In the Pipeline - December 2020

Corporate Governance/Pay

January 2019 to 2020 onwards

• A number of measures to reform corporate governance and pay took effect in 2019. The changes apply to financial years beginning on or after 1 January 2019, so the first reports have been and will be published in 2020.
  
  
• Quoted companies with more than 250 UK employees are required to report pay ratio information in their annual directors' remuneration reports. The pay ratio information needs to compare the total remuneration of the company's CEO with the remuneration of employees at the 25th, 50th and 75th percentiles of the workforce, and provide an explanation of the ratios.
  
  
• Large private companies are required to include a statement about their approach to corporate governance in their directors' reports, including which corporate governance code the company has applied (if any), how it did so and the reasons for any departure from that code. The Financial Reporting Council has published corporate governance principles for large private companies which can be used for this purpose (known as the Wates Principles). The requirement applies to companies that have either more than 2,000 employees or a turnover of more than £200 million and a balance sheet of more than £2 billion.
  
  
• All companies with at least 250 UK employees are required to report on employee engagement as part of their annual directors' reports. The report needs to describe what measures were taken during the financial year to introduce or develop arrangements for providing information to employees and consulting with them about decisions likely to affect Directors also have to explain how they engaged with employees and had regard to their interests, and how this has impacted on key decisions of the company.
  
  
• The Corporate Governance Code for premium listed companies has been revised and changes include:
  
  
  • new measures for employee engagement at board level
  • a specific requirement for effective whistleblowing procedures and reports to the board
  • additional measures to promote culture and diversity.

Kickstart Scheme

November 2020 onwards

• The Government has announced a new scheme to fund six month job placements for young people (aged 16 to 24) who are on universal credit and at risk of long term unemployment.
  
  
• Employers may apply for funding to pay the national minimum wage for up to 25 hours per week, as well as £1500 for training and set up costs, provided they, either alone or in conjunction with another employer (or other employers), offer at least 30 placements.

Financial Services and Insurance Regulation

09 December 2020 to 31 March 2021

• In March 2016, the Senior Managers and Certification Regime (SMCR) replaced the approved persons regime for employees in banks, building societies and other financial services organisations jointly regulated by the FCA and PCA. An equivalent regime was brought in for large insurers.
  
  
• The SMCR was extended to all insurers in December 2018 and to all FCA regulated firms on 9 December 2019.
  
  
• There are transitional rules for employees who were approved under the approved persons regime and will become certified individuals under the SMCR. Firms originally had until 9 December 2020 to certify these employees as fit and proper under the SMCR, but this deadline has been extended to 31 March 2021 in light of the pandemic.

Statutory Sick Pay

04 April 2021

The rate of statutory sick pay is set increase to from £95.85 to £96.35 per week.

Statutory Maternity, Paternity, Adoption, and Shared Parental Pay

04 April 2021

The rates of statutory maternity, paternity, adoption and shared parental pay are set to increase from £151.20 to £151.97 per week.

Gender Pay Gap Reporting

04 April 2021

Employers with 250 or more employees are required to publish their gender pay gap report for the period 5 April 2019 to 4 April 2020, by 4 April 2021. (The requirement to report for 2018/2019 by 4 April 2020 was suspended due to the pandemic.)

Tax and Contractors

06 April 2021

• The Government is extending rules on taxing contractors, which already apply in the public sector, to the private sector. The so-called "off-payroll working rules" were introduced in the public sector in April 2017.
  
  
• Under the rules, where an individual contractor or consultant supplies their services to a public sector client via a personal services company, the client must decide whether the "IR35 legislation" applies. This broadly involves the client asking whether, without the personal services company, the individual would be regarded as an employee of the client for tax purposes. If so, the client (or the body responsible for paying the contractor's company) must deduct income tax and national insurance contributions from payments to the contractor's company.
  
  
• The rules are designed to ensure that those who work through a personal services company, who would be employees if they were engaged directly, pay broadly the same tax as employees. The rules were originally due to take effect on 6 April 2020 but have now been postponed to 6 April 2021. Our note on the implications of the postponement is available here.

National Minimum Wage and National Living Wage

April 2021

• The hourly rates of the national living wage and the national minimum wage will increase. The national living wage currently applies to workers aged 25 or over, but is to be extended to 23 and 24 year olds.
  
  
• The new hourly rates are follows:
  
  
  • £8.91 for workers aged 23 or over (currently £8.72)
  • £8.36 for workers aged 21 to 24 (currently £8.20)
  • £6.56 for workers aged 18 to 20 (currently £6.45)
  • £4.62 for workers aged under 18 (currently £4.55)
  • £4.30 for apprentices (currently £4.15)

Unfair Dismissal and Statutory Redundancy Pay

April 2021

• The maximum compensatory award for unfair dismissal, and the maximum amount of a week's pay for calculating the unfair dismissal basic award and statutory redundancy pay, usually increase every April.
  
  
• Currently the maximum compensatory award is the lower of £88,519 and a year's pay, and the maximum amount of a week's pay is currently £538.

Coronavirus Job Retention Scheme

Until 30 April 2021

• The Coronavirus Job Retention Scheme (CJRS), introduced in March 2020, originally enabled employers to place employees on furlough and reclaim 80% of their wages (up to £2,500 per month), together with related employer national insurance contributions (NICs) and auto-enrolment payments.
  
  
• The amounts employers could claim under the CJRS began to reduce from 1 August so that by October, employers could only claim 60% of the wages of furloughed employees. The Scheme was set to end on 31 October but has been extended to 30 April 20201.
  
  
• Employers can currently claim 80% of pay for the unworked hours of furloughed employees, to a maximum of £2500 per month (but not national insurance or pension contributions).

Sexual Harassment

No date

• In spring 2018, the Equality and Human Rights Commission (EHRC) published a report, Turning the tables: ending sexual harassment at work, which made a number of recommendations to strengthen the protection for victims of sexual harassment.
  
  
• The Government responded in December 2018 and has committed to develop a statutory code of practice on sexual harassment. The Government has consulted on further measures to address sexual harassment at work, including:
  
  
  • introducing a new duty to prevent harassment
  • requiring employers to publish their sexual harassment policies
  • introducing specific provisions dealing with third party harassment
  • extending time limits for discrimination and harassment claims from three to six months.
    
    
• In January this year the Equality and Human Rights Commission published Technical Guidance on harassment at work. The Government has stated that this will form the basis of the new statutory code of practice.

Settlement and Confidentiality

No date

• In 2019, the Government consulted on the use of confidentiality provisions in settlement agreements in discrimination and harassment cases. The Government has now responded to this consultation and stated that it will legislate to:
  
  
  • ensure that settlement agreements will not prevent disclosures to the police or healthcare or legal professionals
  • require confidentiality clauses in employment contracts and settlement agreements to set out their limitations clearly
  • require individuals to take legal advice on the confidentiality provisions in a settlement agreement.

Redundancy and Pregnancy/Maternity Leave

No date

• Employees who are made redundant during maternity leave must be offered a suitable alternative vacancy if there is one.
  
  
• Following a consultation in 2019, the Government confirmed that it will extend this redundancy protection so that it  begins when the employee notifies the employer of the pregnancy and ends six months after the end of the maternity leave. The equivalent redundancy protection for adoption leave will be extended until six months following the end of adoption leave, and similar extensions will apply in relation to shared parental leave.

Maternity/Adoption/ Shared Parental and Parental Leave and flexible working

No date

• The Government has consulted on measures to support working families including:
  
  
  • how to improve paternity and shared parental leave and pay, including the possibility of dedicated "pots" of leave for each parent
  • requiring employers with 250 or more employees to publish their family related leave and pay, and flexible working, policies on their website.
    
    
• The Government's response to the consultation is awaited.

Neonatal leave and pay

No date

The Government is to introduce a new entitlement to up to 12 weeks' neonatal leave and pay for parents of premature babies. No date has yet been given for when this will come into effect. 

Carers' leave

No date

The Government has consulted on a new form of unpaid statutory leave for employees with unpaid caring responsibilities, such as care of an elderly relative. The Government's response to the consultation is awaited.

Diversity Reporting

No date

In August 2018, the Equality and Human Rights Commission (EHRC) published a report on disability and ethnicity pay gaps and progression. The EHRC plans to produce guidance for employers on collecting, using and reporting data on employee ethnicity and disability.

• The Government has also consulted on ethnicity pay gap reporting and this is likely to be introduced in the future although no date has been given.

Sickness and disability

No date

• The Government has consulted on proposals to increase the employment of disabled people including:
  
  
  • enabling SSP to be paid during a phased return to work
  • requiring employers to give four weeks' notice that SSP is due to end
  • giving non-disabled employees a right to request alterations to the workplace to accommodate a health condition
    
    
• The Government's response to the consultation is awaited.

Employment Status

No date

• Following the publication of the Independent Review of Employment Practices in the Modern Economy (known as the Taylor Review) in 2017, the Government published the Good Work Plan in 2018, setting out a number of reforms aimed at improving the position of workers including:
  
  
  • a right for zero-hours workers to request a more stable contract
  • refining the employment status test and developing an online employment status tool
  • making it easier for casual workers to establish continuity of employment (by increasing the gap required between contracts for breaking continuity from one week to four weeks).
    
    
• The Government has consulted on specific measures to improve protection for zero hours workers including proposals for compensation for cancelled shifts, minimum notice of working hours and the right to move onto a fixed hours contract.
  
  
• The Government has not given a date for when the above changes are likely to be introduced.