Trump Administration Terminates Humanitarian Parole for Citizens of Cuba, Haiti, Nicaragua, Venezuela
Department of Homeland Security (DHS) Secretary Kristi Noem announced the termination of humanitarian parole for citizens of Cuba, Haiti, Nicaragua, and Venezuela, also known as the CHNV program, in the Federal Register on March 25, 2025. Humanitarian parole for citizens of these countries will expire no later than 30 days from March 25, 2025, or April 24, 2025.
CHNV beneficiaries who did not file some other immigration benefit application prior to publication of the termination notice must depart the United States on or before April 24, 2025, or the expiration of their humanitarian parole, whichever date is sooner. DHS will prioritize removal of CHNV beneficiaries without pending immigration applications who remain in the United States beyond the expiration of their humanitarian parole.
DHS has determined that, after termination of the parole, the condition upon which employment authorizations were granted no longer exists, and DHS intends to revoke parole-based employment authorizations.
The CHNV program was instituted by DHS under former President Joe Biden. It allowed citizens of Cuba, Haiti, Nicaragua, and Venezuela who obtained U.S. financial sponsors to enter the United States by humanitarian parole for up to two years. Once in the United States, parolees could apply for work authorization. Humanitarian parole was renewable, however, on Oct. 4, 2024, the Biden Administration announced it would not renew the program. About 530,000 individuals benefited from the CHNV program.
Seeking to enjoin termination of the program, on Feb. 28, 2025, Haitian Bridge Alliance and several individuals affected by the termination of the CHNV program filed a lawsuit in U.S. District Court for the District of Massachusetts, alleging violations of the Administrative Procedure Act and the Due Process Clause of the Fifth Amendment. The lawsuit is pending.
Operation Allies Welcome, the humanitarian parole program for Afghanis who assisted U.S. forces during the war in Afghanistan, and Uniting for Ukraine, the humanitarian parole program for individuals fleeing the war in Ukraine, are unaffected by the latest announcement.
FCA Review of Private Fund Market Valuation Practices
Go-To Guide:
The United Kingdom’s Financial Conduct Authority (FCA) is increasing its scrutiny of private fund market valuation practices, highlighting the need for stronger governance, transparency, and conflict-of-interest management across fund managers.
Fund managers are expected to apply consistent valuation methodologies, maintain functional independence in valuation processes, and address gaps in ad hoc valuation procedures.
The FCA has emphasised the importance of engaging third-party valuation advisers and has reminded fund managers of the importance of ensuring the independence of valuers.
Private fund managers should consider conducting gap analyses and strengthening their valuation frameworks to align with the FCA’s expectations.
Background
The FCA has embarked on a level of engagement with the private funds sector not seen since the consultation and engagement exercises surrounding the implementation of the Alternative Investment Fund Managers Directive (AIFMD) in 2013.
On 26 February 2025, the FCA issued a letter to the CEOs of all asset management and alternative firms, setting out its priorities for the year and informing them that it intends to:
engage with the UK fund management industry in a review of the UK’s implementation of the AIFMD, with a view to streamlining certain UK regulatory requirements (i.e. after maintaining a post-Brexit status quo, the FCA is now finally considering how UK private fund managers and their affiliated entities should be regulated); and
launch a review of conflict of interest management within UK fund managers. As part of this, the FCA will assess how firms oversee the application of their conflict of interest frameworks through their governance bodies and evaluate how investor outcomes are protected. (Note that the FCA will likely expect to see actual living processes deployed to prevent conflicts at all levels of a fund’s structure, with the efficiency of those processes tested by UK managers).
Subsequently, on 5 March 2025, the FCA published its findings from its review of private market valuation practices (the “Review’s Findings”).
Context of the FCA Review
The FCA’s review stemmed from its concern that private market assets, unlike public market assets, are not subject to frequent trading or regular price discovery. This necessitates firms to estimate values using judgment-based approaches, which can pose risks of inappropriate valuations due to conflicts of interest or insufficient expertise.
Private fund managers in the UK deploy a variety of different structures:
many of the valuation-related issues are more pronounced for open-ended funds that permit redemptions during the fund’s life, compared to closed-ended funds, where the true value and performance can only be determined at the end of the fund’s life when assets are sold.
funds that invest into a variety of assets, from relatively liquid ones (as is common with many hedge funds) to illiquid assets whose value may evolve as managers improve the asset (e.g. real estate funds and certain private equity funds).
We expect that the FCA will continue to focus on this area and will likely require all compliance teams across UK fund managers – regardless of their fund strategies – to conduct a gap analysis against the Review’s Findings.
The Review’s Findings
The FCA identified examples of good practice in firms’ valuation processes, including:
high-quality reporting to investors;
comprehensive documentation of valuations; and
use of third-party valuation advisers to enhance independence, expertise, and the consistent application of established valuation methodologies.
Overall, the FCA found that firms recognised the importance of robust valuation processes that prioritise independence, expertise, transparency and consistency.
The Review’s Findings, however, also identified areas requiring improvement, particularly in managing conflicts of interest. For example, conflicts can arise between a manager and its investors in the valuation process, such as when fees charged to investors depend on asset valuations. While firms acknowledged conflicts relating to fee structures and remuneration policies, the FCA found that other potential valuation-related conflicts were inadequately recognised or documented. These include:
conflicts in investor marketing, where unrealised performance of existing funds may be used to market new funds;
secured borrowing, where valuations may be inflated to secure higher borrowing levels; and
pricing of redemptions and subscriptions based on a fund’s net asset value.
The FCA expects firms to identify, document, and assess all potential and relevant valuation-related conflicts, determine their materiality, and take actions needed to mitigate or manage them.
The Review’s Findings also highlighted variations in firms’ approaches to independence within valuation processes. The FCA noted that functional independence within valuation functions and voting membership of valuation committees are critical for effective control and expert challenge. Additionally, the FCA found that many firms lacked clearly defined processes or consistent approaches for conducting ad hoc valuations during market or asset-specific events. Given the importance of ad hoc valuations in mitigating the risk of stale valuations, the FCA encouraged firms to consider the types of events and quantitative thresholds that could trigger such valuations and document how they are to be conducted.
The FCA flagged the following key areas for managers to consider reviewing and potentially improving:
the governance of their valuation processes;
the identification, documentation, and management of potential conflicts within valuation processes;
ensuring functional independence for their valuation process; and
incorporating defined processes for ad hoc valuations.
Breakdown of the Review’s Findings
Governance arrangements
The FCA found that while most firms had specific governance arrangements in place for valuations, including valuation committees responsible for making valuation decisions or recommendations, there were instances where committee meeting minutes lacked sufficient detail on how valuation decisions were reached. The FCA emphasised that firms must keep detailed records to enhance confidence in the effectiveness of oversight for valuation decisions.
Conflicts of interest
The FCA expects firms to identify, avoid, manage and, when relevant, disclose conflicts of interest. The Review’s Findings identified specific areas where conflicts are likely to arise, including investor fees, asset transfers, redemptions and subscriptions, investor marketing, secured borrowing, uplifts and volatility and employee remuneration. While the FCA found that conflicts around fees and remuneration were typically identified and mitigated through fee structures and remuneration policies, other potential conflicts were only partially identified and documented. Many managers had not sufficiently considered or documented these conflicts, often relying on generic descriptions.
The FCA expects firms to thoroughly assess whether valuation-related conflicts are relevant and, if so, to properly document them and the actions taken to mitigate or manage them. This may include engaging third-party valuation advisers.
Functional independence and expertise
The FCA reviewed the extent to which firms maintained independent judgment within their valuation processes, by looking at independent functions and the expertise of valuation committee members.
Only a small number of managers clearly demonstrated functional independence by maintaining a dedicated valuation function or an independent control function to lead on valuations. Such functions were responsible for developing valuation models and preparing recommendations for decisions made by valuation committees.
The FCA noted that examples of good practice to ensure independence included establishing a separate function to lead valuations and ensuring sufficient independence within the voting membership of valuation committees to guarantee effective control and expert challenge.
Policies, procedures and documentation
Unsurprisingly, the FCA emphasised that clear, consistent and appropriate policies, procedures and documentation are core components of a robust valuation process. These elements ensure a consistent approach to valuations and enable auditors and investors to verify adherence to the valuation process.
The FCA found that not all firms provided sufficient detail on their rationales for selecting methodologies and their limitations, nor did they include a description of the safeguards in place to ensure the functional independence of valuations or potential conflicts in the process. The FCA also observed examples of vague rationales for key assumption changes, such as adjustments in discount rates.
The FCA stated that it would encourage firms to engage with auditors appropriately, by inviting them to observe valuation committee meetings, raising auditor challenges at those meetings and taking proactive measures of managing conflicts of interest involving the audit service provider. It also stated that back-testing results can help firms inform their approach to valuations, by identifying insights about current market conditions and potential limitations in models, assumptions and inputs and encouraged firms to consider investing in technology to improve consistency and reduce the risk of human error in valuation processes.
Frequency and ad hoc valuations
The FCA noted that infrequent valuation cycles risk stale valuations, which may not accurately reflect the current conditions of investors’ holdings. This can lead to potential harm, such as inappropriate fees or investors redeeming at inappropriate prices.
The FCA emphasised that conducting ad hoc valuations (outside of the regular valuation schedule) can help mitigate the risk of stale valuations if material events cause significant changes in market conditions or how an asset performs.
Most firms, however, were found to lack formal processes for conducting ad hoc valuations. The FCA urged firms to incorporate a defined process for ad hoc valuations, including defining the thresholds and types of events that would trigger an ad hoc valuation (such as movement in the average multiple of the comparable set, company-specific events and fund-level triggers). It found that most firms waited for changes to flow through at the next valuation cycle instead of conducting ad hoc valuations. Only a few firms formally incorporated ad hoc valuations into their valuation processes by having defined types of events that would trigger these. The FCA stated firms should consider incorporating defined ad hoc valuation processes to mitigate the risk of stale valuations.
Transparency to investors
The FCA emphasised that transparency to investors increases confidence in their decision-making around private assets and enables them to make better informed decisions. The FCA urged full-scope UK AIFMs to provide investors with clear information about valuations and their calculations and encouraged all FCA-regulated firms to pay close attention to the information and needs of their clients.
The Review’s Findings highlighted that most firms demonstrated good practice by reporting both quantitative and qualitative information on performance at the fund and asset-levels, as well as holding regular conference calls with investors. Some firms further enhanced their reporting by including a ‘value bridge’ in their investor reports, showing the different components driving changes in asset values or net asset values, helping investors to better understand the factor influencing valuation changes. The FCA noted that some firms faced barriers limiting their ability to share information with investors. These barriers included restrictions arising from non-disclosure agreements and concerns about the commercial sensitivity of sharing valuation models.
The FCA urged firms to consider whether they can improve investor reporting and engagement by providing detail on fund-level and asset-level performance to increase transparency and investor confidence in the valuation process.
Application of valuation methodologies
The FCA stressed that valuation methodologies must be applied consistently for valuations to be appropriate and fair. In its review, the FCA observed that while firms applied valuation methodologies generally consistently by asset class, there were instances where firms employed different approaches, such as comparable sets and discount rate components for private equity assets. While firms could reasonably justify the use of different assumptions, the FCA expressed concerns that these variations might impair investors’ ability to compare valuations across firms. Firms demonstrating good practice were those that employed another established methodology as a sense check to validate their primary valuation and confirm their judgment.
The FCA expects firms to apply valuation methodologies and assumptions consistently, making valuation adjustments solely based on fair value. It also emphasized the need for valuation committees and independent functions to focus on these adjustments to ensure decisions are robust and well-documented.
Use of third-party valuation advisers
The FCA noted that it is good practice to seek further validation for internal valuations through third-party valuation advisors, particularly after identifying material conflicts of interest, such as calculating fees, pricing redemptions and subscriptions, transferring asset using valuations.
The FCA found that most managers engaged third-party valuation advisers and discussed their controls to assess the quality of service and independence provided by these advisers. Examples of good practice included conducting an annual exercise whereby the firm used a valuation from an alternative provider for the same asset and compared the quality of valuations from both providers.
Firms that adopted good practices had considered the limitations of the service provided, taken steps to ensure the independence of the third-party valuation advisers, and retained responsibility for valuation decisions.
The FCA urged firms to consider the strengths and limitations of the service provided and to disclose the nature of these services to investors, including the portfolio coverage and frequency of valuations. Additionally, firms need to be aware of potential conflicts of interest when using third-party valuation advisers and should ensure that investment professionals are kept at arm’s length to maintain the independence of third-party valuations.
Next Steps
The FCA indicated that the Review’s Findings will inform its review of the AIFMD and will be taken into consideration when updates are made to the FCA’s Handbook rules. Furthermore, the FCA indicated that the Review’s Findings will inform its contribution to the International Organization of Securities Commission’s review of global valuation standards to support the use of proportionate and consistent valuation standards globally in private markets.
In the meantime, the FCA has said that managers should assess the Review’s Findings and address any gaps in their valuation processes to ensure they are robust and are supported by a strong governance framework with a clear audit trail. Boards and valuation committees should also be provided with regular and sufficient information on valuations to ensure effective oversight.
In light of the above, fund managers and other regulated firms in the UK performing key functions related to funds should:
consider reviewing the FCA’s findings and identify any gaps in their valuation approach, taking action to address deficiencies where applicable;
ensure their governance arrangements provide accountability for valuation processes;
assess whether their valuation committees have sufficient independence and expertise to make valuation decisions; and
enhance oversight of third-party valuation advisers and consider the strengths and limitations of service providers.
China Releases Draft Implementation Measures for the Protection of Drug Trial Data Including Data Exclusivity for Foreign-Originated Drugs
On March 19, 2025, China’s National Medical Products Administration (NMPA) released Implementation Measures for the Protection of Drug Trial Data (Trial, Draft for Comments) (药品试验数据保护实施办法(试行，征求意见稿))and Working Procedures for the Protection of Drug Trial Data (Draft for Comments) (药品试验数据保护工作程序(征求意见稿)) that provides up to 6 years of data exclusivity of clinical trial data required to be submitted to the NMPA to prove safety and efficacy of a new drug to prevent generic drug manufacturers from relying on this data in their own applications. In contrast, the US generally provides 5 years of exclusivity. However, for foreign-originated drugs, the Chinese data protection period will be 6 years minus the time difference between the date on which the drug’s marketing authorization application in China is accepted and the date on which the drug first obtains marketing authorization overseas. Comments are due before May 18, 2025. The original documents as well as spreadsheets to submit comments are available here (Chinese only).
A translation of the Implementation Measures follows.
Article 1 (Purpose and Basis) These Measures are formulated in accordance with the Drug Administration Law of the People’s Republic of China, the Regulations for the Implementation of the Drug Administration Law of the People’s Republic of China, the Drug Registration Management Measures and other relevant regulations in order to encourage drug innovation and meet the public’s demand for medicines.
Article 2 (Management Mechanism) The State Drug Administration (hereinafter referred to as the NMPA ) is responsible for the protection of drug trial data (hereinafter referred to as data protection) and is responsible for establishing a data protection system and implementing management work in accordance with the principles of fairness, openness and impartiality.
The Drug Technical Review Center of the National Drug Administration (hereinafter referred to as the Drug Review Center) is responsible for the specific implementation of data protection.
Article 3 (Definition of Concepts) Data protection means that when drugs containing new chemical ingredients and other qualified drugs (see the attached table for details) are approved for marketing, the National Medical Products Administration shall protect the test data and other data submitted by the applicant that are obtained independently and not disclosed, and grant a data protection period of no more than 6 years.
During the data protection period, if other applicants apply for drug marketing authorization or supplementary application relying on the data in the preceding paragraph without the consent of the drug marketing authorization holder (hereinafter referred to as the holder), the National Medical Products Administration will not grant permission; unless other applicants obtain the data on their own.
During the data protection period, if other applicants submit drug registration applications using data obtained by themselves, their applications shall be approved if they meet the requirements and no longer be granted the data protection period, but the data shall not be relied upon by other subsequent applicants .
Article 4 (Conditions of protected data) Undisclosed trial data and other data refer to trial data in the complete application materials that are not disclosed in the application for drug marketing authorization for the first time in the country.
After a drug is approved, test data obtained when subsequent research work is completed in accordance with the requirements of the drug regulatory authorities will no longer be given new data protection.
Article 5 (Data Protection Related to Innovative Drugs) A six-year data protection period is granted for innovative drugs from the date of their first domestic marketing authorization.
If an original research drug that has been marketed overseas but not in China applies for marketing in China, the data protection period is 6 years minus the time difference between the date on which the drug’s marketing authorization application in China is accepted and the date on which the drug first obtains marketing authorization overseas. The data protection period is calculated from the date on which the drug obtains marketing authorization in China.
The scope of drug data protection in this clause includes all test data used in the drug marketing authorization application materials to prove the safety, efficacy and quality controllability of the drug.
For innovative drugs that have been approved for multiple indications but have the same approval number, each indication will be given data protection according to the registration category, and the scope of data protection for newly added indications will be the clinical trial data that support its marketing.
During the data protection period, the National Medical Products Administration will not approve the marketing application or supplementary application for improved new drugs, chemical generic drugs and biosimilar drugs submitted by other applicants without the consent of the holder, relying on the protected data of the holder , unless other applicants submit data obtained by themselves.
Article 6 (Protection of data related to improved new drugs) A three-year data protection period will be granted from the date of the first domestic marketing authorization for the improved new drug.
If a modified drug that has been marketed overseas but not in China applies for marketing in China, the data protection period is 3 years minus the time difference between the date on which the drug’s application for marketing authorization in China is accepted and the date on which the drug first obtains marketing authorization overseas. The data protection period is calculated from the date on which the drug obtains marketing authorization in China.
The scope of drug data protection in this clause includes new clinical trial data that demonstrates that the drug has significant clinical advantages over drugs with known active ingredients (marketed biological products), but does not include bioavailability, bioequivalence and immunogenicity data of vaccines.
During the data protection period, the National Medical Products Administration will not approve the marketing application or supplementary application for chemical generic drugs and biosimilar drugs submitted by other applicants without the holder’s consent and relying on the protected data of the holder , unless other applicants submit data obtained by themselves.
Article 7 (Data Protection Related to Generic Drugs) A three-year data protection period is granted to the first approved generic drugs (including drugs produced overseas) and biological products of original research drugs that have been marketed overseas but not in China. The data protection period is calculated from the date on which the generic drug or biological product obtains marketing authorization.
The scope of data protection for drugs in this clause includes necessary clinical trial data to support approval, but does not include bioavailability, bioequivalence and immunogenicity data of vaccines.
During the data protection period, the National Medical Products Administration will not approve the marketing application or supplementary application for chemical generic drugs and biosimilar drugs submitted by other applicants without the holder’s consent and relying on the protected data of the holder , unless other applicants submit data obtained by themselves.
Article 8 (Application and supporting documents) If the applicant intends to apply for data protection, he/she shall submit an application for data protection at the same time as submitting the application for drug marketing authorization. If there are any questions about data protection-related issues, he/she may apply for communication.
Article 9 (Technical Review) When conducting technical review of drug registration applications, the Center for Drug Evaluation shall confirm the scope and duration of data protection in accordance with the provisions of these Measures.
Article 10 (Granting of Protection Period and Publicity) For drugs that meet the data protection conditions, the National Medical Products Administration will mark the drug’s data protection information in the drug approval certificate.
The Center for Drug Evaluation has established a data protection column on its website to publish relevant information on drug data protection.
Article 11 (Acceptance, Review and Approval) After a drug obtains data protection, other applicants can submit drug marketing applications and supplementary applications that rely on the protected data within one year before the expiration of the data protection period . The Drug Evaluation Center will suspend the review time after completing the technical review, and the relevant drugs will be approved for marketing after the data protection period expires.
an applicant claims that the data was obtained independently when submitting a drug marketing application and a supplementary application , but it is discovered during the technical review process that the application relies on protected data of other applicants, the application will not be approved.
Article 12 (Termination of Data Protection) Data protection shall terminate if the drug approval document is revoked, suspended, or cancelled, if the holder voluntarily waives data protection, or in other circumstances prescribed by laws and regulations.
If data protection is terminated, the National Medical Products Administration will issue a notice on the termination of data protection, and the Drug Evaluation Center will update the relevant information in the data protection column based on the notice. From the date on which the National Medical Products Administration issues the notice on the termination of data protection, it can accept or approve drug registration applications submitted by other applicants that rely on the protected data.
Article 13 ( Incompliance with data protection information ) If, during the review process, it is found that the documents proving the first overseas marketing authorization for drugs submitted by the applicant in accordance with Articles 5 and 6 of these Measures do not match the actual situation , data protection will not be granted; if data protection has already been granted, the data protection will be cancelled.
Article 14 (Data Protection Procedure) The specific working procedures for data protection will be separately formulated by the Drug Evaluation Center.
Article 15 (Effective Date) This regulation shall come into force from now on.
Schedule 1
Chemical Drug Registration Classification and Data Protection Period
Classification
content
Data protection period
Category 1
Innovative drugs that have not been launched in the domestic or overseas markets.
6 years
Category 2
Improved new drugs that have not been marketed domestically or abroad.
3 years
Category 3
Domestic applicants copy original drugs that are marketed overseas but not in China.
3 years
Category 4
Domestic applicants copy original drugs that have been marketed domestically.
none
Category 5
Drugs that have been marketed overseas can apply for domestic marketing approval.
5.1
Original research drugs that have been marketed overseas apply for domestic marketing.
6 years – (domestic acceptance time – overseas listing time)
Improved drugs that have been marketed overseas may apply for domestic marketing approval.
3 years – (domestic acceptance time – overseas listing time)
5.2
Generic drugs that have been marketed overseas apply for domestic marketing.
3 years
Schedule 2
Registration classification and data protection period for preventive biological products
Classification
content
Data protection period
Category 1
Innovative vaccines
6 years
Category 2
Improved vaccines
3 years
Category 3
3.1 Application for listing of vaccines produced overseas and marketed overseas but not marketed domestically
6 years – (domestic acceptance time – overseas listing time)
3.2 Vaccines that have been marketed overseas but not in China can be produced and marketed in China
3 years
3.3 Vaccines already on the market in China
none
The Perils of Interpreting Your Own Rules Too Strictly, Especially When They Don’t Exist (UK)
So here it is, 2025’s first serious contender for the What On Earth Were They Thinking? Awards, an unfair dismissal case with a common-sense answer so clear you could see it from Mars, but which it nonetheless took five years and the Court of Appeal to arrive at.
Mr Hewston was employed by Ofsted as a Social Care Regulatory Inspector. In 2019, in the course of a school inspection, he brushed water off the head and touched the shoulder of a boy of 12 or 13 who had been caught in a rainstorm.
That contact was reported to Ofsted by the school as a case of “inappropriate touching”. The terms of the school’s reports were, said the Court of Appeal, “redolent with hostility against the inspectors and the inspection”. They described the incident in fairly hyperbolic terms – that contact had created a “very precarious situation” and had “put the safety of a student at risk”, both allegations which Ofsted itself quickly dismissed as arrant nonsense. It knew that the same school had made complaints about a number of previous inspectors, allegations not necessarily unconnected with its having serially failed to receive the Ofsted gradings it wanted.
Ofsted itself never made any suggestion that there had been any improper motivation on Hewston’s part. It accepted from the outset that the conduct was “a friendly act of sympathy and assistance”. Nonetheless, it dismissed Hewston for gross misconduct a month later. Why?
The disciplinary charges referred to his having without consent or invitation touched a child on the head and shoulder “contrary to Ofsted core values, professional standards and the Civil Service Code”. It was not Ofsted’s case that any of those values or standards or the Code contained any explicit reference to the circumstances in which school inspectors should make physical contact with a child, still less any blanket no-touch rule. Nonetheless, Hewston found himself in an impossible position at the disciplinary Hearing – even though promising that he had learnt his lesson, the more he denied that he had acted improperly (not least in the absence of any such rule), the more fuel he added to Ofsted’s claimed view that he could not be trusted not to do it again.
By the time the question reached the Court of Appeal, the issues had for practical purposes been boiled down to whether it was reasonable for Ofsted to treat that conduct as justifying Hewston’s dismissal, and as part of that, whether even without that no-touch rule, Hewston should have appreciated that his conduct could lead to his dismissal.
The ruling was clear that Hewston’s actions had been a misjudgement, however well-intentioned, but also that Ofsted could not reasonably have determined that they were sufficient to justify his dismissal. There had never been any safeguarding issue nor any risk to the child. Hewston had made it clear that he would undertake whatever training was required and would not repeat his conduct. Even if Ofsted thought that he harboured some continuing doubt about whether he had in fact acted inappropriately, it had no real reason to fear a recurrence. In any case, it was not allowed to turn sub-dismissable conduct into gross misconduct merely because Hewston didn’t seem in its perception to show the appropriate remorse or understanding.
Most of all, Hewston’s trip to the Court of Appeal was successful for the reasons in one short paragraph in a judgement of nearly 30 pages – the “fundamental point was that in the absence of a no-touch rule or other explicit guidance covering a situation of the relevant kind, Hewston had no reason to believe that he was doing anything so seriously wrong as to justify dismissal”. As a result, said the Court, it seemed “deeply regrettable that [Hewston], who was an experienced inspector with an unblemished disciplinary record on safeguarding issues, should have been summarily dismissed for conduct which, on any reasonable appraisal, amounted to no more than a momentary and well-meaning lapse of professional judgement of a kind which he was most unlikely ever to repeat”.
So for employers, the immediate moral of this story is that if you have a principle of conduct in your business which is as important to you as Ofsted said its non-existent no-touch rule was to it, make it express. And the more stringent that rule is, the more it might lead to dismissal for conduct which isn’t on its face that big a deal, the louder you have to shout about it.
But even then, that is not necessarily the end of the matter. As employer, you cannot safely go straight from breach of that rule to dismissal without consideration of the specific circumstances of the case. That is particularly the position where the wider the rule, the easier it is to breach it for wholly innocuous reasons. Even writing as a committed adherent to the instructions on packs of dishwasher tablets to “keep well away from children”, there are limits. Could a school inspector touch a child to help it up after a playground accident? To pull it out of the way of a car or a collision with another child, something corrosive spilt in the Chemistry Lab, an errant javelin on Sports Day? Could you sit it down and dry its tears if it were clearly distressed about something, or help it to the Sick-room? Exactly where is the line between protecting a child’s physical health and safety on the one hand and its comfort, happiness or wellbeing on the other? With the possible exception of that one about not taking the boron rods out of nuclear reactors, every hard rule has its fuzzy edges.
As soon as Ofsted accepted that no harm to the child had been intended or done, that should have been the end of the matter. A warning at its absolute highest. However, to pursue the principle of a rule which did not exist as far as the Court of Appeal at vast cost to both Hewston and the taxpayer shows, with respect, a serious loss of self-awareness from the point of dismissal and ever since. Don’t let this happen to you – remember that fairness trumps rules every time.
DHS Terminates Parole Programs
On March 25, 2025, the Department of Homeland Security (DHS) published a Federal Register notice terminating parole programs for Cuba, Haiti, Nicaragua, and Venezuela (CHNV) as of April 24, 2025, unless Secretary Kristi Noem makes an individual determination to the contrary. This is being carried out pursuant to Executive Order 14165, titled “Securing Our Borders.” The termination of these programs affects 532,000 individuals from these countries. DHS will notify affected individuals through their online myUSCIS accounts.
Unless those under a CHNV program have a separate underlying immigration status to which they can revert, they will be deemed “undocumented” and subject to expedited removal (deportation) from the United States. The subjects of expedited removal do not appear before immigration judges for full hearings, making the deportation process swift. Any work authorization issued to them will also end on April 24, 2025, even if their employment authorization documents contain later expiration dates.
New Office of Financial Sanctions Implementation Financial Services Threat Assessment
On 13 February 2025, the Office of Financial Sanctions Implementation (OFSI) published its assessment of suspected sanctions breaches involving financial services firms since February 2022 (the Assessment). The Assessment forms part of a series of sector-specific assessments by OFSI that address threats to UK financial sanctions compliance by UK financial or credit institutions.
The Assessment highlights three areas of main concern:
Compliance;
Russian-Designated Persons (DPs) and enablers; and
Intermediary Countries.
This alert provides a summary of these concerns and suggests action financial services firms can take to combat these threats when developing their risk-based approach to compliance.
Compliance
OFSI has identified several compliance issues and advised steps that firms can take to improve and strengthen their compliance. These include:
Improper Maintenance of Frozen Assets
All DPs accounts and associated cards, including those held by entities owned or controlled by DPs, must be operated in accordance with asset freeze prohibitions and OFSI licence permissions. Financial institutions should review existing policies or contracts as these can often automatically renew, resulting in debits from DP accounts.
Breaches of Specific and General OFSI Licence Conditions
Firms need to carefully review permissions when assisting with transactions they believe are permitted under OFSI licences. Firms must ensure that OFSI licenses are in date, bank accounts are specified in OFSI licences and licence reporting requirements are adhered to.
Inaccurate Ownership Assessments
Firms must be able to identify entities that are directly owned by Russian DPs, and subsidiaries owned by Russian conglomerates that are themselves designated or majority owned by a Russian DP. Firms should conduct increased due diligence where necessary and regularly update due diligence software.
Inaccurate UK Nexus Assessments
Firms should take extra care to understand the involvement of UK nationals or entities in transaction chains when assessing the application of a UK nexus. They must also ensure they understand the difference between United Kingdom, European Union and United States sanctions regimes to make correct assessments of how UK sanctions might be engaged.
Russian DPs and Enablers
OFSI defines an enabler as “any individual or entity providing services or assistance on behalf of or for the benefit of DPs to breach UK financial sanctions prohibitions.” Broadly, there are two types of enablers:
professional enablers that provide professional services “that enable criminality. Their behaviour is deliberate, reckless, improper, dishonest and/or negligent through a failure to meet their professional and regulatory obligations”; and
non-professional enablers, such as family members, ex-spouses or associates.
Maintaining Lifestyles and Assets
Most identified enabler activity has been in relation to maintaining the lifestyles of Russian DPs and assets as they face growing liquidity pressures from UK sanctions.
OFSI urges firms to scrutinise the following red flags:
New individuals or entities making payments to satisfy obligations formerly met by a DP;
Individuals connected to Russian DPs receiving funds of substantial value;
Regular payments between companies owned or controlled by a DP;
Crypto-asset to fiat transactions involving close associates of a Russian DP;
Family member of a DP that is an additional cardholder on a purchasing card that uses the card for personal expenses and overseas travel; and
Deposits of large sums of cash without sufficient explanation;
Fronting
With a significant value of the assets of DPs having been frozen in the United Kingdom, an increasing amount of enablers are attempting to front on behalf of DPs and claim ownership of frozen assets. The links between enablers fronting on behalf of DPs are not always clear, and so OFSI has outlined several red flags for firms to be aware of:
Individuals with limited profiles in the public domain, for instance, those with limited related professional experience;
Inconsistent name spellings or transliterations;
Recently obtained non-Russian citizenships; and
Repeated or unexplained name changes or declared location of operation.
Utilising Alternative Payment Methods to Breach Prohibitions
Financial services firms need to remain diligent when assessing the threat posed by the increasingly sophisticated methods employed by DPs and enablers to evade UK financial sanctions prohibitions. Particular attention should be paid to attempts at money laundering on behalf of Russian DPs, including any indications of high value crypto-asset to cash transfers.
Intermediary Countries
Emphasis is placed on the use of intermediary jurisdictions in suspected breaches of UK financial sanctions prohibitions. The following jurisdictions are utilised most often: British Virgin Islands, Guernsey, Cyprus, Switzerland, Austria, Luxembourg, United Arab Emirates and Turkey. These jurisdictions offer secrecy or particular commercial interests.
There has also been a change in the third countries referenced in suspected breach reports, with increased activity in the Isle of Man, Guernsey, United Arab Emirates and Turkey. Indeed, the United Arab Emirates accounted for the largest section of suspected breaches reported to OFSI in the first quarter of 2024. This shift has likely been caused by various factors, including capital flight by Russians to jurisdictions that do not have sanctions on Russia.
The Assessment helpfully outlines a non-exhaustive list of specific activities in various countries that could be indicative of UK financial sanctions breaches. Financial institutions are encouraged to review and familiarise themselves with this list so that they can identify potential threats to sanctions compliance. Businesses should then consider the involvement of these jurisdictions when conducting due diligence, and evaluate the risks associated with various transactions.
Conclusion
The recent expansion of the United Kingdom’s financial sanctions regime, particularly in relation to Russia’s invasion of Ukraine, has resulted in sanctions evasion becoming increasingly sophisticated and widespread. Considering the scale of evasion being conducted, financial institutions need to remain proactive and vigilant in identifying transaction activity that may be indicative of attempts to circumvent UK sanctions regimes.
When designing sanctions compliance programmes, financial institutions should refer to the Assessment to account for methodologies of evasion and recognise specific behaviours that might present warning signs. By taking a proactive approach to prevent their services from being exploited as instruments of circumvention, financial institutions will contribute to efforts to combat sanctions evasion, whilst avoiding the financial and reputational repercussions of non-compliance.
If you have any questions on the Assessment or want further advice on developing your policies for UK sanctions compliance, please do not hesitate to contact our Policy and Regulatory practice.
Termination Requirements Around the Globe
In the realm of global employment, the concept of termination payments can be a complex and often surprising issue for U.S.-based employers. Unlike in the United States, where the at-will employment doctrine generally allows employers to dismiss employees at any time with or without cause (as long as the reason is not unlawful), many countries have stringent laws that mandate significant benefits and entitlements upon termination of employment.
Before setting up shop in a new country, employers may want to examine the intricacies of these statutory payments and understand how best to navigate the challenges they present.
Quick Hits
U.S. at-will employment is not common internationally; other countries require valid reasons and advance notice for termination.
Statutory severance pay is mandatory in many countries, calculated based on length of service and salary, and non-negotiable.
Additional benefits include accrued but unused vacation, pro-rata thirteenth-month salary, earned bonuses, and seniority premiums.
Good cause termination requires specific procedures and evidence, making it challenging to avoid severance payments.
Employers may want to understand local laws, plan financially, and accrue liabilities to manage employment termination costs effectively.
At-Will Employment vs. International Norms
In the United States, at-will employment generally allows employers to dismiss an employee for almost any reason (or no reason at all) as long as the reason is not illegal. This concept, however, is foreign to most other countries. Internationally, employers must often provide a valid reason for employment termination or face substantial financial penalties. These penalties can include statutory severance pay and other mandatory benefits.
Statutory Severance Pay: A Misunderstood Term
One of the most misunderstood aspects of international termination payments is statutory severance pay. Unlike in the United States, where severance is typically associated with layoffs or reductions in force, statutory severance pay is a mandatory payment in many countries, generally when there is no “good cause” to terminate the employment relationship. Basically, the termination payment is a penalty for employers that are terminating the employment relationship that the employee expected would continue indefinitely. This payment is often calculated based on the employee’s length of service and salary, and it is enshrined in labor codes, making it non-negotiable. Note that some countries impose caps on severance payments. For example, in China, the cap is based on the city-specific minimum wage, while in the United Arab Emirates (UAE), the end-of-service gratuity has no salary cap but cannot exceed a total of two years’ pay.
Additional Benefits and Entitlements
Beyond having to provide a notice period (or payment in lieu as allowed by certain countries) and severance pay, employees in many countries are entitled to other benefits upon termination of employment, regardless of the reason for their departure. These benefits can include:
Accrued but Unused Vacation: In many jurisdictions, employers must pay for any accrued but unused vacation days. This can be a significant financial burden, especially in countries where vacation days can carry over for several years.
Thirteenth-Month Salary: Many countries require employers to pay a thirteenth-month salary or Christmas bonus. Upon termination of employment, employees are often entitled to a pro-rata portion of this payment.
Earned Bonuses: In some countries, employees are entitled to bonuses they have earned, even if they are no longer employed at the time of payment and regardless of any language included in the bonus plan.
Seniority Premium: This payment compensates employees for their loyalty and length of service. It is separate from severance pay and is due even if the employee resigns.
The Challenge of Demonstrating Good Cause
Generally, one of the ways employers can avoid paying notice periods and severance is to terminate employment for good cause. Demonstrating that good cause exists, however, can be a complex and lengthy process in many countries. Poor performance is not generally considered a valid reason to terminate employment. Rather, employers must prove that the employee behaved in a way that is prohibited under the relevant labor code, such as fraud, theft, and gross misconduct. Employers must follow specific procedures, including conducting hearings, collecting evidence, and issuing decisions within strict timeframes. Failure to adhere to these procedures can lead to a wrongful termination claim, potentially resulting in legal liability for the employer to pay damages to the separated employee, and in some cases, reinstatement.
Preparing for Termination Costs
To avoid being caught off guard by termination payments, U.S. employers may want to consider the following steps:
Understanding Local Employment Laws: Before setting up operations in a new country, employers may want to seek a summary of the local employment laws, including termination payment obligations—for employees, independent contractors, and contingent workers employed through an employer of record (EOR).
Planning Financially: Employers may want to consider setting aside funds to cover potential termination costs. The total balance in such a fund could include the cost per employee per year, including not only base salary but also social security contributions and additional benefits and payments. Being prepared will allow employers to make business decisions regarding employment relationships that are not bound by finances.
Accruing Liabilities: In some jurisdictions, employers are required to accrue liabilities for mandatory entitlements. Being aware of these obligations can help employers manage their financial responsibilities effectively.
Conclusion
Navigating the complexities of termination payments for international workforces requires a thorough understanding of local employment laws and careful financial planning. By being proactive and informed, U.S. employers can avoid surprises and ensure compliance with international labor regulations.
Navigating E-2 Visa Processing at the US Embassy in London: What Applicants Need to Know
The E-2 visa has long been a popular option for entrepreneurs, investors, and employees seeking to live and work in the United States by investing in or working for a qualifying U.S. business. Historically, the U.S. Embassy in London has been a predictable and efficient post for processing E-2 visas, with interviews typically lasting only a few minutes and focusing on a cursory review of the application. However, recent developments have introduced significant changes to the process, requiring applicants to approach their interviews with greater preparation and awareness.
Key Changes in E-2 Visa Processing at the U.S. Embassy London
Over the past year, applicants and immigration practitioners have reported notable shifts in the E-2 visa interview process at the U.S. Embassy in London. These changes include longer interviews, more in-depth questioning, and an increase in unexpected refusals under INA 214(b). To address these concerns, representatives from the American Immigration Lawyers Association (AILA) engaged in discussions with consular leadership at the embassy. While consular officials confirmed that no changes have been made to the laws, regulations, or policy guidance governing E-2 visas, they did provide insights into procedural adjustments that may impact applicants.
1. Interview Environment
E-2 visa interviews are now conducted on a separate floor from other nonimmigrant visa classifications. Applicants are grouped with individuals undergoing Visa Control Unit interviews, which typically involve cases with potential criminal or inadmissibility issues. This setup offers limited privacy, which may add to the stress of the interview process.
2. Rotating Pool of Consular Officers
Unlike in the past, there is no dedicated E visa officer at the U.S. Embassy in London. Instead, interviews are conducted by a rotating pool of 14 consular officers, with two officers assigned to review E visa applications each day. This lack of specialization may lead to inconsistent adjudications, as officers may vary in their familiarity with E-2 visa requirements and nuances.
3. Longer and More Detailed Interviews
Interviews for E-2 corporate registrations and individual applicants are now lasting up to 30 minutes, compared to the brief interviews of the past. Applicants should be prepared to answer detailed questions about their business operations, financials, and role within the company. Examples of questions for corporate registrations include:
What is your U.K./U.S. revenue this year and last year?
Can you explain your business plan?
What were your start-up expenses, and what is their price/value?
For individual applicants, questions may focus on:
Why is your company expanding or operating in the United States?
Why are you being sent to the United States, and why can’t your U.S. colleagues cover your role?
Is your U.S. company profitable?
Will you be seeking a green card eventually?
Are you aware that an E-2 visa does not provide a pathway to a green card?
4. Increased Scrutiny
Applicants with limited business experience or those unable to provide detailed answers may face heightened scrutiny. Additionally, the embassy appears to be applying the “Buy American Hire American” (BAHA) lens, which asks applicants to justify why an American worker cannot perform their proposed U.S. job duties. This aligns with the broader “America First Policy Directive” that prioritizes U.S. workers and businesses.
Implications for Applicants
The procedural changes at the U.S. Embassy in London have implications for E-2 visa applicants:
Thorough Preparation is Essential: Applicants must be ready to discuss their business operations, financials, and role in detail. This includes having a clear understanding of their business plan, start-up expenses, and the rationale for their presence in the United States.
Risk of Refusal: Unexpected refusals under INA 214(b) have become more common. A refusal may also impact an applicant’s eligibility to visit the United States under the Visa Waiver Program (ESTA), further complicating future travel plans.
Inconsistent Adjudications: The rotating pool of consular officers may lead to variability in interview experiences and outcomes. Applicants should be prepared for a range of questions and approaches.
Key Considerations
Given the evolving landscape of E-2 visa processing in London, applicants should consider taking the following steps to maximize their chances of approval:
Work with Experienced Counsel: Consulting with an experienced immigration attorney can help ensure applications are complete, accurate, and tailored to address potential concerns.
Prepare for In-Depth Questions: Practice answering detailed questions about business operations, financials, and role within the company. Applicants should be ready to articulate why their presence in the United States is essential.
Document Everything: Provide clear and organized documentation to support an application, including financial statements, business plans, and evidence of the applicant’s qualifications.
Understand the Limitations of the E-2 Visa: Be aware that the E-2 visa does not provide a direct pathway to permanent residency (a green card). Applicants should be prepared to address this if asked during their interview.
Conclusion
The U.S. Embassy in London has introduced changes to its E-2 visa interview process, making it more rigorous and unpredictable than in the past. Applicants should consider approaching their interviews with thorough preparation, a clear understanding of their business and role, and a willingness to address detailed questions. By staying informed and working with experienced professionals, applicants can navigate these challenges and increase their chances of a successful outcome.
Extinction of the National Institute for Transparency, Access to Information, and Personal Data Protection
As we previously reported in an earlier newsletter, in accordance with the recent constitutional reform dated November 28, 2024, the extinction of seven autonomous agencies was decreed, including the National Institute for Transparency, Access to Information, and Personal Data Protection (INAI).
On Thursday, February 20, 2025, a Decree was published in the Official Gazette, enacting a new Federal Law on the Protection of Personal Data Held by Private Parties, as well as a new General Law on the Protection of Personal Data Held by Obligated Subjects.
These two new laws came into force on March 21, 2025, formalizing the extinction of INAI.
After reviewing these laws, it appears that the personal data protection framework—both for data held by private entities and by public entities of the Mexican Government—remains unchanged. There are no modifications to the rights of data subjects or to the obligations of those who process personal data.
Likewise, no changes have been observed in the legal framework for transparency and access to information.
The main change associated with these new laws is that all functions and powers previously held by INAI have now been transferred to the newly created Ministry of Anti-Corruption and Good Governance.
Another notable change is that the resolutions issued by this new Ministry may now be challenged through an amparo lawsuit before specialized courts in the field. Previously, INAI’s resolutions were challenged before the Federal Court of Administrative Justice.
As we previously warned, the elimination of autonomous agencies that oversee the actions of various federal government entities does not appear positive in a democratic state. Additionally, the concentration of INAI’s former powers—along with oversight and auditing functions—within a single Ministry does not seem advisable and could impact the continuity and effectiveness of the National Transparency Platform, as well as the protection of personal data, among other issues.
It is important to note that all pending matters that were unresolved by INAI will now be handled by the Secretariat of Anti-Corruption and Good Governance. This will likely result in delays in resolution times and may lead to discrepancies in the criteria applied to resolve cases.
Corporate Debtors and Transactions at an Undervalue–Lessons From the UK Supreme Court: El-Husseini and Another v Invest Bank Psc
The UK Supreme Court’s recent decision in El-Husseini and another v Invest Bank PSC [2025] UKSC 4 has clarified the circumstances in which section 423 of the Insolvency Act 1986 (the Act) provides protection against attempts by debtors to “defeat their creditors and make themselves judgment-proof”. This is a critical decision for insolvency practitioners, any corporate or fund which is involved in distressed deals and beyond to acquirers who were not aware they were dealing in distressed assets. It is potentially good news for the former, improving or fine-tuning weapons deployed for the benefit of creditors. It is potentially awkward news for the latter, who may have to look rather more broadly at insolvency issues when acquiring assets not only from distressed vendors but potentially also from vendors with distressed owners.
The case concerned an individual debtor, Mr Ahmad El-Husseini, but the decision has ramifications for corporate debtors. It confirms a broad interpretation of “transactions at an undervalue” applicable to section 423 (transactions defrauding creditors) of the Act and gives clear guidance that this interpretation applies to section 238 (transactions at an undervalue) of the Act, such that the assets which are the subject of the transaction do not need to be legally or beneficially owned by the debtor to be subject to these provisions. Instead, they can catch transactions in which a debtor agrees to procure a company which they own to transfer an asset at an undervalue.
Section 423 and Section 238 of the ACT
Section 423 of the Act (which applies to both individuals and corporates, whether or not they are or later become insolvent) is engaged where a party enters into a transaction at an undervalue for the purpose of putting assets beyond the reach of creditors or otherwise prejudicing their interests.
Section 238 of the Act (which applies to companies in administration or liquidation) is engaged where a company enters a transaction at an undervalue within two years of the onset of insolvency and the company was insolvent at the time of the transaction or became insolvent as a result of the transaction.
If a claim pursuant to section 423 or 238 of the Act is successful, the court has the power to restore the position as if the transaction had not been entered into.
The Facts in El-Husseini and Another V Invest Bank PSC
Seeking to enforce a United Arab Emirates (UAE) judgement in the sum of approximately £20 million, Invest Bank PSC (the Bank) identified valuable assets linked to Mr El-Husseini. In its judgment, the Supreme Court proceeded on the basis that Mr El-Husseini was the beneficial owner of a Jersey company which owned a valuable central London property. Further, that Mr El-Husseini had arranged with one of his sons that he would cause the Jersey company to transfer the property to the son for no consideration. As a result, the value of Mr El-Husseini’s shares in the Jersey company was reduced and the Bank’s ability to enforce the UAE judgement was prejudiced. The Bank brought claims under section 423 of the Act.
Defining A “Transaction” Falling Within Section 423 and the Ramifications For Section 238
The fundamental issue for the Supreme Court was whether, as asserted by the Bank, section 423 of the Act could apply to a transaction where the relevant assets were not legally or beneficially owned by the debtor but instead by a company owned or controlled by the debtor.
The Supreme Court ruled in the Bank’s favour, including on grounds that:
The plain language of section 423 strongly supports the conclusion that the provision contains no requirement that a transaction must involve a disposal of property belonging to the debtor personally.
A restrictive interpretation of “transaction” such that it was limited to transactions directly involving property owned by the debtor would undermine the purpose of section 423.
It was appropriate to rely on the purpose of section 423 to construe a provision which was common to section 423, 238 and 339 (which provides a remedy in the case of transactions at an undervalue where the debtor has subsequently been declared bankrupt) of the Act. These sections share a common purpose: to set aside or provide other redress when transactions at an undervalue have prejudiced creditors. The Supreme Court considered it impossible to think of circumstances in which a “transaction” was held to be within section 423 when it would not fall within section 238 and 339 of the Act. In any event, there was no reason as a matter of policy or purpose why a transfer by a company owned by an insolvent company or individual should not fall within those sections.
Thus, not only does the judgment confirm the broad interpretation of “transactions at an undervalue” applicable to section 423, but it also gives clear guidance that this interpretation applies equally to section 238.
Key Takeaways
Debtors cannot hide behind corporate structures – The ruling confirms that a corporate structure does not shield debtors who procure the transfer at an undervalue of assets belonging to companies owned by them to evade their obligations to creditors.
Stronger protections for creditors – Creditors will welcome the decision, which makes it harder for debtors to circumvent enforcement.
Greater clarity – The judgment provides clear guidance that the broad interpretation of “transactions at an undervalue” applicable to claims under section 423 of the Act can be relied upon for the purposes of claims under section 238.
UK Parliament Proposes Increased Penalties for Failure to Consult in a Collective Redundancy
The Employment Rights Bill has undergone significant amendments in March 2025 as it progresses through Parliament. Included in the amended bill are changes addressing redundancy and the controversial practice of “fire and rehire.”
Quick Hits
In March 2025, the UK government announced amendments to the Employment Rights Bill following a series of consultations.
The penalty “protective award” payable to employees when an employer fails to consult properly in a collective redundancy situation would be doubled from 90 to 180 days’ pay.
Collective redundancy consultation obligations (which apply when twenty or more redundancies are proposed) would continue to be determined separately for each “establishment” (meaning “workplace”), removing the original proposal that the determination should be based on the total number of proposed terminations in the whole company.
“Fire and rehire” would be automatically considered unfair unless carried out under very limited circumstances.
Redundancy
Amongst the bill amendments is an adjustment to collective redundancy rules. Employers are currently required to consult collectively when making twenty or more redundancies at a single establishment. The new amendments maintain this threshold, meaning that original plans to scrap this establishment test are no longer on the agenda. However, the amendments introduce a yet-to-be-defined threshold for multisite redundancies. This alternative threshold is expected to be based on redundancies across entire organisations and may be a specified percentage of employees.
Additionally, when carrying out collective redundancy consultations employers would not need to consult with all employee representatives together or reach the same agreement with all representatives.
The government intends to increase the maximum protective award duration from 90 days to 180 days of pay, which is applicable in successful claims for violations of collective redundancy obligations. The doubling of the protective award is “to ensure that employers will not be able to deliberately ignore their obligations,” the government stated in response to the consultation on strengthening remedies against unfair practices in collective redundancy and “fire and rehire” (which also requires following redundancy rules). It also stated that “it should never be the case that it is financially beneficial to [ignore the rules].”
Employment tribunals would retain the authority to adjust the duration of the protected period, with a maximum limit of 180 days, as deemed fair and appropriate based on the circumstances. This decision would take into account the severity of the employer’s actions as well as any mitigating factors.
The government plans to provide additional guidance to employers on adhering to best practices in meeting their collective redundancy consultation responsibilities.
‘Fire and Rehire’
To address the practice of “fire and rehire,” where employers impose harmful contractual changes on employees by threatening dismissal and reengagement on new contractual terms, the amendments stipulate, among other things, that dismissing an employee “to vary the employee’s contract of employment” would be automatically deemed unfair except in situations where organisations are in extreme financial distress and “the reason for the variation [is] to eliminate, prevent or significantly reduce … any financial difficulties” affecting “the employer’s ability to carry on the business as a going concern.”
Improving business efficiency alone does not satisfy these criteria; there would need to be a clear absence of alternatives. Consequently, in practice, this exception would likely apply only in rare and limited circumstances. However, when such situations do occur, employers would need to comply with the Code of Practice on dismal and re-engagements, which is also proposed to receive updates under the current government.
Employers effectively may want to provide justifications for any proposed contractual changes and demonstrate that all alternative solutions have been explored. Failure to comply with these requirements could result in significant penalties, including compensation for negatively impacted employees.
In response to the consultation on enhancing protections against the misuse of collective redundancy and fire-and-rehire practices, the government has confirmed that the earlier proposal to introduce interim relief in unfair dismissal cases linked to collective redundancy will not be implemented. This is due to concerns about the excessive burden it would place on employers and the challenges of enforcement.
(UK) The Issue With Hybrid Insolvency Claims Rumbles On
Should a claim be struck out where the applicant has failed to comply with the procedural requirements relating to “hybrid” claims? In the recent case of Park Regis Birmingham LLP [2025] EWHC 139 (ch), the High Court held that it would be disproportionate to strike out the claim on that basis.
Hybrid Claims
Hybrid claims are those that include claims under the insolvency legislation (e.g. “transaction avoidance” claims), as well as company claims (e.g. unlawful dividends or sums owing under a director’s loan account). Previously, it was common practice for such claims to be issued as a single insolvency act application, rather than as a Part 7 claim.
Since the Manolete Partners plc v Hayward and Barrett Holdings case in 2021, applicants have been required to issue these claims separately, with the insolvency claims being issued as an insolvency application, and the company claims being issued as a separate Part 7 claim. The applicant can then issue an application to request that the separate proceedings are managed together e.g. at a single trial. This has meant that the costs of issuing such claims have increased, as the issue fee for a Part 7 claim can be up to £10,000, whereas the issue fee for an insolvency application is £308.
Facts
In the Park Regis case, the applicants had incorrectly issued a hybrid claim as a single insolvency application, without issuing the separate Part 7 claim for the company claims. However, when issuing the application, the applicant’s lawyers had informed the Court that the issue fee for the application would be £10,000, as the claim was a hybrid claim, and therefore the £10,000 fee was paid.
The respondents applied to strike the claim out, on the basis that the applicant had failed to comply with the Hayward and Barrett Holdings case and argued that the applicant’s approach constituted an abuse of process.
The judge held that the applicant had failed to comply with the procedural requirements regarding hybrid claims. However, in exercising her discretion about whether to strike out the claim, the judge held that striking out the claim would be too severe a penalty for that failure. The judge therefore exercised her discretion (under CPR 3.10) to waive the procedural defect and allowed the claim to proceed as if it had been properly issued.
Commentary
While the judge in this case declined to strike out the claim, the judge was clear that the applicant’s attempt to issue the claim by way of a single insolvency application, but paying the higher Part 7 issue fee, was procedurally incorrect. Had this approach been endorsed it would have made issuing such applications more straightforward for practitioners, but the judge noted the absolute requirement for separate proceedings.
We understand that this decision has been appealed – so watch this space for further comment. In the interim practitioners should continue to apply the Hayward and Barrett Holdings approach and issue two sets of proceedings to avoid the risk of a claim being struck out. Although the procedural defect was waived in this case, the power to do that is a discretionary one!
The Insolvency Service in the First Review of the Insolvency Rules has reported that they are considering whether an amendment to the Rules is required to address the Hayward and Barrett Holdings case which would hopefully see a return to previous practice – one set of proceedings with one court fee. But to date there has been no indication from the Insolvency Service when (if) they will progress that and unless further clarity is provided on appeal it seems the sensible approach for practitioners is to follow Hayward when pursuing a claim.