New corporate offence for failure to prevent fraud

With effect from 1 September, the Economic Crime and Corporate Transparency Act (ECCTA) introduces a new corporate offence for failure to prevent fraud (FTPF).

Guidance issued by the Serious Fraud Office (SFO) and the Crown Prosecution Service (CPS) suggests that they will be flexing their new powers to pursue businesses and/or associated persons in the business for corporate criminal liability under the FTPF offence.

The FTPF offence applies only to large organisations. A ‘large organisation’ is a business that meets at least two of the following criteria:

1. more than 250 employees;

2. more than £36 million turnover; and

3. more than £18 million in total assets.

How could it impact your business?

Historically, there was a very high bar for businesses to be criminally liable for fraud because evidence of the board being complicit in the fraud was required for a conviction.

Under ECCTA, the position has changed and a business can be liable for failing to prevent associated persons (such as employees, agents, subsidiaries etc.) from committing frauds which benefit the business, as opposed to the business committing the fraud itself. It’s a strict liability offence which means the business does not need to be complicit in the fraud, as long as the associated person has dishonest intent when committing the fraud that benefits the business. If convicted, the business could receive a fine and the level of the fine will be decided by the court.

The FTPF offence creates an increased risk for businesses in connection with employees working in sales, marketing, payroll and providing services to clients because of the higher likelihood of them having the chance to commit fraud.

A business has a defence to FTPF if it can show it had reasonable prevention procedures in place. Government guidance lists procedures that businesses can implement, such as:

1. top level commitment;

2. risk assessment;

3. proportionate risk-based prevention procedures;

4. due diligence;

5. communication (including training); and

6. monitoring and review.

Businesses may also wish to ensure commercial agreements contain further assurances regarding their processes to prevent fraud, in a similar way to which commercial agreements contain anti-bribery and modern slavery provisions.

What steps should you take?

Businesses should implement reasonable prevention procedures as soon as possible to ensure its risk is minimised. In practice, this can include a variety of different processes and procedures that incorporate the Government guidance, including:

1. communications to all employees from leaders in the business regarding the stance on preventing fraud;

2. fraud training for relevant teams and new employees;

3. a fraud prevention plan which imposes obligations on key individuals with responsibility to implement the plan;

4. a fraud policy;

5. a system for monitoring and reviewing teams or individuals that could be at risk of committing fraud;

6. standardising processes relating to payments and invoicing; and

7. enhanced supplier checks.

In summary, the scope of the FTPF offence has widened substantially which increases the risk of prosecution for businesses. Ensuring proactive measures are taken to implement reasonable prevention procedures is the best way to mitigate that risk. Certain long term agreements, such as outsourcing agreements may start to contain assurances of such measures.

Review of collective opt-out actions 

Earlier this month, and a decade on from its initial introduction, the Government announced a review of the opt-out class action litigation regime in competition law. The announcement comes at a time where the regime is generating an intense debate around whether it has achieved its aim of providing an appropriate redress mechanism for consumers harmed by breaches of competition law.

Collective opt-out actions were introduced via the Consumer Rights Act 2015, and the intention was that this system would make it easier for consumers who had been harmed by a breach to obtain redress. A class representative brings a private action against a defendant on behalf of an entire class of affected consumers, who are not required to opt-in to the litigation. If the action is successful, every consumer which falls into that class can step forward and receive their share of the damages awarded.

These actions are generally split into two case types- follow on, and standalone. Follow on cases are those where the Competition and Markets Authority (CMA) or European Commission (EC) have already investigated, and concluded, that a party or parties have infringed competition law, and the private action follows on from that finding. Standalone cases are those without a preceding finding by the CMA or the EC. Whilst we have seen more successes in follow on cases, these are especially limited, given the currently limited scope of public enforcement.

How could it impact your business?

There is a growing concern that the regime, in its current form, is not delivering on the intended redress for consumers. Despite the number of class actions being filed in the Competition Appeal Tribunal (CAT) growing to a peak of 18 claims in 2023, only the case of Justin Le Patourel v BT Group Plc has so far reached judgment in the CAT, with the vast majority of claims settling outside of court. Not only has this meant that there has been limited amount of precedent case law arising from the regime to apply to future cases, but it has also led to criticism on the cost effectiveness of settled claims, and whether the benefits of pursuing these claims truly lie with the harmed consumer, or if they instead lie with the litigation funders and other interested third parties.

The conduct of the parties in the case of Merricks v Mastercard has come under scrutiny on these issues. An opt-out class action claim against Mastercard, with prospective damages which were initially valued at up to £16.7 billion, settled for a comparatively lower sum of £200 million, which was requisitely approved by the CAT. Whilst Mr Merricks, the class representative, stated that the settlement was a “fair and just outcome for UK consumers”, the litigation funders, Innsworth Capital, described the settlement as a “total capitulation” by the class representative and his solicitors on the core of the case and its value. It should be noted that Innsworth funded the litigation over a period of seven years, at a cost of £45 million, and the settlement represented less than 1.2% of the total claim value. This subsequently led to a judicial review challenge by Innsworth as to the settlement, and the allocation of the damages which they argued should be directed towards them. A separate procedural application as part of this matter was criticised by Mr Justice Roth for what he described as “wholly disproportionate and unreasonable” costs.

What steps should you take?

The argument for reform to the regime is that these public battles between stakeholders to the class actions draws attention (and ultimately, damages) away from the initial aims of consumer redress and towards the balance sheets of the litigation funders and lawyers. There is a question as to whether the ancillary aim of preventing anti-competitive behaviour generally has been achieved, as claims such as the Merricks action show the heightened risk to parties in terms of costs and eventual potential damages, and this has started to result in a more cautious approach being made by the funders to these actions. In any event, the lack of cases reaching the final Judgment stage is perhaps telling for the genuine motivators behind such claims being progressed and the eventual settlement figures which are reached.

In its announcement of the review, the Government has suggested that whilst the choice of bringing a private action is an important legal right, they believe that “there may be other more appropriate routes that may reduce the burden on both consumers and businesses”. Whilst the review is at a very preliminary stage, this could signal a movement away from the current regime, and towards alternative forms of early dispute resolution, and settlements reached outside of the regime altogether, with the focus and attention placed back on the consumer. Perhaps the boom in class actions in competition law will soon come to an end, we recommend keeping one eye on developments in this area whilst the future of class action litigation is determined.

Sourcing Workers via “Umbrella Companies”

On 17 September 2025, HMRC published updated paragraphs for their Employment Status Manual (and supplemental guidance) which outlines proposed changes that will apply to umbrella companies from 6 April 2026.

What is an umbrella company?

The term “umbrella company” essentially describes an employer of convenience, where the employee works for someone else. Normally an umbrella company is involved in the supply of temporary workers.

Sometimes, such workers are engaged and paid by the umbrella company (although in practice the worker works day-to-day for a different company). Another common use of umbrella companies is by employment agencies, some of whom use umbrella companies to be the formal employer for workers they source and supply.

Why now?

The Government is committed to closing the ‘tax gap’. This is the gap between what is owed versus what is actually collected by HMRC. The Government has identified that some umbrella companies are being used to avoid significant tax revenues by failing to operate PAYE and National Insurance Contributions on employee wages. The Government is also concerned that less reputable umbrella companies are involved in dubious practices, i.e. categorising payments to workers as ‘loans’, ‘grants’, ‘capital payments’ and the like in order to limit employment taxes unlawfully.

How could it impact your business?

With the proposed measures under the Finance Bill 2025 (the Bill), UK-based employment agencies that supply workers to an end-client will be jointly and severally responsible for the PAYE liabilities of the umbrella company that actually employs the worker.

In the event there is no UK agency in the supply chain, joint and several liability may attach instead to the end-client using the worker, (provided that end client is a resident in the UK).

What steps should you take?

Some time remains before these changes come into effect in April 2026. However, if you source or provide contractors indirectly, and your labour supply chain may involve umbrella companies:

• You should review any ‘off payroll’ arrangements for sourcing labour which may involve umbrella companies;

• You may wish to strengthen the protections in labour supply contracts (through which you source and supply labour) to ensure any workers sourced using umbrella companies are subject to correct payroll taxes.

Further information can be found on the Government website here and a copy of the Employment Status Manual can be found here.

Employment Rights Bill – House of Commons rejects non-Government amendments

In its passage through the House of Lords, the upper chamber had proposed a number of amendments which would have changed a number of key aspects of the Employment Rights Bill (the Bill) and in some cases limit their effect.

However, on 15 September 2025, the House of Commons rejected a number of non-Government amendments to the Bill which had been proposed. The draft Bill will now return to the House of Lords for another reading, before it will receive Royal Assent and comes into force.

The amendments rejected by the Government were:

1. Retaining a six-month qualifying period for unfair dismissal – rejected on the basis the Government considered it appropriate for the protection to apply from day one. This was a headline promise of the Labour Party in opposition, and it is no surprise it was rejected.

2. Replacing the proposed employer duty to offer guaranteed hours with a right for workers to request them – rejected on the basis that the Government considered it appropriate for workers who meet the qualifying criteria to request such an offer and the obligation should remain with the employer.

3. Defining “short notice” for the purpose of compensation for cancelled or curtailed shifts as 48 hours – rejected on the basis that the amendment would cut across on-going consultation the Government is involved in in relation to a definition of “short notice”.

On the issue of a proposed ban on fire and rehire provisions however, amendments proposed in the Lords were retained. The original ban on fire and rehire has therefore been watered down significantly and accepted, as it was a Government-backed amendment.

This will mean that rather than making almost all fire and rehire dismissals unlawful (absent severe financial distress), the amended Bill only prevents such dismissals for solvent companies where the contract changes relate to pay, holiday, hours of work or pensions. Where the dismissal relates to some other change, any dismissal can be fair as long as a fair process is followed by the employer and the requirements of an existing code of practice is taken into account.

How could it impact your business?

The ERB is a flagship piece of legislation for the Government, which will change the employment law landscape significantly.

If (as expected) the Bill becomes law this Autumn, the essential framework for reform of employment will be formalised into law. Individual consultations will then continue on critical areas of detail, through to 2027.

What steps should you take?

The Employment Rights Bill should receive Royal Assent in the coming weeks and you should continue to monitor its progress.

We will continue to review guidance and proposed amendments as they are released. In the meantime, a more detailed view of the ERB can be found on the Knights’ website here.

Lutz v Ryanair - Claiming employment rights as an Agency Worker

In this recent case, Mr Lutz was a pilot who worked day-to-day for Ryanair between July 2018 and January 2020. He wore a Ryanair uniform, had a Ryanair ID pass and booked his leave through them.

Despite this close working relationship, Ryanair put arrangements in place so that Mr Lutz would actually be engaged and supplied indirectly (through an aviation agency, MCG Aviation Ltd (MCG)).

The written agreement documenting these arrangements stated that Mr Lutz was not an “officer, agent, employee or servant” of either MCG or Ryanair.

During the term of the agreement, Mr Lutz asked Ryanair to become an employed pilot, but his requests were refused.

Following the termination of the agreement, Mr Lutz brought two employment tribunal claims:

1. A claim against MCG for holiday pay; and

2. A claim against both MCG and Ryanair (as an ‘agency worker’) claiming the same entitlement to basic working conditions as Ryanair’s employed pilots.

An Employment Tribunal found that Mr Lutz could claim his holiday pay and was an agency worker of MCG under the Agency Worker Regulations 2010 (AWR). The decision was ultimately appealed to the Court of Appeal.

The Court of Appeal agreed that Mr Lutz was engaged by MCG, as the services agreement was made between him and MCG, and no contract existed with Ryanair at all.

MCG argued that Mr Lutz was not their employee but Ryanair’s employee. They said he was working under Ryanair’s direction and control and should be considered their employee. This argument was rejected. The Court found that the agreement should be taken at face value.

Despite upholding the outline structure Ryanair had put in place, Mr Lutz succeeded in both his claims.

First, he was able to claim his correct holiday pay from MCG, as the entity that engaged him as a worker.

Secondly, the fixed term nature of a 5-year contract with MCG was still ‘temporary’ enough to bring him within the protection for agency workers under the AWR. Accordingly, he was entitled (after 12 weeks of supply to Ryanair) to the same basic terms and conditions due to Ryanair pilots.

How could it impact your business?

This case reaffirms that courts will not normally imply a direct employment relationship where an indirect structure is put in place. 

Nevertheless, if an indirect structure is put in place (through one or more intermediaries) that is not the end of the story for employment rights. Claims may still be available under the AWR against an end-user of a worker (like Ryanair) even if the worker isn’t taken on directly.

It is important to bear in mind that individuals engaged through an indirect structure may fit the broad definition of agency workers and therefore (a) be entitled to certain day 1 rights and (b) the same basic terms and conditions as the permanent workforce after 12 weeks.

What steps should you take?

This case offers valuable guidance for businesses that engage agency workers or individuals supplied by third-party companies on a temporary basis. Key takeaways include:

• “Temporary” doesn’t mean short-term: For the purposes of the Agency Workers Regulations (AWR), arrangements that span over years can still be considered temporary, potentially triggering rights and obligations under those rules.

• Substance over form: While contractual terms are relevant, they are not decisive. Tribunals and Courts will look beyond the written agreement to assess how the relationship operates in practice. Businesses therefore cannot rely solely on clauses stating that an individual is not an employee, worker, or agency worker (although they can still be helpful to include).

• Worker status has a broad and protective scope: The Court reaffirmed that in tripartite arrangements (where one business supplies an individual to work for another) the supplier may still be deemed the employer, even if the hirer exercises day-to-day control.

In light of this decision, businesses using agency workers, temporary workers or similar arrangements should consider conducting a thorough audit of their workforce models to ensure compliance and mitigate risk.

Great British Energy Act 2025

The Great British Energy Act 2025 (the "Act") establishes Great British Energy, a new publicly-owned energy company with a mandate to accelerate investment in clean energy. It introduces measures to boost domestic renewable generation, support grid upgrades and tighten supply chain standards (including modern slavery provisions linked to solar and battery manufacturing).

The Act passed in mid-2025 and has now come into force. Implementation will be phased, with the new company expected to start operating in early 2026.

How could it impact your business?

The new entity could reshape the UK energy market by providing additional competition and funding for renewables. Businesses in energy-intensive sectors may benefit from long-term price stability if new projects scale quickly. However, energy suppliers and developers may face new partnership models and closer scrutiny of supply chain ethics.

Compliance teams should note the stronger focus on forced labour and environmental risks within clean energy supply chains.

What steps should you take?

• Monitor how Great British Energy structures partnerships and procurement opportunities as early engagement may secure advantageous positions.

• Review energy procurement strategies to assess whether new supply contracts could deliver cost or reputational benefits.

• Supply chain policies should be updated to reflect the Act’s modern slavery provisions, particularly if sourcing from high-risk regions.

Failing to adapt could mean missed opportunities for collaboration, or reputational harm if supply chains fall short of heightened ESG expectations.

Reform of landlord and tenant law

Clause 72 and Schedule 31 of the English Devolution and Community Empowerment Bill introduce sweeping reforms to commercial landlord and tenant law, despite the Bill’s title suggesting otherwise.

Without prior consultation, the Bill proposes to abolish upward-only rent review clauses in future commercial leases by inserting new provisions into Part 2 of the Landlord and Tenant Act 1954. Specifically, it adds Schedule 7A, which prohibits certain rent review terms, and Schedule 7B, which prevents landlords from compelling tenants to accept new leases with rent fixed on an upward-only basis.

The changes will apply to tenancies granted after the commencement date, expected in early 2026.

How could it impact your business?

This reform will significantly affect landlords, commercial surveyors, and asset managers involved in drafting or negotiating business tenancies.

The prohibition applies to leases governed by Part 2 of the 1954 Act (including those contracted out) and captures rent review clauses where the rent may change during the term but cannot be determined at the outset. It covers not only open market reviews but also index-linked and turnover-based rent reviews, where the reassessed rent could fall below the passing rent.

Existing leases and pre-commencement contracts are not affected, nor are stepped rent increases with predetermined values. However, the mismatch between legacy headleases and future subleases may create operational and valuation challenges. Anti-avoidance provisions will prevent landlords from circumventing the ban.

What steps should you take?

Commercial property professionals should urgently review lease drafting practices and remove upward-only rent review clauses from any new or renewing leases falling within the scope of the 1954 Act.

Legal teams should be engaged to develop compliant alternatives, such as open market reviews with bilateral flexibility or inflation-linked mechanisms that allow for downward adjustment. Internal procedures must be updated, and teams trained to identify prohibited terms and avoid triggering anti-avoidance scrutiny.

Marketing materials and heads of terms should reflect the new legal position. Delay in adapting could result in unenforceable lease provisions, tenant disputes, and reputational risk, particularly for institutional landlords and portfolio managers.

Chancel Repair Liability

Anybody who has purchased property in England and Wales will be aware that solicitors always recommend the carrying out of a number of property searches to establish whether there is anything noted in any public registers which may adversely affect the property being purchased.

One such search is a Chancel Repair search and, if the search confirms that the property is within a parish which has a potential liability, the buyer may be required to incur further expense to purchase insurance against the risk of a chancel repair claim being made against the property. The Law Commission has launched a consultation to tidy up legislation which should mean that in certain circumstances it will no longer be necessary for such searches to be carried out and therefore no requirement to pay for indemnity insurance, the consultation “aims to close a historic loophole and save homeowners millions in insurance costs”.

How could it impact your business?

Chancel repair liability (CRL) is a largely historic liability with origins in the feudal system and it applies to both commercial and residential property. However, it still has the potential to impose an obligation on owners of land within affected parishes which can require property owners to pay for certain repairs to a local church. Whilst in practice it is rarely enforced, when it is, the liability can be huge.

The Land Registration Act 2002 states that overriding interests will not to be binding on owners of registered land who acquire the land for value after October 2013, where such an interest has not been included on the registers of title.

It was always thought and intended, that CRL should fall within the definition of overriding interest and would therefore be caught by the provisions of the 2002 Act. However, doubt has been cast on whether CRL is in fact an “adverse right affecting the title” and therefore an overriding interest and solicitors have therefore continued to carry out Chancel searches in relation to all proposed land purchases.

What steps should you take?

The consultation is aiming to introduce an amendment to the 2002 Act to ensure that CRL does fall within the definition of overriding interests, which will mean that if you are purchasing a property which has a registered title and the current owner bought that property on a date after October 2013, then there will be no need to carry out Chancel Repair Searches nor obtain insurance on acquisition.