Introduction Outsourcing involves a transfer of functions from a customer to a supplier and can lead to the customer losing detailed knowledge relating to the processes involved in delivering those services. The longer the term, the more likely it will be that the nature of the services and the methods of delivery will change. A customer may decide to transfer the services 'as is' to a replacement supplier or back in-house. Alternatively, it may decide on a very different approach. When outsourcing arrangements end (for example, on breach, expiry or termination for convenience), exit arrangements must cover a number of eventualities. Detailed exit provisions allow a customer to move the services from an existing supplier for practical, commercial and operational reasons. Equally importantly for regulated customers, they are essential to comply with regulatory risk management requirements, for example the requirements that apply to financial services outsourcing. See Practice Note: Financial services outsourcing and Financial services outsourcing checklist. Exit should not necessarily be seen as a process to be addressed only once termination is in prospect and many of the problems commonly

What is outsourcing? Outsourcing is a general description given to arrangements by which a person (A) provides services to another person (B) which B could have provided to itself, for example through its own employees. A provides the services and B receives the services in the course of their respective businesses. There are a number of commercial or non-tax reasons why B might want to outsource services to A, such as reducing B’s operating costs, benefiting from A’s expertise or independence, or enabling B to focus on the growth and development of its core business. It is common for banks and insurance companies, for example, to outsource back-office functions to specialist service providers. Tax considerations could be an important factor in determining the cost effectiveness of an outsourcing arrangement. Outsourcing could result in B incurring higher or lower tax liabilities in respect of the services than if B provided the services to itself, or the arrangements could be tax neutral. Additional tax liabilities are generally undesirable due to their economic cost. Tax advantages are economically desirable but could prompt

This Practice Note examines each of the key terms in a typical outsourcing agreement including transition and transformation, service description, outsourcing service levels, charging structures, intellectual property, TUPE in outsourcing, benchmarking, data protection, customer responsibilities, governance, step in, limitation of liability, termination and exit. It also covers the implications of the UK GDPR for outsourcing agreements. Outsourcing is the appointment of a third party supplier to manage certain business processes, functions or responsibilities that were previously carried out by the customer in the case of a first generation outsourcing, or by another third party supplier in the case of a second or subsequent generation outsourcing. This Practice Note covers the following key terms applicable to most forms of outsourcing agreements (including information technology (IT) and business process (BPO) outsourcing): • Transition and transformation • Service description • Service levels • Charges • Intellectual property • Employment and TUPE • Data protection and the UK GDPR • Customer responsibilities and dependencies • Record retention and audit • Continuous improvement, benchmarking and most-favoured customer • Governance • Limitation of liability and indemnities • Step in

1 Description of outsourced services [State nature of services, eg digital dictation for private client team] 2 Outsourcing supplier [Identify the outsourcing supplier to which this record relates] 3 Audit team Name Role [Identify the individuals within your business who are involved in the audit exercise, eg head of dept, head of IT, senior PA, head of HR] [Insert details of the individual’s role] 4 Method of audit Audit methodology Select all that apply: Details of audit ☐ Physical inspection [Insert details eg, date(s) of inspection, whether announced or unannounced etc] ☐ Review of documents [Insert details of documents reviewed eg, information security policies and procedures, staff vetting policy etc] ☐ Staff

Before you engage in outsourcing activities, you will have to navigate a complex compliance obstacle course dictated by: • SRA requirements • data protection requirements • other legislation, eg Equality Act 2010 • general risk management best practice We have attempted to simplify this in our Outsourcing compliance lifecycle diagram. This Practice Note provides high-level guidance on the four key compliance phases, which are further divided into 12 practical stages to correspond with our Outsourcing compliance lifecycle diagram: • pre-contract (stages 1–6) • negotiating and executing the contract (stages 7–9) • post-contract record keeping (stage 10) • post-contract quality checking and auditing (stages 11–12) Regulatory requirements For guidance on regulatory requirements that are specific to the legal sector, see Practice Note: Outsourcing and offshoring—law firms. For guidance on data protection requirements, see Practice Note: Outsourcing and data protection. For guidance on general risk management best practice, see Practice Notes: • Due diligence in outsourcing • Limitation of liability in outsourcing • Outsourcing remedies—step-in rights, service credits, liquidated damages and termination Pre-contract compliance

Law360: More than 110,000 former mine workers across the UK got an initial bump to their pensions on 29 November 2024 after a decision by the Labour government to reverse 'a historic wrong' by transferring £1.5bn to their retirement savings plan.

Law360: Government data shows 3.1 million UK pensioners will be dragged into paying higher taxes in the next four years due to the freeze on income thresholds, financial firm Quilter Plc said on 22 August 2024.

The European Commission has announced that over a hundred companies across sectors such as IT, telecoms, healthcare and banking, have signed the EU AI Pact and the associated voluntary pledges. The Pact urges signatories to commit to at least three core actions, spanning AI governance strategy, high-risk AI system mapping and promoting AI literacy. Over half of the signatories also agreed to additional pledges, such as ensuring human oversight, transparently labelling certain types of AI-generated content, and mitigating risks.

Law360: The government should change the focus of The Pensions Regulator (TPR), parliament said on 26 March 2024, warning that years of excessive caution on regulation has nearly wiped out the country's remaining defined benefit (DB) retirement plans.

An undertaking is a solemn promise to the court that a party do or not do something. A breach of an undertaking may be enforced by an application for committal. Breach of an undertaking is therefore a serious matter. See Practice Note: Enforcement of undertakings. It is not uncommon for a party in financial remedy proceedings to give an undertaking relating to the payment of child maintenance. This is because notwithstanding any order for child maintenance made by the court, this may be superseded by an assessment by the Child Maintenance Service (CMS) after the elapsing of 12 months

As defined in Article 1 of the buy-back-stabilisation-regulation'>UK Buy-back and Stabilisation Regulation (Retained Regulation (EU) 2016/1052), a clause in the underwriting agreement or lead manager’s agreement which permits acceptance of subscriptions or offers to purchase a greater number of relevant securities than originally offered. An over-allotment facility is used to stabilise the market in a company’s shares in the immediate post-offer period following a share issue. See also Greenshoe option and stabilisation.

Also referred to as a Greenshoe option, an option given to the manager'>lead manager or bookrunner in an IPO or secondary offer to acquire more shares at the offer price in order to stabilise the market in the immediate post-offer period following the share issue (see the definition in Article 1 of the UK Buy-back and Stabilisation Regulation (Retained Regulation (EU) 2016/1052).