Following a dynamic year, coupled with a continually evolving legal landscape, employers face increasing regulatory compliance, organized labor advances, technological changes, challenges in protecting company information and retaining talent, and new litigation trends.
In a recent webinar, McDermott’s industry-leading employment team unpacked the most pertinent legal updates and provided tips and action items to get ahead in 2025. They discussed new laws taking effect in the new year, explored key developments impacting management and the workforce, and provided guidance on what employers can anticipate this year.
Spin-offs have become increasingly popular with innovative companies as a method of unlocking shareholder value, but the transaction is not always tax-free, particularly for international employees holding equity awards or shares.
The ability to obtain tax-free treatment in the United States for both the company and shareholders in a spin-off is often attractive. However, the transaction is not always tax-free for shareholders located outside the US. When local country criteria are not met, the distribution of spin-co shares is taxable for shareholders.
Significantly, employees holding equity awards and company shares can be negatively affected by a spin-off, which can have a significant impact on morale at a very sensitive time in a spin-co’s evolution.
Companies generally take one of two approaches when adjusting equity awards in a spin-off: either a basket approach, where employees hold equity awards from both companies; or a concentration approach, where employees only retain equity awards from their post-spin employer. The basket approach raises more local tax and securities compliance issues than the concentration approach as the employee is holding awards from a company that is not their employer.
“Long” shares held by employees in an employer’s plan raise additional issues. The applicable tax analysis mirrors the analysis applicable to shareholders generally, which may or may not be taxable upon distribution, depending on the country. However, the tax result may differ when the shares are held in a trust or where the employee does not yet have full ownership of the shares. In certain cases, a local tax ruling should be submitted, potentially providing the employees with more favorable tax treatment than regular shareholders.
Tax-qualified equity awards also require consideration as the tax-advantaged treatment may be lost for the employees in many countries. For example, in the United Kingdom, Share Incentive Plans (SIPs) and Company Share Option Plans (CSOPs) are common equity awards and a spin-off impacts them differently.
When an employee holds shares in a SIP for five years, the employee may sell the shares without paying income tax or national insurance contributions. However, when a spin-off transaction does not meet the UK “demerger” rules for a tax-free spin-off, the SIP participants will be subject to taxation on the value of the distributed spin-co shares when they are distributed.
If an employee exercises CSOP options three or more years after grant, that employee doesn’t pay income tax at exercise for the difference between the exercise price and the current fair market value of the shares. Any adjustment of the CSOP awards results in the loss of tax-qualified treatment, subjecting the employee to income taxation when the options are exercised. Employees who have already met the three year requirement may therefore prefer to exercise the awards prior to the spin-off.
In most cases, particularly if the communication occurs shortly before the spin-off, employees do not fully understand the ramifications until it is too late to mitigate the tax impact. To avoid this, companies should communicate the tax implications to employees well before the spin-off, taking into [...]
How can the independent sector and choice make a dent in reversing the increasingly high number of United Kingdom healthcare patients waiting for treatment? In this LaingBuisson News article, Sharon Lamb examines the latest waiting time data and offers perspective on potential solutions.
The recent decision in Ponticelli Limited v Gallagher provides a salient reminder that the right to participate in a share incentive plan can transfer to a new employer under the Transfer of Undertakings (Protection of Employment) Regulations. The right applies even if the employee’s right to participate in the plan arose outside of the contract of employment. The employee will be treated as a leaver under their old employer/transferor’s scheme, and the transferee employer must then provide a scheme of substantial equivalence for the employee to participate in post-transfer.
While this is a Scottish case, the decision is binding on the employment tribunals throughout the UK.
As summer approaches and the clocks are set forward, April marks an increase in the National Minimum Wage, compensation for unfair dismissal and other payments required by UK employment laws.
With the General Data Protection Regulation (GDPR) resulting in a rise in enforcement incidents, it is prudent for organizations operating in the health and life sciences industries across the United Kingdom, European Union (EU) and other European Economic Area (EEA) nations to assess their responsibilities regarding the gathering and handling of health data.
Major Points:
“Data concerning health” is a wide term; it doesn’t just apply to medical records. Policies and processing records should accurately capture all health data, including inference data.
Most EEA countries, and the United Kingdom, have national laws that supplement GDPR.
Consent is not the only legal basis for collecting, storing and using health data; there are other options available, but be aware that “insufficient legal basis for data processing” is a common type of GDPR violation.
If used, health data consents must be granular, specific and transparent, and they must break down all the purposes for which the data is being processed. Consent must be granted on an “opt-in” basis and not as a result of a pre-filled tick box.
Health data may be reused for genuine scientific research purposes provided the processing is compatible with the original use, appropriate safeguards are in place and any separate national law conditions are satisfied.
Privacy policies and transparency notices must be clear about the basis on which health data is processed.
Proceed carefully and consider reidentification risk when relying on anonymisation to process data; document any reidentification risk assessment and periodically review risk assessment in light of developments in publicly available data and evolving risk environment. Technical measures, such as evolving encryption standards, should be reviewed periodically.
The COVID-19 pandemic has dramatically changed how governments confront issues as varied as global taxation, emigration and real estate. In this article published in Law.com, McDermott partner Nicholas Holland contributes his insight into these trends (and others) that are sweeping across Hong Kong, the United States, the United Kingdom and the Cayman Islands.
As the UK Government works through its phased COVID-19 recovery strategy and lockdown restrictions are progressively eased, employers in the United Kingdom are contemplating the implications of returning staff to the workplace. In this article, we address some of the key issues for employers to consider, with a particular focus on the UK Government’s “Covid-secure” workplace guidance. The issues raised in this article are subject to any local requirements that may apply in Wales, Scotland and Northern Ireland.
In the UK, changes in restrictions will see non-essential shops opening and many workers hesitantly going back into offices even though they could work from home. Government focus has therefore started to shift to the “re-opening” of business.
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