³ÉÈËÓ°Òô

In association with Iain Larkins from Radius Law, we bring you the latest commercial news for in-house lawyers. This month’s edition covers:

• Corporate & Commercial
• Data Security
• Employment

As a commercial lawyer,  contains all the practical guidance, insights and knowledge tools you’ll need. Not currently a subscriber? Request your complimentary 7-day access here.

Corporate & Commercial

New Block Exemption

The UK’s new Vertical Agreement Block Exemption Order (‘VABEO’) became law in the UK on 1^st June 2022 replacing the EU Vertical Block Exemption Regulation (‘retained VBER’) - which had been retained in the UK under domestic law post-Brexit.

Here’s a quick summary: 

• VABEO provides a ‘safe harbour’ for certain vertical supply chain agreements – such as franchise, agency or distribution agreements–which might otherwise be prohibited on anti-competitive grounds. 

• There is a 1-year transition period to accommodate pre-existing agreements which satisfied the conditions for exemption provided in the retained VBER prior to 1 June 2022, but which don’t otherwise satisfy the conditions for exemption provided in the new VABEO.
• In parallel, the vertical agreement block exemption applicable in the EU also changed on 1 June 2022.  The new UK VABEO and new EU VBER are similar but there is some divergence.

• There is an allowance for differentiated wholesale prices (also known as dual pricing) to help with the additional investments needed for physical stores. The new EU VBER has made similar changes albeit with more strict conditions.
• Wide parity clauses (also known as most favoured nation clauses, whereby a product or service must not be offered to other customers on better terms than those offered to the buyer) will not be permitted under the VABEO whether online or offline, although the EU VBER does not have the same absolute prohibition.
• The CMA has been given the power to ask for information about vertical agreements claiming the benefit of the block exemption from the parties to those agreements.
• The accompanying CMA Guidance provides more information about the treatment of agency agreements under VABEO; however, it is important to note that the CMA guidance is currently in draft form only and has not yet been finalised. There are currently small differences between the UK’s CMA Guidance and the EU VBER Guidelines.
• The VABEO will be reviewed in six years, whereas the EU VBER has been set for twelve years.

See Checklist:

See News Analysis: What impact do the new block exemptions and their respective guidance have on established market practice for the type of restrictions typically seen in franchising agreements?

Model Articles deemed unsuitable for sole director companies

A recent decision of the High Court¹ has suggested that the Model Articles for private companies are not suitable for sole director companies.

Model Articles are the standard default articles a company can use.

Article 11(2) of the Model Articles states: ‘The quorum for directors’ meetings may be fixed from time to time by a decision of the directors, but it must never be less than two, and unless otherwise fixed it is two’.

Accordingly, for sole director companies we recommend that:

• the Model Articles are amended as otherwise decisions taken by that director may be invalid;
• passing a shareholder resolution to ratify any past decisions taken by the sole director.

See Practice Note: Directors’ decision-making—written resolutions and decisions by sole directors

Data security

New UK Data Protection regime.

The Government has .

Whilst a few proposals are still under consideration by the Government, proposed reforms identified as forming part of the Data Reform Bill include:

• removing the requirement in certain instances to conduct a ‘balancing test’ when using ‘legitimate interests’ as your lawful basis to process personal data;
• imposing requirements on companies to conduct a privacy management programme to evidence how they process and safeguard personal data;
• substituting the obligation on some organisations to appoint a Data Protection Officer with an obligation to identify an individual within the organisation responsible for overseeing data protection compliance;
• the removal of Data Protection Impact Assessments;
• a relaxation of the requirements relating to consent for certain cookies;
• extending greater powers of enforcement to the Information Commissioner’s Office (‘ICO’).

See:

See Practice Note: The Data Reform Bill

The European Commission clarifies Standard Contractual Clauses

On 25 May, the European Commission released  for the Standard Contractual Clauses (SCCs) for transfers of personal data outside the EEA  that it implemented in June last year.  

Subject to meeting other requirements, SCCs can be used to lawfully transfer personal data subject to the EU GDPR to a country that has not yet been approved by the EU as having adequate data protection controls.

As you may recall from our previous vlogs, those 2021 EU  SCCs are still relevant to UK data exporters (post Brexit) under the UK GDPR provided the is used in conjunction with them.

Key points in the Q&As include:

• that the SCCs can be supplemented with additional clauses and/or incorporated into a broader commercial contract provided it does not contradict the SCCs or prejudice the rights of data subjects;
• if organisations use SCCs this should be stated in their privacy policies together with information on how individuals can obtain a copy of the clauses.

See:

See Practice Notes: UK GDPR and EU GDPR—transfers of personal data internationally and to international organisations and EU GDPR—transfers of personal data internationally and to international organisations

ICO launches an AI and data protection risk toolkit

The ICO has launched its . The toolkit is a risk assessment tool to help organisations using AI (artificial intelligence) to manage the risks to individuals’ information rights caused by such processing.

See:

Employment

Changes to fit notes

Since the 1^st July, fit notes certifying sickness absence for employees can be written by a wider group of healthcare professionals, including pharmacists and nurses.

A ‘Statement of Fitness For Work’, known as a ‘fit note’, is an official written statement that provides a medical opinion on an individual’s fitness for work and is a requirement to obtain statutory sick pay following seven days of absence.

See:

See:

See Practice Note: Sick pay

Harassment

Three recent cases have given reminders to employers of their duties to prevent harassment in the workplace.

In one case² a tribunal has held that a claimant who was called an expletive in relation to his baldness at work was subjected to harassment. The tribunal agreed that such banter was unwanted conduct that related to his sex (because baldness is more prevalent in men).

In another case³ a 69-year-old employee has been awarded £13,000 for injury to feelings for being referred to as ‘half dead Dave’ by his team mates and his supervisor. The Tribunal agreed that the name calling in this case was age discrimination.  The Tribunal dismissed the employer’s argument that it was just work-place banter and that it should not be liable as the employee had not objected.

Finally, a woman has succeeded with a claim⁴ of harassment when her employer failed to provide somewhere private for her to express breastmilk at work, forcing her to use her car or the toilets instead.

It’s worth noting that employers won’t be liable where they have taken all reasonable steps to prevent harassment from happening by making reasonable adaptions and having robust policies and training in place.

See News Analysis: Can calling a man ‘bald’ at work amount to sex-related harassment?

See Practice Note: Harassment

New review of the future of work

There was surprise and disappointment that the long-awaited Employment Bill (which had been expected to contain measures in relation to tips, additional rights for zero hours workers and pregnant women, neonatal and paid carers’ leave and default flexible working as well as bringing in a single enforcement body for employment rights) was not included as part of the Government’s legislative agenda in the Queen’s Speech.

The Government has however now announced a new review of the ‘Future of Work’. The review will be led by Matt Warman MP and will be conducted over the spring and summer this year.

See:

See Practice Note: Consultation tracker—Employment

See Practice Note: Legislation tracker—Employment

Enforcing a non-compete

Employers often seek to protect their business by including post termination non-compete clauses in the contracts of their key employees.

If a key employee leaves and joins a competitor, the obvious next step is for the employer to issue an interim injunction – i.e. an injunction to immediately stop the employment with the competitor until there is time for a full hearing.

The Court of Appeal has recently considered⁵ such an interim injunction.  The following points are worth noting:

• Unless the former employee is very wealthy or if the ex-employer is willing to pay the former employee during the period between the interim injunction and full hearing – the Court may refuse the injunction.
• Don’t delay – whilst there was disagreement amongst the Court of Appeal Judges about whether the seven-week delay before issuing the injunction in the current case was fatal to it – it’s clear that the longer the delay the more risk there is to the success of the interim injunction application.
• If the non-compete acts as a total bar to other appropriate employment the clauses are unlikely to be justified as reasonable.

On this last point a recent High Court case⁶ has provided some useful guidance stating that where the non-compete is restricted to 12 months and to the parts of the businesses where the employee had material involvement, rather than all the business then the non-compete provision is more likely to be enforceable.

See News Analysis: Planon v Gilligan—Court of Appeal considers interim enforcement of non-competes

See News Analysis: Non-compete covenants in shareholder and service agreements—what is reasonable? (Law by Design Ltd v Ali)

See Practice Note: Post-termination restrictions on competition

See Practice Note: Interim injunctions in employee competition claims and confidentiality claims

Cases, laws, decisions referred to in this Bulletin

Disclaimer

Nothing in this Bulletin, or on the associated website, is legal advice. We have taken all reasonable care in the preparation of this Bulletin, but neither we nor the individual authors accept liability for any loss or damage (other than for liability that cannot be excluded at law).

LexisPSL provides clear, practical guidance for in-house lawyers. Want to see for yourself? Try it free for 7 days by filling out the form below.