Straight Talk

Our set of A-Z legal jargon busters will help your business know exactly where it stands.

A is for…

Automatically unfair dismissal

If an employee is fired for some improper reasons (like taking maternity leave or whistleblowing), it’ll be an automatically unfair dismissal, which means they could take their employer to court.

B is for…

Buy back

This is where a company buys its own shares from one or more of its shareholders, by following a specific prescribed procedure. A buy back might facilitate the exit of a particular shareholder, or be used to return cash to a shareholder.

C is for…

Casual worker

Not to be confused with an employee, a casual worker is only offered work when the business needs them, and they don’t have to accept! Think seasonal worker or zero hours worker. They’ve got fewer rights than employees but more freedom to find work elsewhere. Keep it casual.

D is for…

Data controller

The person (or company) which is responsible for what is done with personal data. Why’s it important? They’ve got serious legal obligations under data protection law and need to make sure they comply.

E is for…

Enterprise Investment Scheme

An HMRC scheme to encourage investments in small, growing companies by giving income tax relief to their investors. Various conditions must be met by both the company and investor to qualify for EIS relief.

F is for…

Fixed charge

A mechanism by which a lender can secure a debt owed to them by your business. Similar to a mortgage, a fixed charge will restrict you from doing certain things with the specified asset(s) (including selling them!) until you have paid off the debt.

G is for…

Gross misconduct

Behaviour by a staff member that’s so bad that they can be fired straight away, without any notice. Things like theft, fraud, physical violence or serious negligence could count as gross misconduct.

H is for…

Heads of Terms

A document setting out the proposed terms for a commercial agreement. It’s not usually legally binding itself, but it provides a framework for negotiating the full contract. Also known as: letter of intent; memorandum of understanding.

I is for…

IR35

The name of HMRC’s tax rules to make sure that contractors are taxed properly. In a nutshell, if contractors work like employees of their clients even though they contract through their own company, then IR35 says they should be taxed like employees.

J is for…

Just-in-time notice

This is a way to provide users with privacy information on a website. These notices appear at the point someone inputs their personal data on a website to tell them what the business will do with it.

K is for…

Knowledge Intensive Company

A company carrying out research, development or some other kind of innovation. These companies have special status with HMRC under certain tax relief schemes, including EIS, and can raise more money in a more flexible way.

L is for…

Lien

A right to take or keep possession of someone else’s property or assets until they pay a debt. It’s pronounced ‘lee-uhn’ in the UK. A person who has a lien over property or assets is known as the lien holder.

M is for…

Margin scheme

A VAT scheme available if you sell second-hand goods, artworks, antiques or collectors’ items. VAT is charged on the difference between the price you paid and the price you sold it for. You can’t use a margin scheme if you were charged VAT when you bought the item.

N is for…

Nominal value

The fixed monetary value of a share. Every company share must have a nominal value, but it does not represent the actual market value of the share. It will usually be a nominal sum like £1 or 1p.

O is for…

Open source

Usually software which is released for free along with its source code, and can be used, modified and redistributed by anyone. You should check the type of open source licence for any limitations or exceptions as there may be some.

P is for…

Passing off

This is illegal, and involves misleading other people into thinking that your goods have come from a different business which already has a reputation in the market. It might be done by copying another brand or company name, or implying the two businesses are connected in some way.

Q is for…

Quorum

The minimum number of people required to be present in order for a meeting to be valid. When a quorum is present, a meeting is described as being quorate.

R is for…

Restrictive covenant

Sounds complicated, but it’s just a term in a contract that restricts someone from doing something. You might see them in employment contracts, where an employer wants to stop its employee from competing with its business when they leave.

S is for…

Subject access request

A request from an individual for information about their personal data. They might want you to tell them what personal data you have about them, how you got it or what you’re doing with it. They might also want copies!

T is for…

Term sheet

A document signed at the outset of negotiations that sets out the important points of principle for a particular transaction or agreement. The signed term sheet is then used as a template to write the more detailed legal documents. A term sheet is not usually legally binding.

U is for…

Unregistered design

When you design something in the UK, you automatically have an unregistered design right in it. This prevents others from directly copying your design. However, you’ll be better protected, for a longer period, if you register your design.

V is for…

Veto rights

In a contract, these are things which it is agreed cannot be done without the consent of one or more of the parties. The person whose consent is required is said to have a veto.

W is for…

Winding up

The process by which a company is closed. Its assets are sold to pay off creditors and other expenses. Any assets and cash remaining are then distributed to the shareholders, and the company itself then ceases to exist.

X is for…

Express term

Any term in a contract which is clearly agreed by the parties, either orally or in writing. This can be compared to an implied term which isn’t specifically agreed by the parties but which forms part of their agreement, perhaps because it’s so obvious it goes without saying, or it’s required by law.

Y is for…

Young worker

A worker who’s under 18 but over school leaving age. In England and Wales, that’s the last Friday in June of the school year that they turn 16.

Z is for…

Zero-rated

Zero rated goods have a VAT rate of 0%. Examples include most food and children’s clothes. Don’t get confused with exempt goods, which do not have any rate of VAT attached to them!