Commercial Client Reference Articles

Insolvency and Pre-Packs

Legislation on insolvency enacted in the Small Business, Enterprise and Employment Act 2015  affect directors of companies that become insolvent.

The Act added two new grounds for disqualifying a person from being a director of a UK company and broaden the range of review of the past conduct of a director and the 'harm done' as a result of an insolvency. In 2016 Parliament issued a research briefing on the operation of pre-packs and setting out the need to comply with best practice when undertaking pre-pack sales out of administration.

What will be particularly worrisome for directors, and which should be of particular concern to those – including non-executive directors – who do not take an active and inquiring role in the management of the company, is that the Secretary of State has enhanced powers to make directors personally responsible for losses suffered by creditors in appropriate circumstances.

The Government has also made it known that it will consider implementing further changes that will affect 'pre-pack' sales of insolvent companies if voluntary measures currently in place do not prove to be successful in curbing abuses.


What follows below is a snapshot of some of the more important ones.

  • A new regime for the conduct of creditors' meetings is to be introduced, the practical effect of which will be that the proposals of the insolvency practitioner as regards the insolvent entity will be deemed to be accepted unless ten per cent of the creditors (by value) object. A formal meeting will not be held unless requested by at least ten per cent (by value or number) of the creditors.


  • Administrators will be given the same powers as liquidators of companies to bring claims for wrongful or fraudulent trading.


  • Directors of insolvent companies are at increased risk of having compensation orders made against them and face an extension to the period – from two years to three – within which an application to disqualify them from acting as directors can be brought. Compensation orders can also be brought against non-directors who advise a director who becomes disqualified.

 

In the 2018 Autumn Budget statement, the Government took the step of announcing the reintroduction of Crown Preference, meaning that debts die to the Crown (eg taxes) will take preference for payment over debts due to other unsecured creditors.

Insolvency practitioners who overstep the mark when arranging pre-packs (typically transferring assets for less than a value the creditors think is fair) can face sanctions from the courts, which seem to be taking an increasingly dim view of perceived sharp practcie.

Landlords - Dealing With Pre-Pack Tenants

Businesses in financial difficulties are increasingly seeking ways of ridding themselves of extra costs and, in many cases, premises let in more promising economic times are viewed as a substantial and avoidable liability, especially for businesses which have expanded too quickly.

One of the more common ways for a business to be restructured on a more profitable basis is to arrange to take the profitable parts into a new business by doing a ‘pre-pack’ administration – a procedure whereby the business, or part of it, is transferred to a new entity. Prior to this, the business will be placed into administration, which imposes a moratorium on legal processes, such as the landlord’s right to make the lease forfeit by peaceable re-entry.

The argument for pre-packs is that they maximise the chance of salvaging the business and preserving employment. On the downside, the creditors of the original business are often left nursing losses.

From the landlord’s perspective, a tenant which undertakes a pre-pack may well leave the rented unit behind if it is uneconomic to retain it, thus leaving the landlord facing the prospect of finding a new tenant and a loss of rental income.

If the new business wishes to retain the unit, there may be scope for the landlord to negotiate with the new occupier with regard to arrears of rent as well as adherence to the lease covenants.

The good news for landlords is that in most cases they should be entitled to retain a rent deposit paid by a tenant that goes into administration.

A recent case has also confirmed that it will be difficult in many circumstances for administrators to assign a tenancy 'by operaton of law'  - the landlord will normally have to made it unequivocal by its conduct that the prior tenant's tenancy had ended and a new tenancy begun.

A 2018 case confirmed that where a landlord wishes to use the statutory Commercial Rent Arrears Recovery (CRAR procedure that was introduced in 2014, the right will be lost to accept the tenancy as ceasing.

 

 

Disputes in the EU - Rules on Applicable Law

Where a dispute has a foreign element, one of the common problems is deciding under what jurisdiction legal action should be taken. This is avoided in many commercial contracts by specifying the applicable law in the contract, but in consumer contracts there is often no such clause. When the action arises because of a non-contractual issue, the problem is even more difficult.

The EU has set out regulations aimed at clarifying the issue of where action should be taken with regard to a range of non-contractual obligations in civil and commercial matters, excluding actions involving government bodies. These harmonise the rules for deciding jurisdiction across the EU (excluding Denmark), but also allow for the parties to elect for a specified jurisdiction to apply in certain circumstances. There is no freedom of choice in some types of action, for example those involving intellectual property and competition law.

The key concept is that the jurisdiction applicable will depend on the place where the damage occurs, or is likely to occur. This may well be different from the country in which the event giving rise to the action took place. There are some exceptions to this, however, the main one being that if both parties to a dispute are habitually resident in the same country, that country’s law will apply, no matter where the event took place.

Another exception will be where the event giving rise to the action is inextricably linked with a particular country, in which case the law of that country will apply.

It remains to be seen wheher Brexit will allow the UK to participate fully in the simplified system for enforcing trade debts and resolving trade disputes now in place.

Reports on dispute resolution and enforcement post-Brexit are available from the Parliament website.

Small Business Data Protection Law Compliance Checklist

The Information Commissioner's Office (ICO) publishes a great deal of useful information for all organisations on data protection and compliance with data protection law.

The ICO has recently updated its guidance on exemptions from some of the rights and obligations under the General Data Protection Regulation (GDPR) and the Data Protection Act 2018 (DPA).

For small businesses and sole traders, the ICO has also created a small business data protection checklist to allow them to assess how well they comply with data protection law. This can be found here and should only take a few minutes to complete.

If you are unsure about how the GDPR and DPA affect your organisation, we can advise you. In October alone the ICO announced that fines totalling £825,000 had been levied on three organisations for breaches of data protection law or nuisance calling.

It is better to be safe than sorry.

 

GDPR Documenting Processing Activities

Article 30 of the EU General Data Protection Regulation (GDPR) contains explicit provisions that require organisations to maintain internal records of their data processing activities.

This obligation reflects the increased importance of accountability and the need to ensure (and demonstrate) that your organisation processes personal data in line with the GDPR. 

Most organisations must document their processing activities to some extent. Both data controllers and data processors have their own documentation obligations, but controllers are required to keep more extensive records than processors.

The scope of the exemption from documentation is still under consideration. Under the current guidance, organisations with 250 or more employees will be required to document all their processing activities. Smaller organisations must do so where the processing is not occasional, where it is likely to result in a risk to the rights and freedoms of data subjects or where it includes special categories of data. The latter largely refers to what is currently termed 'sensitive personal data' under the Data Protection Act 1998, but also includes genetic and biometric data when this is processed in order to uniquely identify an individual. Similar extra safeguards apply to the processing of personal data relating to criminal convictions.

The Information Commissioner's Office (ICO) has published detailed guidance on documentation. This explains how maintaining up-to-date records of data processing activities can assist in complying with other elements of the GDPR, such as drafting privacy notices, responding to access requests and ensuring the personal data you hold is relevant, accurate and secure. Knowing precisely what data you hold will also support good practice in data governance and increase business efficiency.

The ICO's guidance on documentation can be found on the ICO website. Guidance on the implications of Brexit is here.

The GDPR came into effect on 25 May 2018 as did the Data Protection Act 2018. This widens the scope of data protection law somewhat and increases various penalties for transgressions for various offences.

Making Waivers of Dividends Work

When a company is set up, it is common to divide the shares in it in approximately equal proportions amongst the subscribers. Whether or not this proves to be the most effective way to split them in the long run depends on a variety of factors, of which the effect on the governance of the company is normally the most significant. However, one problem which sometimes results is that where dividends are paid in proportion to the shareholdings, this can lead to dividends being payable to a shareholder who does not need them or who would have to pay higher-rate tax on them.

When a shareholder does not wish to receive a dividend, this can be effected by the execution of a dividend waiver. The use of such waivers can be an effective tool in tax planning, so it is unsurprising that HM Revenue and Customs (HMRC) are generally not keen on them. Unless a dividend waiver is executed in the right way, HMRC are likely to use anti-avoidance legislation to attack the scheme.

The essential steps are:

  1. The dividend waiver must be a formal election by the person entitled to receive the dividend. It must be done on paper in appropriate form and dated and witnessed;
  2. The waiver must be executed before the dividend is declared; and
  3. It is always better if there is a commercial reason for the dividend to be waived – this will normally be to allow the company to retain funds for some specific purpose.

It is unwise to use dividend waivers too frequently. HMRC will look more closely at arrangements which are repeated and the practical effect of which reduces the overall tax payable – for example, where the shareholder executing the waiver is a higher-rate taxpayer and the shareholder who receives the dividend is not.

 

IPO Guidance on Brexit

The Intellectual Property Office (IPO) has published a guide on how intellectual property (IP) law is likely to be affected following Britain's withdrawal from the EU. The IPO's aim is to 'continue to protect all existing registered European Union Trade Marks, Registered Community Designs, and Unregistered Community Designs as we leave the EU'.

Essentially, what is proposed is a continuation of the status quo, with UK organisations having the same IP protections they do now in the EU, and EU organisations having their current IP rights in the UK recognised. Pronouncing itself confident that a 'no deal' exit is unlikely, the IPO says that 'it is in no one's interests for there to be a cliff edge, and so the laws and rules that we have now will, so far as possible, continue to apply'.

However, the IPO has also published a series of guides in the event of a 'hard Brexit'. These cover the following areas:

  • ·       Trade Marks and Designs;
  • ·       Patents;
  • ·       Copyright; and
  • ·       Exhaustion of IP rights.

All can be found on the IPO website..

Age Discrimination and Retirement

Since the abolition of the Default Retirement Age (DRA) in 2011, it is not permissible for an employer to dismiss an older worker on the ground of retirement unless this can be objectively justified under the Equality Act 2010.

This does not mean that employees will never be able to retire, but that an employer cannot lawfully force an employee to retire at a set age unless the age can be objectively justified under the Equality Act. If this is not possible, the employer faces the double threat of a claim for age discrimination and for unfair dismissal.

Employers therefore have two options. These are:

  • not to have a set retirement age and use other dismissal options where necessary; or
  • to use an Employer Justified Retirement Age (EJRA).

For a set retirement age to be objectively justified, its use must be a proportionate means of achieving a legitimate aim. This is not an easy test to pass, and businesses who do wish to have in place an EJRA are advised to seek legal advice before choosing this option. An EJRA will normally be appropriate for occupations where retirement at a particular age can be justified on health and safety grounds – for example for airline pilots or fire fighters. Employers must provide evidence that the chosen EJRA is necessary – not based merely on assumptions – and be able to demonstrate that no alternative or less discriminatory action could achieve the same result. Employers who choose to use an EJRA must follow a fair procedure, giving the employee adequate notice of their impending retirement and, if circumstances permit, consider any request to work beyond the EJRA as an exception to the normal policy. However, it is important to have procedures in place to ensure consistency of treatment of employees who request to stay on.

Older employees can retire voluntarily at a time of their choosing and draw any occupational pension to which they are entitled under the rules of the scheme. If an employee has given formal notice that they wish to retire, the employer is under no obligation to permit them to withdraw their notice should they change their mind. If, however, an employee has only told their employer that they plan to retire, they can change their mind before formal notice is given.

Great care must be taken if an older employee is performing badly. Procedures for dealing with performance issues must be fair and applied consistently across all age groups. To avoid a claim of unfair dismissal, any dismissal must be for one of the potentially fair reasons for dismissal under the Employment Rights Act 1996. Care must also be taken that any decisions taken by the employer do not discriminate against an employee who has a condition that constitutes a disability under the Equality Act. In such cases, the employer has a duty to make reasonable adjustments to remove any barriers to the employee’s performance.

Group risk insured benefits are exempt from the principle of equal treatment on the grounds of age, so employers who provide such benefits can cease to provide or offer them to employees who reach the State Pension Age, even if they continue to work beyond that age. The age at which group risk insured benefits can be withdrawn will increase in line with increases in the State Pension Age.

In addition, under the pensions auto-enrolment rules, employers are not obliged to enrol workers who have reached the State Pension Age.

Whilst the abolition of the DRA has given employees greater choice and flexibility over when to retire, the move has been criticised as having a negative impact on an employer’s ability to plan workforce requirements to meet future business needs.

The Advisory, Conciliation and Arbitration Service has guidance on retirement that contains useful advice on a possible framework for workplace discussions that will help identify an employee’s future aims, and gives examples of ways of raising the issue of retirement without asking questions that could be seen as discriminatory.

The Equality Act 2010 - A Guide for Employers

The Equality Act 2010 replaced nine major pieces of discrimination legislation and other ancillary measures introduced over the last forty years. The core provisions of the Act came into force on 1 October 2010.

As well as harmonising existing discrimination laws, the Act aims to advance equality and to extend protection from unfairness and discrimination on grounds of disability; age; sex; sexual orientation; gender reassignment; race; religion or belief; marriage and civil partnership; and pregnancy and maternity. These are now called ‘protected characteristics’.

Whilst many of an employer’s obligations regarding discrimination in the workplace remain the same, there are some key changes that do need to be addressed as the Act extends some protections to characteristics that were not previously covered and also strengthens some aspects of equality law.

Types of Discrimination – Definitions

Direct Discrimination
Direct discrimination occurs where the reason for a person being treated less favourably than another is one of the protected characteristics covered by the Act. The new definition is broad enough to cover instances where someone does not have the protected characteristic but has suffered less favourable treatment because of their association with someone who does (discrimination by association) or where the victim of less favourable treatment is wrongly thought to have a protected characteristic (perception discrimination).

Indirect Discrimination
Indirect discrimination occurs when a policy or practice which applies in the same way to everyone has an effect which particularly disadvantages people with a protected characteristic, unless the person applying the policy or practice can justify it by demonstrating that it is a proportionate means of achieving a legitimate aim.

Indirect discrimination can also occur when a policy would put a person at a disadvantage were it to be applied. For example, where a person is deterred from doing something, such as applying for a job, because a policy which would be applied would result in his or her disadvantage, this may also be indirect discrimination.

Indirect discrimination now covers all the protected characteristics apart from pregnancy and maternity.

Harassment
Harassment is unwanted conduct that is related to a relevant protected characteristic that has the purpose or effect of creating an intimidating, hostile, degrading, humiliating or offensive environment for the complainant or of violating the complainant’s dignity.

Harassment applies to all the protected characteristics apart from pregnancy and maternity and marriage and civil partnership. The definition means that employees can complain of behaviour they find offensive, even if it is not directed specifically at them and the complainant need not possess the relevant protected characteristic themselves.

Third Party Harassment
Under Section 40 of the Act, an employer was potentially liable for harassment of an employee by a third party, for example a customer or client. However, the third party harassment provisions were repealed with effect from 1 October 2013.

Victimisation
Victimisation takes place where one person treats another badly because he or she has, in good faith, done a ‘protected act’, for example taken action, or supported any action taken, for the purpose of the Act, including in relation to any alleged breach of its provisions. Victimisation also occurs where one person treats another badly because he or she is suspected of having done this or of intending to do so. A person is not protected where he or she maliciously makes or supports an untrue complaint. Only an individual can bring a claim for victimisation.

Under the Act, victimisation is technically no longer treated as a form of discrimination, so there is no longer a need to compare treatment of an alleged victim with that of a person who has not made or supported a complaint under the Act.

Specific Points to Note

Disability
The definition of disability remains essentially the same. A person is disabled if they have a physical or mental impairment which has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities. However, the Act removes the requirement to consider a list of eight capacities, such as mobility or speech, hearing or eyesight, when determining whether or not a person is disabled. This change will make it easier for some people to demonstrate that they meet the definition of a disabled person.

The Act replaces the concept of disability-related discrimination with a new protection from discrimination arising from disability. This means that a person discriminates against a disabled person if they treat them unfavourably because of something arising from, or in consequence of, their disability where the employer or other person acting for the employer knows, or could reasonably be expected to know, that the employee has a disability, unless the treatment can be shown to be a proportionate means of achieving a legitimate aim. This definition means that there is no need for a disabled employee to establish that his or her treatment is less favourable than that experienced by other, non-disabled employees.

The concept of indirect discrimination has been extended to the protected characteristic of disability.

As before, an employer has a duty to make reasonable adjustments to help employees overcome disadvantages arising from an impairment. Failure of the duty cannot be justified. The Act makes clear that this duty includes a requirement to provide an auxiliary aid, such as job application forms in large print for someone with a visual impairment or a specially adapted computer keyboard for an employee with arthritis, if this would overcome the substantial disadvantage to the disabled person.

Age
The Act protects people of all ages. However, different treatment because of age is not unlawful direct or indirect discrimination if the employer can justify it – i.e. can demonstrate that it is a proportionate means of achieving a legitimate aim. Age is the only protected characteristic that allows an employer to justify direct discrimination.

As of 6 April 2011, it is no longer lawful to compulsorily retire an employee on the grounds of age unless the dismissal can be objectively justified as a proportionate means of achieving a legitimate aim, which is not an easy test to pass.

Group risk insured benefits are exempt from the principle of equal treatment on the grounds of age, so employers who provide such benefits can cease to provide or offer them to employees aged 65 and above, even if they continue to work beyond that age. The age at which group risk insured benefits can be withdrawn will increase in line with increases in the State Pension Age.

Employers can continue to use the development bands of the national minimum wage without the threat of legal challenge on the grounds of age discrimination.

Gender Reassignment
A transsexual person now has the protected characteristic of gender reassignment.

The Act defines this as being where a person has proposed, started or completed a process to change his or her sex. Note that he or she is no longer required to be under medical supervision to come within the definition.

It is discrimination to treat transsexual people less favourably for being absent from work because they propose to undergo, are undergoing or have undergone gender reassignment than they would be treated if they were absent through illness or injury.

In January 2016, a report by the Women and Equalities Committee made recommendations calling for the Government to act to ensure full equality for trans people. One of the report's recommendations was that the use of the terms 'gender reassignment' and 'transsexual' in the Equality Act are outdated and misleading, as the preferred term is 'trans'. Please note that the terms used in this article are those used in the Act itself. However, employers are advised to make sure that relevant policies used the more up-to-date terminology.

Pre-Employment Health Questionnaires
In order to protect job applicants with a disability from discrimination during the recruitment process, the Act prohibits the use of questionnaires on an applicant’s general health and related issues prior to a job offer being made. This includes prohibiting the use of such questionnaires before selecting a pool of applicants from whom the successful candidate will be chosen.

The measure does not prevent employers from asking job applicants any questions about their health but stipulates that they are only allowed to do so for specific purposes, for example deciding whether a job applicant can carry out a function that is essential (‘intrinsic’) to the work concerned.

Equal Pay
The Act allows an employee to bring a claim of direct pay discrimination using a hypothetical comparator where no actual comparator of the opposite sex exists.

Pay Secrecy Clauses
The Act makes pay secrecy clauses unenforceable and provides that individuals who discuss their pay with one another in order to find out if there might be pay discrimination with regard to any of the protected characteristics are protected from victimisation, even if their employment contract requires them not to discuss their pay.

Positive Discrimination
As with previous equality legislation, the Act allows an employer to take ‘positive action’ in certain situations. Positive action is lawful where it is necessary to prevent those who share a particular protected characteristic from suffering a disadvantage connected with that characteristic or if their participation in an activity is disproportionately low.

The Act also contains provisions that allow positive action specifically in the process of recruitment and promotion, in limited circumstances. These provisions mean that it is not unlawful to recruit or promote a candidate who is of equal merit, in relation to the specific job or position for which they have applied, to another candidate for the same post if the employer reasonably thinks that:

  • the candidate has a protected characteristic that is under-represented in the workforce; or
  • people with that characteristic suffer a disadvantage connected to that characteristic.

This kind of positive action is only allowed where it is a proportionate way of addressing the under-representation or disadvantage. The Act does not allow an employer to appoint a less suitable candidate just because he or she has a protected characteristic that is under-represented or disadvantaged.

Dual Discrimination
Section 14 of the Act contains provisions that would allow individuals who believe they have been treated less favourably on account of two protected characteristics to bring a combined claim. For example, a woman may feel she has suffered discrimination on account of both her sex and her age. However, this provision has not been implemented.

Genuine Occupational Requirements
Under the Act, there is now a single occupational requirement that must exist for direct discrimination in favour of a particular protected characteristic to be lawful. This applies to all the protected characteristics and differs from the previous exceptions for occupational requirements in that it makes clear that the requirement must pursue a legitimate aim and that the burden of showing that the exception applies rests on those seeking to rely on it.

Organised Religion
Where employment is for the purposes of an organised religion, an employer is permitted to apply a requirement to be of a particular sex or not to be a transsexual person, or to make a requirement related to the employee’s marriage or civil partnership status or sexual orientation, but only in narrowly defined circumstances.

Caste
In March 2017, the Government launched a consultation entitled 'Caste in Great Britain and Equality Law', seeking views on how best to ensure that appropriate and proportionate legal protection exists for victims of caste discrimination.

The consultation suggested two potential ways of achieving this, which were:

  1. to implement a duty, which was introduced by Parliament in 2013, to bring caste discrimination within the scope of the Equality Act; or
  2. to rely on emerging case law, which in the Government's view shows that a statutory remedy against caste discrimination is available through existing provisions in the Act, and to invite Parliament to repeal the duty on that basis.

Having considered the responses, the Government has decided not to add caste to the list of protected characteristics under the Act on the ground that it already affords this protection. The decision takes into account that caste is an exceptionally controversial, deeply divisive issue, and legislating for it to become a protected characteristic would be as divisive as doing the same for 'class' would be across British society more widely. Reliance on case law, and the scope for individuals to bring claims of caste discrimination under 'ethnic origin' rather than caste itself, is likely to create less friction between different groups and help community cohesion.

The Burden of Proof
In any claim where someone alleges discrimination, harassment or victimisation under the Act, the burden of proving his or her case starts with the claimant. Once the claimant has established sufficient facts, which in the absence of any other explanation point to a breach having occurred, the burden then shifts to the respondent to demonstrate that no breach of the provisions of the Act has occurred.

Extension of Employment Tribunal Powers
Previously, an Employment Tribunal could only make recommendations for the benefit of the individual claimant. The Act extends this power so that Tribunals can now make recommendations that an employer takes steps to eliminate or reduce the effect of discrimination on other employees.

Further information and Codes of Practice supporting the Act can be found on the website of the Equality and Human Rights Commission.

Employers should ensure that their equal opportunity policies, contracts of employment and recruitment procedures are up to date and that staff are informed and trained accordingly in order to comply with the provisions of the Act.

In addition, it is important to make sure that compromise agreements refer to settling claims under the Act where appropriate.

Failing to Prevent Bribery - Are You at Risk?

The Bribery Act 2010 came into force on 1 July 2011. It created a new offence which can be committed by a commercial organisation if it fails to prevent persons associated with it from committing bribery on its behalf. A business can provide a defence by showing that it had ‘adequate procedures’ to prevent bribery by such persons from taking place, however. Organisations that have not already done so should ensure they have the necessary prevention procedures in place.

What is deemed to be adequate will depend on the nature, size and complexity of your business. The key point is that to rely on the defence, the measures you adopt must be proportionate in view of the likelihood of bribery occurring – for example, a large firm which operates in overseas markets is likely to be more at risk than a small organisation undertaking business primarily in the UK. You should therefore carry out a risk assessment of the potential that exists for bribery offences to be committed, especially when entering into new business arrangements and new overseas markets.

Where appropriate, due diligence should be carried out so that you know exactly whom you are dealing with, especially when engaging others to represent you in business dealings.

Whatever anti-bribery procedures you do decide are necessary should be seen to have the backing of those at the top of the organisation and the policy should be communicated to staff and others who will perform services for you, with training provided where appropriate, so that it is clear that the business culture is one in which bribery is not tolerated. If the risks you face change, your procedures may cease to be effective, so it is important to make sure these are kept up to date.

Concern has been expressed that spending on hospitality could cause a business to fall foul of the Bribery Act. The position is that you can continue to provide bona fide hospitality and spend money on promotional or other business initiatives provided the expenditure is reasonable and proportionate given the sort of business you are engaged in. The expenditure should be made in order to promote your products or services, improve the image of your business or establish good relations with clients, with no intention of corrupting the independence of the recipient.

The Serious Fraud Office advises that when considering whether expenditure on corporate hospitality can be considered to be a bribe, it will look at five factors:

  1. Whether or not the organisation has issued a clear policy regarding gifts and hospitality;
  2. Whether the expenditure in question was compliant with the policy and, if not, whether or not it had been sanctioned at the appropriate level within the organisation;
  3. Whether or not the expenditure was proportionate with regard to the status of the recipient;
  4. Whether or not the expenditure had been entered in the organisation’s books of account; and
  5. The lawfulness of the receipt by the recipient under the laws of his or her own country.

Where an offence under the Act is committed with the consent or connivance of a senior officer of an organisation, that person (as well as the body corporate or partnership) is guilty of the offence and liable to be proceeded against and punished accordingly. The maximum penalty for individuals is 10 years’ imprisonment or an unlimited fine, or both. The maximum penalty for commercial organisations is an unlimited fine.

The Ministry of Justice has published guidance on the Act, including case studies illustrating what approach businesses might take in certain situations.

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