The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019 require unquoted traded companies that do not have a shareholder-approved remuneration policy in place to give shareholders a vote on the remuneration policy during the financial year beginning on or after 1 January 2020.  The Governement’s FAQs on these regulations is available here.

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In Tillman v Egon Zehnder the Supreme Court disagreed with the Court of Appeal, who had found that a covenant in an ex-employee’s contract which prevented her from being directly or ‘indirectly’ engaged or concerned or ‘interested in’ any business which competed with her former employer was too wide and, therefore, unenforceable. The Court of Appeal’s view was that it would have prevented the employee from holding a minor shareholding in a competing company, whereas her contract of employment had allowed her to hold up to 5% shareholding in a publicly quoted company. The Supreme Court allowed the employer’s appeal and held that the restriction was enforceable because the offending part could be severed and that did not involve a major change in the overall effect of the restrictions.

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The Court of Appeal on the 29th January will re-consider whether suspending an employee, even where suspension might be appropriate, is a neutral act that causes no detriment to an employee (Agoreyo v London Borough of Lambeth). In this case, the High Court said that suspending an employee is not a neutral act. If suspension is inappropriate, it will breach the employee’s contract and (potentially) give rise to a claim of constructive dismissal.

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The Streamlined Energy and Carbon Reporting (SECR) regulations (which replaced the CRC Energy Efficiency Scheme) require certain companies to publish energy consumption and emissions information from April 2020.

Subject to a few exceptions, SECR applies to quoted companies, large unquoted companies and large limited liability partnerships (LLPs).

Government guidance is available here.

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All termination payments above £30,000 threshold will be subject to employer class 1A NICs

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The cases of Ali v Capita Customer Management Ltd and Hextall v Chief Constable of Leicestershire Police both relate to shared parental leave and whether it is sex discrimination to deny male employees the chance to receive enhanced pay whilst taking shared parental leave. In Ali v Capita the EAT said that it was not direct discrimination to only offer the enhanced pay for maternity leave. In Hextall, the EAT said that such a policy may be indirect sex discrimination because fathers can only take shared parental leave if they want to care for their baby whereas mothers have a choice about whether to take it or remain on maternity leave. Both decisions have been appealed to the Court of Appeal.

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Where an employee is dismissed, it will be automatically unfair if the principal reason for the decision to dismiss was that they made a protected public interest disclosure. But what if the decision-maker is being manipulated by another? In the case of Royal Mail Ltd v Jhuti, the dismissing officer was unwittingly misled by the employee’s line manager. In 2017, The Court of Appeal, confirmed that in the context of a whistleblowing unfair dismissal claim, even where manipulation has taken place, it is only the mental processes of the person or persons who was or were authorised to, and did, take the decision to dismiss that is relevant. Unfair or even unlawful conduct on the part of individual colleagues or managers is immaterial unless it can be properly attributed to the employer.

The Supreme Court will now consider the issue of decision-maker manipulation in Jhuti, on 12 and 13 June

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The new Incoterms® 2020 are effective from January 2020 (updating the previous version: Incoterms® 2010) and come with a variety of changes to both format and substance.  For more information about Incoterms® including the 2020 changes please visit the International Chamber of Commerce’s website here.

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New Corporate Governance Rules (The Companies (Miscellaneous Reporting) Regulations 2018) mandate a raft of new corporate reporting requirements that are applicable for financial years starting on or after the 1st January 2019 – so mostly need to included in reports published in 2020 and beyond. The reporting requirements vary depending on the size of the company.  We’ve created a helpful table to explain what needs to be reported, where it needs to be reported and which companies are caught by the reporting requirements – please click here.

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The 5th Money Laundering Directive (5MLD) came into force on the 10th January 2020 and is set to build on the regulatory requirements under the 4th Money Laundering Directive. The purpose of 5MLD is to strengthen the UK’s financial system in order to prevent criminals laundering money and funding terrorism.

The key changes include:

• expansion of the sectors that are subject to the regulations (letting agents where monthly rent amounts to €10,000 or more; virtual currency service providers; custodian wallet providers; art traders and intermediaries where the value of the transaction or a series of linked transactions is €10,000 or more)
• broadening the criteria for assessing high-risk third countries, greater safeguards when dealing with these countries and introducing ‘super enhanced due diligence’
• changes in relation to client due diligence;
• clarification on politically exposed persons;
• changes in relation to beneficial ownership and trusts;
• changes in relation to financial services; and
• fewer information barriers for law enforcement.

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The usual increases will take place in April 2020, as follows:

• 1 April: National Minimum Wage rates will increase for workers aged 25 or over from £8.21 to £8.72 per hour; for workers aged 21 to 25 from £7.70 to £8.20 an hour; for 18 to 20-year-olds from £6.15 to £6.45 per hour, for 16 to 17-year-olds from £4.35 to £4.55 per hour and for apprentices from £3.90 to £4.15 per hour.
• 5 April: the rates for Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay and Statutory Shared Parental Pay will all increase from £148.68 to £151.20 per week.
• 6 April: Maternity Allowance will also increase to £151.20.
• 6 April: Statutory Sick Pay will increase from £94.25 to £95.85 per week.

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In April 2018, BEIS published a Green Paper, “Modernising Consumer Markets”, consulting on a review of competition and consumer regulation.

The Green Paper focused on:

The need to protect vulnerable consumers in regulated markets.

• Securing the benefits of open portable personal data to assist consumer switching.
• Strengthening the regulation of consumer-to-consumer transactions.
• The need to understand how personalised pricing is being used and whether it can harm consumers
• Improving businesses’ presentation of terms and conditions and privacy notices, and the possible of introducing comprehension testing in some sectors.
• Introducing further measures to tackle consumer subscription traps.
• Improving business awareness of the need to minimise use of unfair terms in consumer markets.
• Improving consumer awareness of and access to alternative dispute resolution (ADR), and expanding the mandatory use of ADR to certain sectors.
• Establishing a national body with statutory powers and duties to enforce consumer law.
• Introducing civil fining powers for breaches of consumer protection legislation, with such fines capped at 10% of the firm’s worldwide turnover.

We understand that BEIS will publish a White Paper on consumer policy in the first half of 2020.

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Parental Bereavement (Leave and Pay) Act 2018 means that from 6 April 2020 parents whose children die on or after 6 April 2020 will be entitled to two weeks’ paid leave.

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From 6 April 2020, the NMW Regulations will be changed so that salaried hours workers will be allowed to be paid in additional equal instalments, such as fortnightly or four-weekly, employers may choose a calculation year for their salaried hours workers, and any salary premium received by a worker (an additional sum for working in particular circumstances, for example at night) will be discounted from their remuneration for minimum wage purposes. The Government will also provide further guidance and assistance to employers on how to comply with NMW rules.

National Minimum Wage (Amendment) (No 2) Regulations 2020

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From 6 April 2020:

• all workers (not just employees) will have a right to receive a written statement of employment particulars; the maximum financial penalty available for aggravated breach of a worker’s employment rights will increase from £5,000 to £20,000 and the percentage of employees required for a valid request to start negotiating an agreement on informing and consulting employees will be reduced (Employment Rights (Miscellaneous Amendments) Regulations 2019);
• written statements of employment particulars will have to be supplied on or before start of employment and more information will have to be included in them (the days of the week required to be worked, details of any terms and conditions relating to any paid leave plus particulars of any other benefits, any probationary period and training) (Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018).

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While judicial assistance may or may not be forthcoming about easing holiday pay calculations for some atypical workers, legislative reform may help instead. On 6 April 2020, the Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 will increase the reference period for calculating holiday pay from 12 to 52 weeks (or the number of complete weeks for which the worker has been employed if fewer than 52). This will allow for consistent holiday pay calculation over the year rather than holiday pay being inflated (if holiday is taken after a busy period) or deflated (if holiday is taken after a quiet period) for workers with variable hours.

2018/1378http://www.legislation.gov.uk/uksi/2018/1378/made

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The government announced in Budget 2018 that from 6 April 2020 it will extend to certain medium-sized and large private sector businesses the changes which it made from April 2017 to the off-payroll working rules (IR35) to those working for public sector bodies. Under the new rules, the private sector employer will be responsible for determining whether IR35 applies and for paying tax and NICs, in some circumstances. Relevant legislative provisions will be included in the Finance Bill 2020. Draft clauses for this Bill were published on 11 July 2019, together with explanatory notes, tax information and impact notes, responses to consultations and other supporting documents. In November 2019, HMRC updated its Check Employment Status for Tax (CEST) tool. In January 20202, it published two draft Regulations that explain how it will recover unpaid income tax and NICs from employers. In February 2020 the government updated its Employment Status Manual (still in draft), which gives guidance on how the new rules will apply and announced that the changes will only apply to payments made for services provided on or after 6 April 2020.

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We expect the Registration of Overseas Entities Bill to be implemented in 2021. The new law will require overseas entities wishing to own UK property will need to identify and register their real owners. Entities failing to comply will be unable to sell, buy, lease or mortgage UK property – and could face criminal sanctions and fines.  You can access Government guidance and the draft bill here

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Progress in trade negotiations between the EU and UK to be assessed, in particular to enable the UK to decide whether to request an extension to the transition period provided for in the Withdrawal Agreement (the Withdrawal Agreement requires that any request to extend be made before 30 June 2020)

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Equal pay claims against Tesco, Asda and Sainsbury’s are still in their preliminary stages and continue to rumble on through the courts. Tesco are facing a £4bn equal pay claim from store staff (mainly female) who allege that they should be paid the same as distribution centre workers (mainly male). Currently there is a £3p/h difference. Asda faces similar claims from 7,000 supermarket employees.

In Element v Tesco Stores the London Central ET made a reference to ECJ in August 2019 on whether Article 157 of the Treaty on the Functioning of the European Union is directly enforceable in equal value claims in the same way it is in claims of like work and work rated as equivalent. The ECJ hearing is awaited.

In Asda v Brierley & others, the Court of Appeal has agreed with the ET and the EAT decisions that the retail workers could use depot workers working in different establishments as the comparators for the purposes of their equal pay claims (based on equal value) as they were employed by the same employer and common terms and conditions applied in the different establishments. Asda has appealed to the Supreme Court who will hear the appeal on 14 and 15 July 2020.

Sainsbury’s Supermarkets v Ahmed was remitted back to the ET in 2018 to determine a dispute over whether the claims had been properly filed under the same ET1 and whether any irregularity could be waived to allow the claims to proceed. We await further judgments on this case.

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The Data Protection Act 2018 (DPA 2018) requires the Information Commissioner (ICO) to produce a code of practice for direct marketing.

The ICO published a draft direct marketing code of practice in January for consultation.  The consultation closes on the 4th March 2020.  The ICO will then review any response before finalising the code of practice.

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On the 3rd September 2020, the Shareholder Rights Directive II (SRD II) will be in force in all EU member states.

The objective of SRD II is to improve European financial stability by boosting shareholder loyalty and limiting those risks that are perceived to be linked to short term and speculative behaviour.Key elements of the SRD II include:

The SRD II applies to companies that have their registered office in a member state and the shares of which are admitted to trading on an EU regulated market

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The FRC’s 2019/2020 annual review of corporate governance and reporting is expected to be published in Octover 2020.

The FRC’s annual review of corporate governance and reporting sets out its findings for the year in the UK. It is based on evidence gathered through the FRC’s monitoring of annual reports and accounts, broad outreach with stakeholders and evidence gathered by external parties. The annual review highlights aspects of good practice and common areas for improvement.

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Kostal v UK v Dunkley concerns when it’s acceptable for an employer (who recognises trade unions) bypassing a union to negotiate directly with individual employees regarding changes to their terms and conditions. Trade Union law only allows employers (who recognise trade unions) to go over the heads of a union with a direct offer to workers concerning contracts of employment if they have a genuine, proper business purpose for doing so.  The cost of making an unlawful offer is currently £4,059 in respect of each worker, multiplied by the number of different offer letters sent.

The ET and EAT held that Kostal had committed unlawful inducement contrary to section 145B the Trade Union and Labour Relations (Consolidation) Act 1992. The Court of Appeal allowed Kostal’s appeal, held that it did not amount to unlawful inducement and dismissed the claims. On 11 February 2020 the employees were given permission to appeal to the Supreme Court and we await an a hearing date.

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11:00pm GMT on 31 December 2020 (midnight in Brussels), unless extended at the UK’s request in June 2020, the transition period provided for in the Withdrawal Agreement will expire and EU law will cease to apply in the UK, although most of it will be translated immediately into UK law through the operation of the EU (Withdrawal) Act 2018. At this point, either the terms of the new free trade agreement entered into between the UK and EU will be applied (provisionally, if necessary) or, if that is for any reason not ready, UK-EU trade will revert to basic World Trade Organisation terms.

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Working out holiday entitlement for term time only workers, casual and zero hour workers can often prove to be an administrative headache. Many employers use a 12.07% of annualised hours shortcut as set out in ACAS guidance. The Court of Appeal in The Harpur Trust v Brazel held that there is no requirement as a matter of EU law to give effect to the pro rata principle or, more particularly, to pro-rate the entitlement of part-year workers to that of full-year workers. It agreed with the EAT’s decision that when calculating holiday pay for variable hour term-time workers, employers must calculate holiday pay on the basis of the average hours worked in the preceding 12 weeks immediately before payment is made as required under the Working Time Regulations 1998. The Harper Trust has sought permission to appeal to the Supreme Court and a decision is awaited on the papers.

Please note that the reference period for calculating annual leave will be increased from 12 to 52 weeks from 6 April 2020. See below Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018, SI

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In January 2017, the European Commission published an initial proposal for an E-Privacy Regulation (ePR), to update and replace the E-Privacy Directive (2002/58/EC).

The proposed regulation has some worrying changes:

• the soft opt-in that allows marketers to use electronic marketing to existing customers will be time-limited to 12 months;
• websites will need to have functionality to facilitate individual and specific consent;
• all live marketing calls and B2B marketing will need prior consent.

It’s also intended to extend the the rules so that they apply to all electronic communications service providers, including WhatsApp, Facebook Messenger, Skype, Gmail, iMessage and Viber.

The Commission’s original intention was for the ePR to come into force on 25 May 2018, to coincide with the GDPR’s becoming effective. This date has come and gone, and the draft regulation has still not been finalised. It is now expected that the Commission will present a revised proposal on the draft ePR in the first half of 2020.

If adopted, the ePR will apply in member states two years after the date of its entry into force. It seems likely that the standstill transitional arrangements that currently govern the UK-EU relationship will have expired, before the new rules must be applied. However, the ePR’s proposed territorial scope means it may remain relevant to many UK businesses, and the UK may accordingly look to mirror its provisions in order to assist with adequacy status.

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