In good news for landowners and landlords, a key recent decision of the Upper Tribunal has increased the rent that telecoms operators will have to pay for the siting of masts on “unexceptional rural sites”. The case also provides useful guidance on the rights of landlords/landowners who require a redevelopment break right to be included in new leases.

Background

The decision was published on 29 July 2024 and relates to a renewal lease of a greenfield telecommunications site at Vache Farm near Chalfont St Giles in Buckinghamshire (Site).

The equipment on the Site consisted of a 20m high steel mast which was in a fenced 16m x 6m enclosure in a field. There were also several cabins housing telecoms apparatus. The parties to the lease were EE as tenant, and APW (also a telecoms company) as landlord. After the contractual term of the original 15-year lease expired in May 2020, the lease continued under the provisions of the Telecommunications Code (Code).

Code Reminder: a lease that is subject to Code rights (generally most telecoms leases) will continue even after the contractual term ends, unless a prescribed procedure to terminate is followed.

The parties could not agree on the renewal terms for the rent or the redevelopment break right and so the matter was referred to the Tribunal.

Rent for Unexceptional Rural Sites

The tenant, EE’s position was that the annual rent should be based on the figure of £750 per annum. This was taken from several 2022 cases which set £750 as the precedent rent figure for unexceptional rural sites[1]. EE’s surveyor conceded that the £750 should be increased to allow for inflation, taking it to £977, which they rounded to £1,000.

APW’s case was that the rent should be £2,850 per annum, and they submitted detailed valuation evidence that the rent of £750 was too low based on market comparables, and the good access and size of the Site.

The Tribunal took the opportunity to revisit the appropriate rent for rural mast sites, which had not been considered since the 2022 cases[2]. The Tribunal set out the previous thinking on unexceptional rural site valuation and considered whether the guideline figures needed to be reviewed.

It was the first time that the Tribunal had carefully reviewed transactions in relation to setting a value for small rural sites in non-telecommunications use, which can then be used to get the no-network assumption value.

In summary, the Tribunal found that the previous case law determining a rural mast site rent at £750 was much too low. The found that inflation was particularly relevant to valuation and took into account the evidence on comparables for non-telecoms use sites. They concluded that the appropriate rent for this type of site is £1,750.

Redevelopment Break Right

The parties agreed on the principle that APW should have a right to terminate the lease on 18 months’ notice, but they disagreed on how the re-development right should be worded.

APW wanted quite a widely drafted break right to be available to them whenever:

“(a) the Landlord desires to redevelop all or part of the Communications Site or any neighbouring land or any land under the ownership or control of the Superior Landlord (the site owner); or

(b) the test under paragraph 21 of the Code for the imposition of the agreement on the Landlord is no longer met.” Effectively, this was a right to terminate the lease whenever they want to redevelop the Site, or neighbouring land, for any purpose and at any time.”

Code Reminder:

Paragraph 21 contains a 2-part test which sets out that for a Court to impose Code Rights. The Court must be satisfied that:

1. Any prejudice caused to the landlord/landowner by imposition of the code agreement can be adequately compensated by money.
2. The public benefit outweighs the prejudice caused to the landlord/landowner. If a Court is not satisfied that the test is met, then they do not need to grant Code Rights to the operator.

EE wanted a more limited break right requiring APW to show:

1. a “settled intention” to develop the land; and
2. that the land could not reasonably be developed without obtaining possession of the Site.

EE expressly excluded “providing or operating an electronic communications network, or electronic communications services, or the provision of an infrastructure system” from the definition of “development”, as they did not want APW to try and take the benefit of the Site for their own purposes.

The Tribunal decided it was not the Code’s intention to stand in the way of the genuine redevelopment of land, regardless of whether that was for telecommunications purposes or not – and regardless of whether the operator enjoyed more favourable terms than before the lease renewal. The Tribunal refused to impose restrictions on the meaning of the word “development”.

The Tribunal’s imposed break clause wording was a compromise between the two positions:

“The break clause will therefore provide that the Landlord may terminate the new lease on giving 18 months’ notice expiring on the fifth or any subsequent anniversary of the term commencement date if it intends to redevelop all or part of the Site and could not reasonably do so while the new lease continues.”

Comment

This case provides helpful valuation guidance for unexceptional rural sites on which a vast majority of telecoms apparatus is situated and serves to increase the previous “base” rent of £750 to £1,750.

It also clarifies the position with regards re-development for landlords/landowners, which is that the presence of telecoms apparatus should not prevent development on land, even where that could lead to less favourable lease terms for the operator.

Should you wish to discuss any of the issues raised in this article, please contact Charlotte Curtis.

[1] EE Ltd and Hutchinson 3G UK Ltd v Stephenson and another [2022] UKUT 180 (LC)

[2] where they did so in the following two cases: EE Ltd and Hutchison 3G UK Ltd v. Affinity Water Ltd [2022] UKUT 8 (LC)) and EE Ltd and Hutchison 3G UK Ltd v. Stephenson and another [2022] UKUT 180 (LC)).

The recent case of Ward v Secretary of State for Housing, Communities and Local Government [2024] has highlighted that only lawful developments will be exempt from the requirement to demonstrate water neutrality.

The case

The case began with a planning application submitted in 2018 for a dwelling and stable block on agricultural land in Horsham.

The application was refused in 2019 on the grounds that the proposed development was unsustainable. The refusal was appealed to the Planning Inspectorate, however, due to delays caused by the pandemic, the appeal decision was severely delayed, with the appeal not being heard until 2022.

Two things happened during the extended delay. In December 2020 the landowner had moved onto the land and was living in a caravan. Then in September 2021 Natural England issued water neutrality guidance for the catchment in which the land was located for conservation reasons.

That guidance advised that new developments would need to demonstrate water neutrality. Water neutrality is achieved where the use of water in the supply zone before the development is equal to or less than after the development.

The Applicants submitted a Water Neutrality Statement stating that their occupation of the site prior to the publication of the Natural England guidance removed the need for an appropriate assessment because the development would simply maintain the status quo with regards to water consumption.

Appeal to inspector

At the appeal hearing in 2022 the Natural England guidance was a material consideration to be considered by the Inspector. Due to the relative timing of the Appellant moving on to the site and the issue of the Natural England guidance, the Appellant argued that the guidance did not apply to their appeal.

In contrast, Natural England argued that unless the Appellant could demonstrate that their occupancy of the land was either (1) lawful because it had the benefit of a planning permission or (2) their water consumption was otherwise accounted for, the development described in the appeal must achieve water neutrality.

The Inspector followed the Natural England guidance and concluded that the Appellant’s occupation of the land was unlawful, so their water consumption was not otherwise accounted for. The Appeal was refused on, among other things, water neutrality grounds. Appeal to the High Court.

The Inspector’s decision was challenged in the High Court. The court upheld the decision of the Inspector’s decision, concluding the Inspector had dealt correctly with the arguments on water neutrality.

What this case means

The Ward case confirms that when a water neutrality mitigation strategy is being proposed, only the consumption from existing lawful developments can be taken into account.

For proposed developments on land in catchments where Natural England has issued water neutrality guidance, an applicant needs an effective water neutrality mitigation strategy, and a water neutrality mitigation strategy will not be effective if it relies on a reduction of water consumption arising from an unlawful development located elsewhere in the catchment.

Should you wish to discuss any of the issues raised in this article, please contact Fergus Charlton.

In this episode, Ross Jarvis is joined by Julie Sharpe, a Partner in our Strategic Land Team, and Connie O’Donnell, an Associate in our Residential Development Team. Ross, Julie, and Connie discuss what is meant by ‘managed areas’ and examine the considerations developers should take into account when establishing them. They also discuss whether managed areas could play a role in delivering biodiversity net gain (BNG) and achieving nutrient neutrality ‘on-site’. Finally, they explore some of the more topical and practical issues affecting managed areas and their potential impact on the overall customer experience.

Earlier in 2024 Biodiversity Net Gain (BNG) requirements for planning permission were implemented under Schedule 7a of the Town and Country Planning Act 1989 – from 12 February 2024 for major sites, and from 2 April 2024 for small sites. Despite this progress, however, there remains a large gap regarding the implementation of BNG as a requirement for Nationally Significant Infrastructure Projects (NSIPs) under Development Consent Orders (DCOs).

Schedule 15 of the Environment Act 2021 sets out the prospective BNG provisions which will apply to DCOs once they are implemented. The key points to note are:

• The Secretary of State must make a BNG statement containing a BNG objective, which will apply to all DCOs during a specified period
• The statement must require a BNG value increase of at least 10%, mirroring the required gain for planning permission, though the Secretary of State has the power to make a BNG statement requiring additional BNG
• The statement must make provision that if a DCO includes land already registered on the BNG register, the value of predevelopment habitat for the purposes of the DCO includes the value of the existing habitat enhancement
• The statement must set out whether and how the BNG objective applies to irreplaceable onsite habitat
• The statement must set out what evidence is required from any DCO applicants to demonstrate how the BNG objective is met.

There are subsequent provisions which set out procedure, if any developments are, or are not, covered by an existing national policy statement at the time at which Schedule 15 is implemented.

Acquisition of land for BNG purposes

In a decision letter dated 12 September 2024, a DCO was granted to National Grid for the upgrading of infrastructure running from Suffolk to Essex, known as the Bramford to Twinstead Reinforcement and associated development. Interestingly, this DCO dealt with BNG considerations for the NSIP, ahead of the requirements becoming mandatory.

National Grid argued that whilst BNG was not mandatory for NSIPs, within their 2021-2026 Environmental Action Plan, they had committed to delivering at least 10% or greater value on BNG in that period, and as such, it formed part of their application for the DCO.

The decision letter confirmed that whilst the government intends to commence mandatory BNG for NSIPs from November 2025, it supported National Grid’s decision to commit to BNG on a voluntary basis ahead of the mandatory requirement being introduced.

Further, the Secretary of State used their discretionary power to grant compulsory purchase powers under a DCO pursuant to s122 of the Planning Act 2008, to give National Grid the power to acquire compulsorily, land it needed for its BNG requirements, in the event that voluntary agreements, with those whose interests it needed to acquire, could not be reached.

What this means for Landowners & Tenants

The implications of this decision are quite stark in respect of compulsory purchase; landowners will now need to concern themselves with developments, not only where their land may be required for the direct development of an NSIP, but also where their land is not directly required, but rather has simply been identified as suitable BNG land to support the NSIP.

Should you wish to discuss any of the issues raised in this article, please contact Adrian Bennett.

Introduction

Agreements that infringe the Chapter I prohibition of the Competition Act 1998 are void and unenforceable and can lead to fines of up to 10% of total group turnover.

The Competition Appeal Tribunal (“CAT”) is rarely required to opine on vertical agreements, particularly, those that do not involve retail price maintenance. However, in a recent case, Up & Running v Deckers, involving the supply of HOKA branded running shoes, the CAT has provided a detailed analysis of its approach to analysing the potential anti-competitiveness of selective distribution systems.

The case highlights the substantial competition law risks in seeking to operate selective distribution systems without clear, objectively justifiable, qualitative criteria. As a result of the findings in the case, Deckers is now facing a substantial claim for damages.

Pros and cons of selective distribution from a competition law perspective

Selective distribution systems restrict the number of authorised distributors and the possibilities of resale and thus reduce competition at the distribution level.

In a selective distribution system, distributors must meet certain qualitative and/or quantitative criteria to be supplied. Qualitative criteria require distributors to be able to provide particular levels of service. Quantitative criteria simply limit the number of distributors. Quantitative restrictions can also be imposed indirectly, for example, by requiring minimum levels of purchasing.

The competition risk is that these systems potentially reduce competition in the distribution of products and services. That is, they reduce ‘intra-brand’ competition between retailers.

In particular, selective distribution forecloses different types of distributors who do not meet the specified qualitative or quantitative criteria. In theory, this potentially facilitates collusion between distributors due to the requirement of similarity and hence likely business models and costs, and if there are quantitative limits as well, this will limit the number of distributors further facilitating collusion.

However, at the same time, selective distribution can increase competition between brands, ‘inter-brand’ competition – improving competition in relation to factors other than price (as opposed to the guarantee of a high profit margin for distributors).  For example, by ensuring a higher quality of service by distributors to offset any reduction in price competition.

Competition law assessment

Relevant Competition law background points

Before getting to the detail of the assessment of selective distribution, there are a couple of basic competition law points that are important to establish.

First, in competition law matters, the term ‘agreement’ is interpreted broadly and includes not just written contracts but also any meeting of minds that it is possible to infer from the behaviour of the parties and, importantly for selective distribution type cases, includes the tacit acceptance of terms by a distributor.

Second, there is a distinction in competition law between agreements which have the ‘object’ of restricting competition and those which may have the ‘effect’ of restricting competition. Where agreements contain ‘object’ restrictions of competition, the anti-competitive effects can be assumed. There is no need for detailed economic analysis of the actual effects. However, where agreements do not clearly have the ‘object’ of restricting competition, it is necessary to conduct a detailed economic analysis of their effects and this is a much more onerous exercise (for regulators and private actions).

Agreements that do not raise competition law issues

There is a substantial body of EU caselaw specifically concerning selective distribution systems and competition law.  While there remain gaps, this has broadly established a methodology for conducting competition law assessments of selective distribution systems. Selective distribution systems that comply with what are known as the ‘Metro‘ criteria, are considered not to raise competition law issues at all. the Metro criteria are that:

• The nature of the products necessitates a selective distribution system (e.g. ‘luxury’ goods, examples being perfume and high quality/high technology products)
• Distributors must be chosen on objective qualitative criteria
• The criteria are laid down uniformly for all potential resellers and not applied in a discriminatory fashion
• The criteria must not go beyond what is necessary

Where Metro criteria are not met, this does not necessarily mean there’s a restriction by ‘object’, it is still necessary to consider the question. However, it is difficult to envisage many practical circumstances where this will not be the case. In particular, the absence of a clear framework (transparent, objective, precise, non-discriminatory and proportionate) for the proper exercise of discretion by the distributor will point to an ‘object’ restriction of competition.

Agreements that raise issues but may be exempt

Agreements that do restrict competition (even by ‘object’) can benefit from ‘exemption’ from the competition law prohibitions. Agreements may be ‘exempt’ because they fall within the Vertical Agreements Block Exemption Order (VABEO) or because they qualify for ‘individual exemption’. In both cases, the thinking is essentially that on balance the positive benefits outweigh the detriment to competition.

Broadly speaking, the VABEO can cover selective distribution systems (irrespective of the nature of the product and the nature of the selection criteria) provided the market shares of the parties are below 30% on their respective markets and they do not contain ‘hardcore’ restrictions of competition. ‘Hardcore’ restrictions include those relating to onward sale pricing and selling other than to end users.

Where the VABEO does not apply, individual exemption is theoretically possible. However, it is likely to be difficult to establish that the benefits outweigh the detriments where there are high market shares, hardcore restrictions or the relevant market contains a number of selective distribution networks and there is a cumulative anti-competitive effect as a result.

Internet sales

A contentious area can be restrictions on online sales.

In a UK case involving Ping golf clubs, Ping had tried to prevent resellers from selling online as it argued that its golf clubs required personalised fitting in store. The CMA, CAT and Court of Appeal, however, were all of the view that such a restriction went beyond what was reasonable in the circumstances.

On the other hand, in an EU case involving perfumes, Coty successfully argued that it should be allowed to prevent resellers from selling its perfumes through online marketplaces as these did not fit the luxury image of its products.

The dividing lines between these approaches are not entirely clear.

Up & Running v Deckers

The facts were that Up & Running operated bricks and mortar stores and an associated online sales platform. Deckers supplies HOKA running shoes in the UK. Up & Running sought to start selling residual/out of season HOKA products through a new discount online sales platform (runningshoes.co.uk). Deckers required that a retailer had specific permission to make online sales, that the website had an identical or similar name to associated bricks and mortar stores or that Deckers was notified if the retailer wished to sell HOKA products from a website with a different name and that Deckers approved the contents of the website.

Deckers refused permission, ostensibly because there was no clear ‘signposting’ from the running.co.uk website back to Up & Running. In the CAT, Deckers sought to justify this restriction, but Up & Running proceeded to sell HOKA products through the running.co.uk website. Deckers served notice on Up & Running, terminating its supply agreement.

The CAT found that Deckers operated a multi-channel selective distribution system.  This included a ‘Main Retail Channel’, which included Up & Running was categorised and a ‘Clearance Channel’ involving other retailers such as Sport Pursuit.

The CAT also found that: “There was no further guidance given and no criteria formulated, let alone published, to indicate the basis on which Deckers would give approval for any website with a different name from any bricks and mortar operation. These provisions were therefore in the nature of conferring a very wide discretion upon Deckers to make decisions permitting or not permitting such an activity, without any accountability for the reasons for those decisions.”

The CAT’s conclusion, based on these facts, was that the: “general purpose of the contractual provision is to promote the selective distribution model envisaged by Deckers by preventing the emergence of competing business models or channels for distribution. The discretion and vague wording enabled Deckers to pursue two discernible sub-purposes…:

• To restrict entry into the Clearance Channel, being the additional channel for the online clearance of residual stock, so that Deckers is largely able to determine when and what volumes are sold through this channel
• To prevent retailers in Deckers’s selective distribution system who sell HOKA product in the Main Retail Channel from accessing the Clearance Channel, so that discounting of residual stock is inhibited by only taking place within, and subject to the commercial and practical constraints of, the Main Retail Channel.”

The CAT found that despite the market shares of Up & Running and Deckers being below the 30% thresholds in the VABEO, it did not apply because the refusal to approve the runningshoes.co.uk website because of the likely discounting of HOKA products amounted to the ‘hardcore’ restrictions of:

• the restriction of active or passive sales to end users; and
• a restriction on the buyer’s ability to set prices.

The CAT concluded with the following description of the facts that had given rise to the competition law issues in the case: “The selective distribution system implemented by Deckers was incomplete and flawed in its design and operation. The criteria for admission into the system were not properly recorded or kept in writing. Those criteria were, moreover, applied inconsistently on a piecemeal basis at best and in a discretionary, if not arbitrary, manner at worst. It is also striking to see the virtual absence of anything resembling a framework for treatment of separate channels.”

Conclusion

Selective distribution systems can be viewed as pro-competitive or as falling within the VABEO in many circumstances. However, where the qualitative criteria are not clearly specified and/or they clearly operate to restrict price competition or provide wide discretion to distributors to limit the channels through which retailers can sell, there are likely to be significant competition law risks arising.

Distributors operating selective distribution systems should therefore be careful to ensure that these systems are clearly specified, on the basis of objective qualitative criteria as far as possible. While there can be discretion for distributors in how they specify relevant criteria and thus define their selective distribution systems, the systems cannot be designed to allow continuing wide discretion (subject to a system redesign).

Failing to set up a clear selective distribution system could lead to agreements being void and unenforceable, fines of up to 10% of group turnover and private actions for damages.

If you have queries about any of the issues raised in this article, please contact Noel Beale or your usual Michelmores contact for further information. We have extensive experience in helping clients mitigate the potential competition law risks in these types of scenarios and ensuring that our clients have effective and robust distribution systems that optimise their commercial positions.

In the Autumn Budget, the Government announced that it is going to reform Agricultural Property Relief (APR) and Business Property Relief (BPR) from 6 April 2026. These are critical tax reliefs for Landed Estates and the impact of these changes should not be underestimated.

On a lifetime transfer or on death, or on transfers out of trust, Inheritance Tax (IHT) is charged. The lifetime rate is 20% (unless the transfer is potentially exempt, for example, a gift to an individual) and the death rate is 40%. Both rates are subject to the available nil-rate band and various reliefs, notably APR and BPR.

In respect of transfers of agricultural property, where it was used for the purposes of agriculture and held for the required period it benefitted from 100% relief. If it was subject to a pre-1995 Agricultural Holdings Act tenancy the rate was reduced to 50%. In respect of transfers of business property, where it had been owned for two years it would also qualify for 100% relief. A reduced rate of 50% was available for transfers of control holdings of quoted shares as well as assets used in – but not owned by – a trading business.

For Landed Estates, APR and BPR have always gone hand in hand. BPR has often been used to ‘top up’ APR to the extent that the value of property exceeded its agricultural value or in sheltering investment assets used in a composite business which is mainly trading. This is known as Balfour planning.

Whilst there have been no technical changes to the tests for APR and BPR, the available relief has been significantly curtailed.

The key changes which will take effect from 6 April 2026 are:

• 100% relief will be limited to the first £1 million of combined agricultural and business assets for every person or pre-existing trust. Any agricultural or business assets above that threshold will be subject to IHT but at a discounted 50% rate. In other words, a rate of 20% IHT on death (reduced from 40%), and a maximum rate of 3% IHT for ten yearly and exit charges from trusts (reduced from 6%).
• The £1 million of relief will be applied proportionally between agricultural and business property where the total value of the qualifying property is more than £1 million.
• Assets that already qualify for 50% relief (under the old regime) will not use up the £1 million allowance. This includes AIM listed (or other unlisted) shares where BPR is to be reduced from 100% to 50%.
• The £1 million allowance is not transferable between spouses. Careful planning will therefore be needed to ensure that no allowance is wasted.
• The allowance will apply to lifetime transfers (i.e. gifts or transfers into trust) or transfers on death. We do not yet know if it will refresh in the same way as the nil rate band.
• The allowance will be available to trustees, although trusts created by the same settlor after 30 October 2024 will share an allowance between them. Trusts created before this date will each have their own £1 million allowance.
• More detail is expected from the Government in early 2025 in respect of how the new legislation will apply to trusts.
• The Government has confirmed that it will extend the scope of APR to land managed under an environmental agreement with an approved body from 6 April 2025.

The Government has introduced anti-forestalling measures whereby transfers made on or after 30 October 2024 where the transferor dies within seven years and after 6 April 2026 will be caught by the new regime.

Clearly, these announcements will affect and concern many Landed Estates and we await the detailed legislation to understand precisely what the impact will be. However, on the information provided so far, there is scope for creative planning to mitigate the tax charge, consolidate liquidity to meet any charges and/or insure against that risk. Seeking considered tax advice in a timely manner has never been more important for our Landed Estates. Please contact a member of the Tax, Trusts & Succession team for more information and formal advice.

James Baker’s article first appeared in CIPD’s People Management, published here on 11 October 2024. In the article, James explains what businesses should consider when managing those absent because of serious illness or injury, and how to minimise the impact, including a look at the Equality Act.

A new study released by Zurich UK and the Centre for Economics and Business Research found that in the last year, 112.5 million sick days were taken by those with long-term conditions, with SMEs picking up 76 per cent of the 2023 long-term sick bill totalling £24.7bn.

When an employee is on sick leave, an employer should maintain appropriate contact. What is appropriate will depend on the circumstances (size of the business, reason for sickness absence, employee’s role/seniority etc). A careful balance should be struck between showing support and being kept abreast of developments but not inundating the employee unnecessarily. It’s usually sensible to agree how often an employee will be contacted, by what means (calls, emails, visits etc) and by whom (eg, line manager or HR). Always keep a paper trail of the content of conversations/meetings.

Medical reports can be useful in providing information to allow an employer to make informed decisions about next steps. Medical reports will often suggest adjustments, and associated advice, on how to support the employee back to work (if appropriate).

Employers should be mindful that medical information is ‘special category data’ so they must comply with their data protection obligations when handling it. Once a medical report/medical information has been obtained, it is sensible for a meeting to take place to discuss the content and agree on next steps.

Careful consideration should be given to the credentials of the medical professional being approached so as to ensure that relevant information is obtained. There is often an assumption that Occupational Health will provide the requisite information, but this is not always the case.

Managers should receive training on the sickness absence procedure and handling difficult conversations. A long-term absence procedure will usually involve several formal meetings and it’s best practice to allow employees to be accompanied to formal meetings under the policy.

The first meeting(s) will usually involve discussing the reasons and likely length of the absence, considering existing medical advice, looking at what adjustments can be made and agreeing a way forward (usually with steps and timescales for review).

Where an employee does not return to work for a sustained period, a ‘final’ meeting will usually be held to review the actions taken to date, discuss why those have not worked, consider updated medical evidence and establish whether there’s any reasonable prospect of a return to work.

In certain circumstances, an employer may decide to dismiss; however, an employer must be sure its decision is based on the most up-to-date medical evidence and should also consider any feedback from the employee and explore whether suitable alternative employment exists before making the decision. Obtaining specialist legal advice is always advisable in such cases given the unfair dismissal/discrimination risk.

Considering the Equality Act

An employee on long-term sick leave may meet the definition of ‘disabled’ under the Equality Act 2010 (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). If they do, they are protected from discrimination in its various forms (direct, indirect, discrimination arising from disability, failure to make reasonable adjustments, harassment, victimisation, etc).

Employers should be particularly mindful of their duty to make ‘reasonable adjustments’ to support a disabled employee (which could involve changes to the role, working times/location, adjustments to processes – such as discounting disability-related sickness absences, etc), and ensure they are not inadvertently applying policies or practices which particularly disadvantage the employee and those with their disability.

There’s no doubt that managing long-term absence is a challenge for employers. However, structured, proactive and compassionate management can help support the employee as well as reduce the impact on the business and mitigate legal risk.

Should you wish to discuss any of the issues raised in this article, please contact James Baker.

Michelmores has advised the shareholders of Fargo Systems (“Fargo”), a developer of SaaS products to assist with planning and operations in the shipping and road transport sectors, on the private equity investment in Fargo by August Equity (“August”).

This latest transaction follows Michelmores having acted for the management team on the management buyout of Fargo in 2022, a deal which won Small Deal of the Year category at the Insider South West Dealmakers Awards 2023.

Fargo, whose product development is based at the firm’s innovations centre in Exeter, with support and implementation teams based in Ipswich, is the market leader in TMS software for containerised cargo. It has long-standing relationships with several global logistics businesses, and its software is used across 22 countries. Fargo provides mission-critical cloud software that enables logistics customers to plan, execute, and optimise the movement of goods, providing tangible benefits for its customers in terms of automation, cost, and ESG, as well as ensuring compliance with regulations.

August is a mid-market private equity fund that invests in service-orientated companies in high-growth sectors, including healthcare, education, business services and technology. August will provide funding to enable the business to continue to scale internationally and expand its service lines for customers.

August will invest in the continued organic growth of the business, supplemented with targeted M&A into adjacent service lines and geographies. Fargo represents a strong adjacency to previous August investments in mission critical compliance-driven software businesses.

The Michelmores team advising on the deal was led by Partner Francesca Hubbard, alongside Associate Shafi Choudhury, Senior Associate Chris Smedley and Solicitor Dan O’Sullivan, all from the Firm’s Corporate team, with specialist input from Senior Associate Anthony Reeves (Tax), Senior Associate Danielle Collett-Bruce (Banking) and Associate Matthew Warren (Employment).

Francesca comments:

“We are delighted to have supported Fargo Systems through this transaction to a successful finish. This milestone investment for the company will enable the business to continue to scale internationally and expand its service lines for customers – we wish Fargo all the best in their continued growth.”

Steve Collins, Managing Director of Fargo Systems, said:

“We’re grateful to Michelmores for its expert guidance throughout the process and thrilled to have the support of August Equity as we continue our journey of growth and innovation. This investment strengthens our position as a market leader in transport management solutions and opens up exciting expansion opportunities, both internationally and in the services we offer. We are excited about the future for Fargo Systems and our customers.”

Michelmores’ award-winning Corporate team of specialist lawyers advises clients across the UK and beyond on capital markets, mergers and acquisitions, management buyouts, impact investing, energy projects, microfinance initiatives and more. Read more on our website.

As of 1 October 2024, the Employment (Allocation of Tips) Act 2023 is in force, which means employers must ensure that workers receive tips, gratuities and service charges (over which an employer exercises control or significant influence) in full, and those tips must be allocated fairly and transparently. A policy on how tips are dealt with must be in place (and made available to workers), and records of all tips paid and their allocation and distribution between each worker must be maintained (and accessible by workers). This will impact businesses in a number of industries, but particularly those in hospitality.

Employers must have regard to the statutory Code of Practice when dealing with tips. The Code of Practice outlines the scope of the new obligations, as well as the key principles of fairness (suggesting factors for employers to consider when developing their tipping policy and methods of allocation/distribution) and transparency (in terms of workers’ access to the policy and records). It includes a section dedicated to ‘addressing problems’ (which refers to the use of ACAS to help resolve disputes, with ultimate recourse to the Employment Tribunal).

New non-statutory guidance, released at the end of September 2024, supplements the Code of Practice and provides clarity on certain issues, including confirmation that agency workers must be accounted for when considering the distribution of tips, and clarifying that tips cannot be pooled across multiple sites or different branches. It contains template documents (including a tipping policy and tipping record template) to assist employers.

Ultimately, if an employer fails to fairly allocate or pay tips, or does not comply with its obligations regarding a written policy or record keeping, this could result in workers making claims in the Employment Tribunal. It is therefore vital that employers who operate in industries where employees receive qualifying tips comply with the new obligations and put the necessary frameworks and paperwork in place.

Should you need support in ensuring your business is compliant, or if you wish to discuss any of the issues raised in this article, please do not hesitate to contact Robert Forsyth.

The Firm is celebrating its latest Legal 500 results, which include 31 team rankings with ten rankings in Band 1, and eight in Band 2. Nine lawyers received new rankings in the 2025 Guide, bringing the Firm’s total to 44 individuals recognised for their expertise. Four lawyers are ranked in the Hall of Fame, 17 are Leading Partners, 15 are Next Generation Partners and nine are Leading Associates. 23 of the Firm’s 44 ranked lawyers are women.

This year, Michelmores’ Business Group has been newly ranked in two categories. The team have been listed as a Firm to Watch for Venture Capital in London. Venture Capital rankings focus on company-side representation and financing work where a firm is acting for a venture capital investor. A key component of this section is the extent to which a firm is able to advise a start-up throughout its entire lifecycle, from early stage funding and incorporation to exit transactions. The Firm’s new ranking demonstrates its unparalleled support for clients through this life-cycle with its angel investor network, MAINstream, and its early-stage business support programme, MiVentures, as well as experienced advice to scale-up, mature and exit businesses.

Michelmores’ Business Group has also received new rankings in the EU and Competition South West category for the team in Band 2 and for Commercial Partner, Noel Beale, who ranked as a Next Generation Partner. Factors considered in this category include advice on merger control, abuse of dominance, restrictive practices, state aid, cartel investigations and enforcement.

Corporate Partner, Francesca Hubbard, has received an improved ranking as Next Generation Partner for Corporate and Commercial work in Dorset, Devon & Cornwall along with new rankings for Disputes Partner, Sara Chisholm-Batten as a Leading Partner and Senior Associate, Emily Aggett as a Leading Associate for Commercial Litigation (Dorset, Devon & Cornwall).

The Firm’s renowned Banking and Finance team also rose up the table to Band 3 in the South West.

Michelmores Real Estate Group’s Planning & Environment team received improved rankings and recognition in the South West where the team is now ranked in Band 2, and Head of team, Partner, Mark Howard, is recommended as a Leading Partner in the field. This reflects the growth of the team with arrivals in recent years of experienced partners, Helen Hutton in Cheltenham and Fergus Charlton in Bristol.

Our Commercial Property team in Cheltenham led by experienced Transactional Property Partner, Julie Sharpe, was recognised as a Firm to watch and Partner and Head of the Firm’s Construction & Engineering team, Anna Wood, was also newly ranked as a Next Generation Partner for Construction South West.

Michelmores’ exceptionally highly ranked Private Client Group also had its expertise recognised in the Family and Tax, Trusts & Succession teams. Daniel Eames, Head of Family Law has been listed as a Leading Partner and Sarah Green, Partner in the Family Law team, and James Frampton, Partner in the Tax, Trusts & Succession team, have been newly ranked as a Next Generation Partners.

For the full Michelmores results, please visit The Legal 500 website.

The purpose of the Legal 500 UK Solicitors 2025 rankings is to help in-house lawyers and legal teams find the right advisors. These rankings reflect the comprehensive analysis undertaken by The Legal 500’s legal directory research team. Along with robust assessments of law firm submissions, they also conduct interviews with thousands of clients who play a key role in informing the results.

For more information about Michelmores or to get in touch, please visit our website.

Michelmores has advised CJL Rogers Properties Ltd (“CJL”) and Devonfields Ltd (“Devonfields”) on the acquisition of a retail centre in Devon’s new town centre, situated in Cranbrook, near Exeter.

CJL and Devonfields are private property and development companies owning a large portfolio of retail premises spread nationally across shopping centres and high streets, as well as warehouses and industrial locations. Over the years, the company has acquired newly built retail centres in Stockmoor Village, Bridgwater and now in Cranbrook.

The retail centre is situated under a block of residential apartments, in a market square next to a new Morrisons supermarket that is set to open in early 2025. Construction of the units has completed and tenants are now beginning fit-out works of the units.

The shopping district is set to be a vibrant community of retail and food outlets, including a café and charity shop, and a nursery school. The development looks to be a promising new hub not just for the people of Cranbrook, but also for those in the surrounding villages who will be able to shop locally, rather than needing to travel to Ottery St Mary or Exeter.

The Michelmores team advising on the deal was led by Partner Richard Walford, alongside Chartered Legal Executive, Zilah Nelson, both from the Firm’s Transactional Real Estate team.

Richard comments:

“We’re delighted to have advised CJL and Devonfields on this major acquisition, supporting Cranbrook’s growth in the community, and contributing to the development of this town centre.”

Real Estate forms a core part Michelmores’ work. The Firm advises organisations and individuals doing business in the real estate sector, to help them stay at the forefront of progress and innovation. Read more on our website.

Michelmores has advised Vigo Software (Vigo), a privately owned UK business working in the logistics software market for the past 40 years, on its sale to Kerridge Commercial Systems (KCS).

Vigo designs, builds and hosts Transport Management Systems (TMS) and Warehouse Management Systems (WMS) for its customers across the UK and Ireland. Vigo’s solutions help businesses reduce transport costs through efficient loading, plan delivery routes, meet transportation deadlines and enhance customer experience through transparent on time delivery.

With the combined Vigo-KCS solution, customers can expect to see improved stock visibility, capture logistics operational efficiencies and, enhance client service and communication. Vigo also offers real time driver mobile applications with functionality such as route scheduling and electronic proof of delivery. This complements KCS’ growing suite of logistics and field service solutions.

The Michelmores Corporate team advising on the deal was led by Partner Adam Kean and Associate Ben Adams, with specialist tax input from Senior Associate Anthony Reeves in the Firm’s Tax team.

Adam Kean comments:

“It’s been a pleasure working with John and the shareholders of Vigo team throughout this transaction, and we wish Vigo the very best success in the future as they work on the long-term development of the business alongside KCS.”

John Vickers, Managing Director of Vigo, adds:

“I would like to thank the Michelmores team for helping us successfully navigate our sale to KCS. I am delighted to announce that we will be joining forces – our combination represents an opportunity to provide greater value to our customers in terms of accelerating the pace at which we bring innovation and supply chain efficiency enhancing technology to our customers.”

Adam Kean has acted for the shareholders of Vigo Software since its MBO in 2016, supporting its strategic growth trajectory and exit.

Michelmores has a strong Corporate practice in the UK advising clients across a broad range of sectors. For more information, visit our website.