

• The average (median) duration of marriage at the time of divorce was 12.3 years, a small decrease from 12.5 years in 2018.

There is less statistical data for same-sex divorces, due to same-sex marriages only being allowed since March 2014 and the first divorces taking place in 2015. However, the statistics do show that there has been a yearly increase of divorces and in 2019 there were 822 divorces, nearly double the number in 2018 of 428 (and they haven’t reached the 7-year itch!).

A similarity between heterosexual and same-sex divorces was that ‘unreasonable behavior’ was the most popular reason for divorce.

The increase in divorces has been attributed to the backlog of divorce petitions from 2017, processed by the Ministry of Justice in 2018, and some of which would have become decree absolutes (completed divorces) in 2019.

It will be very interesting to see the statistics for divorce in 2020/2021, as we will be able to see the impact the nationwide lockdown has had on relationships, which experts suspect will have caused an influx of divorce proceedings.

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.