Click on the sections below to jump to the relevant section:
It has been a busy month with numerous key developments, including the FCA’s publication of its “near final” rules on the extension of SMCR and the launch of its consultation on a new public directory for individuals in financial services.
There have been significant developments in corporate governance reform with the publication of the new UK Code and Corporate Governance Reporting Regulations, which introduce new requirements for companies in scope from next year.
There have also been a number of noteworthy cases - headlines below.
Extension of SMCR: FCA publishes “near final” rules
On 04 July 2018, the Financial Conduct Authority (FCA) published the “near final” rules on the extension of the Senior Manager & Certification Regime (SMCR) to insurers and FCA solo-regulated firms. SMCR will apply to insurers from 10 December 2018 and to FCA solo-regulated firms from 09 December 2019. In large part the FCA is implementing the proposals as consulted on.
Please see our webinar on key points to note for in-scope firms, and a reminder on timeline and tools for implementation.
We highlight key points of interest for FCA solo-regulated firms in our elexica article.
Key highlights for insurers can be found here.
The FCA propose new public directory for individuals in financial services
The FCA is consulting on the proposal to introduce a new public register for checking the details of key individuals working in financial services.
Following the extension of the SMCR, the number of individuals on the existing Financial Services Register will substantially reduce because only Senior Manager roles will be required to be approved by the FCA and appear on the Register. The proposed new directory will make information public on individuals carrying out a wider range of roles (including Certification staff, non-Senior Manager Function Directors (executive and non-executive) and those who the FCA does not approve, such as financial advisers, traders, and portfolio managers).
The consultation closes on 05 October 2018. For further detail on what is proposed and next steps, please see our elexica article.
More organisations sign up to the Women in Finance Charter
On 11 July 2018, a further 67 firms signed up to the Women in Finance Charter, pledging to promote gender diversity, taking the total number of signatories to 272 that have now committed to the Charter. The first annual review of the Women in Finance Charter was in March 2018 and showed 85% of signatories then had either met targets, or were on track to meet them.
For further detail including the new signatories and a list of the commitments given, please see our elexica article here.
Brexit and employment law
On 12 July 2018, the Government published its White Paper "The Future Relationship between the United Kingdom and the European Union", in which it proposes that the UK commits to the non-regression of employment laws. Previous speculation on possible areas for change included the Working Time Regulations, TUPE and CRD IV. If implemented, the proposal in the White Paper suggests that EU based employment laws may in fact not be repealed when the UK leaves the EU.
For further details on this and the employment aspects of Brexit, please see our elexica “Get Ahead of the Curve” page.
New Corporate Governance Reporting Regulations
The Government has published the new corporate governance reporting regulations (which are the same as the draft regulations published on 11 June 2018). The regulations will introduce new reporting requirements for companies in scope - including to report the ratio between CEO and average staff pay, and to report on employee engagement in regard to key company decisions. The regulations come into force on 01 January 2019 and apply in relation to the financial years of companies beginning on or after 01 January 2019.
The regulations are available here. For further information, please see our elexica article.
New UK Corporate Governance Code
The FRC has published the new UK Corporate Governance Code 2018. The new Code will work alongside the new Corporate Governance Reporting Regulations (above).
The key changes include:
- Greater board engagement with the workforce (one of three options)
- Board responsibility to reinforce healthy culture
- Focus on diversity
- More demanding criteria for remuneration policies and practices (including to take account of workforce remuneration when setting executive remuneration).
Please see the FRC press release and the new Code. For further information, please see our Corporate Governance microsite.
Women & Equalities Committee Report on Sexual Harassment
On 25 July 2018, the Women & Equalities Committee of the UK Parliament published its report on sexual harassment in the workplace, which could lead to greater protection for those subjected to harassment at work and greater liability for employers. The recommendations largely reflect those set out in the Equality & Human Rights Commission “Turning the Tables” report and include:
- a statutory code on sexual harassment
- explicit reference to harassment as whistleblowing, if the complaint is made to the Police/EHRC
- extending the time limit in ET for complaints of this nature to 6 months, with a presumption that costs will be ordered for a complainant who succeeds
- NDA’s in plain language and making it an “offence” to misuse both for employers and those advising, and
- requiring regulators to take a more active role.
Further information is available in our elexica article on Sexual harassment in the workplace by Audrey Williams.
Enforcement of the Equality Act
Having already made recommendations to improve the enforcement of the Equality Act 2010 (EqA) in specific areas (including the recent proposals around extending time limits for specific harassment and other cases - see our elexica article), the Women and Equalities Committee has now launched an inquiry focused on identifying what more needs to be done to achieve widespread compliance with the EqA for all those with rights under it. The call for evidence includes:
- the processes by which individual cases can be brought under the EqA, including the barriers that may prevent claimants from enforcing their rights
- the role of the EHRC as the enforcement body, including the effectiveness of its duties, powers and policies, and
- whether there are other models of enforcement that could achieve more widespread compliance with the rights set out in the Equality Act 2010.
The closing date for submissions is 05 October 2018. Further details can be found here.
Following its consultation last year, the Government has confirmed how it proposes to address caste discrimination. The Government has decided not to legislate to add “caste” as a protected characteristic under the Equality Act 2010. Instead, it has opted for the non-legislative approach allowing case law to develop naturally following the decision in Chandhok and another v Tirkey , in which the EAT held that caste could be protected under the “ethnic origins” limb of the Equality Act 2010.
Briefing Paper published looking at ETs after Unison
The House of Commons has published a briefing paper discussing the consequences of the Supreme Court ruling in R (Unison) v Lord Chancellor (declaring fees to be unlawful) on employment tribunals.
The paper highlights that the number of cases has rebounded again - 9,800 cases were received in January-March 2018, more than double the number in the same quarter in 2017. However, this is still well below pre-regime levels, which may in part be attributed to the ACAS Early Conciliation scheme. The increase in caseload combined with a shortage of judges is leading to delays in cases being brought to hearing. Processes are in place to recruit more judges, but this is a longer-term solution. In the short-term, additional resource is being provided through greater use of fee-paid judges. The paper confirms that future fees policy (including possibility to reintroduce a fee regime) remains under review.
No dismissal where appeal against dismissal successful
Patel v Folkestone Nursing Home Ltd - Court of Appeal
The Court of Appeal has upheld the decision of the EAT that there was no dismissal of an employee following a successful appeal of a decision to dismiss.
The Claimant, a care assistant, was dismissed for two charges of misconduct. He appealed and was informed that his appeal was successful. However, the Claimant refused to return to work and claimed unfair dismissal. Overturning the Tribunal’s decision, the Court of Appeal held that the successful appeal had re-instated the Claimant, such that he had not been dismissed. The fact that only one of the two disciplinary actions that had led to the initial dismissal was addressed in the appeal did not influence the court's decision.
Thirteen months imprisonment for employee who misappropriated confidential information
Corbiere Limited & ors v Xu - High Court
The High Court imposed a 13 month prison sentence on an employee who misappropriated his employer’s confidential information and was subsequently held in contempt of court for failure to comply with a court order requiring him to disclose copies.
The employee, a quantitative analyst, copied confidential information worth over £31 million from software developers which had been developing algorithms for the buying and selling of stocks and shares without human intervention. The employee denied copying the information. In criminal proceedings, he was sentenced to 18 months imprisonment for breach of a Serious Crime Prevention Order. In separate proceedings, the High Court ordered him to disclose the copies, and he was subsequently held in contempt of court for failure to comply. Taking into account all the circumstances, and time already served in prison, 13 months' imprisonment was considered appropriate.
Data subject access requests: when to disclose "mixed data"
B v General Medical Council - Court of Appeal
In this case, the Court of Appeal considered the balancing exercise that needs to be carried out when a subject access request is made and a third party objects to their data being disclosed.
The case concerned disclosure of an expert report regarding a doctor’s fitness to practice, which was produced by the GMC following a patient’s complaint that the doctor had failed to make a bladder cancer diagnosis. The patient requested the report through a subject access request (under the Data Protection Act 1998) but the doctor refused to consent to its disclosure. Whilst the High Court held that the GMC was wrong to disclose the report, the Court of Appeal overturned this decision.
The High Court was wrong to substitute its own assessment of the case for disclosure – data controllers should be afforded a wide margin of appreciation in making their assessment. It is incorrect that there is a presumption against disclosure (despite comments in Durant v Financial Services Authority) in a “mixed data” case where a data subject has objected. Even if the request was made with a view to litigation, this should not interfere with the data controller’s assessment.
Discrimination arising from disability not objectively justified where failure to consider part-time working
Ali v Torrosian and others (t/a Bedford Hill Family Practice) - EAT
The Claimant was a GP who went on long-term sick leave following a heart attack, and his ongoing heart condition was accepted as a disability for the purposes of the Equality Act 2010. Occupational Health advised that the Claimant was unlikely to ever return on a full-time basis but could return on a phased part-time basis. He then suffered a shoulder injury and was signed off for six weeks - and was subsequently dismissed for capability.
Overturning the Tribunal decision that his unfavourable treatment was objectively justified to ensure the best possible care for patients, the EAT determined that his employer had failed to consider the possibility of his return on a part-time basis as a less discriminatory way of achieving its legitimate aim
Philosophical belief discrimination
Gray v Mulberry - Employment Appeal Tribunal
The EAT has confirmed that an employer did not discriminate on grounds of philosophical belief where the employee was the only person to hold such a belief.
The Claimant refused to assign copyright in her work over to her employer due to concerns it would give them ownership over a novel and screenplay she was writing. Despite offering a carve-out for this, they were unable to agree and she was eventually dismissed. She claimed that her belief in the sanctity of copyright law was a philosophical belief and therefore protected. The EAT held that the belief lacked sufficient cogency to qualify, but even if it did, there could be no indirect discrimination because she was the only person known to hold such belief.
Court has public duty to consider whether contractual arrangements are a sham
Sprint Electric Ltd v Buyers Dream Ltd & another - High Court
This case concerned a dispute over the ownership of intellectual property (computer code) between the programmer and the client (Sprint Electric). The programmer had worked for the client through a personal service company for several years in circumstances where it seems clear that the relationship would have been one of employer and employee in the absence of the personal service company. The contractual arrangements were relied on by the programmer to argue that the code did not belong to the client. Although neither side brought up the question of the validity of the contractual arrangements, the court considered that it had a public duty to do so in any event determining that the true relationship was one of employer and employee (on which basis the code belonged to the client).
Training and events
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.