This Practice Note highlights key legal and regulatory changes that will affect in-house lawyers in 2019.

While some are set in stone, others are more speculative at this stage or subject to the Parliamentary timetable. It was last updated on 17 September 2019.

Produced in partnership with Susanna Heley of RadcliffesLeBrasseur.

Category Details Link to Further Material Expected date

Shared parental leave—sex discrimination

Chief Constable of Leicestershire Police v Hextall [2019] All ER (D) 18 (Jun)

The Court of Appeal held that employers who pay enhanced contractual maternity pay but only statutory shared parental leave (ShPL) pay for fathers taking ShPL do not directly or indirectly discriminate against men and are not in breach of equality of terms (equal pay) legislation. See report of 29 May 2019.

Appealed on the basis that the claim was properly characterised as an equal terms/pay claim under sections 66 of the Equality Act 2019, rather than an indirect discrimination claim under section 19 (such claims being mutually exclusive).

Case tracker—Employment

Permission to appeal papers lodged on 25 June 2019. Supreme Court (seeking permission)

Off payroll working in the private sector (IR35)

The IR35 rules are designed to ensure that individuals who provide services through an intermediary (usually a personal services company) but would have otherwise been an employee pay the same PAYE and NICs as direct employees. The responsibility for this rests with the intermediary, but the government believes that this is not an effective control and that only 10% of those who should comply with IR35 rules do so.

The government’s position is to move to similar rules that already apply in the public sector where the public-sector employer is responsible for determining whether IR35 applies and for paying tax and NICs if it does. The draft legislation is expected to be in force by April 2020 and will apply to certain medium-sized and large private sector businesses (as amended by the incoming Finance Act).

The government published draft legislation on 11 July 2019, largely disregarding concerns raised during earlier consultations. The draft finance bill was open for consultation until 5 September 2019.

HMRC has produced a guide to preparing for the changes in April 2019.

IR35—key difficulties and HMRC's approach and reports of 15 July 2019 and 19 July 2019.

Draft Finance Bill published on 11 July 2019, consultation closed on 5 September 2019

Rules in force expected April 2020

Parental Bereavement Leave

The Parental Bereavement (Leave and Pay) Act 2018 received Royal Assent on 13 September 2018. The main provisions of the Act will be brought into force by statutory instrument and provide for regulations to be made giving qualifying bereaved parents of children the right to two weeks paid leave.

It was intended to lay these regulations in Parliament early in 2019 but nothing has yet been published. The rights are not expected to come into force until 2020.

Legislation tracker—Employment

April 2020

Restrictive covenants

Tillman v Egon Zehnder UKSC 2017/0182, [2019] UKSC 32, [2019] All ER (D) 16 (Jul)
Case about whether a post-term restriction is too wide for failing to expressly carve out a minor shareholding in a competing business. The High Court held that the restriction was not wider than reasonably required for the protection of the employer's interests.

The Court of Appeal allowed the employee’s appeal, holding that it was impermissibly wide and in restraint of trade since it prevented her from even taking a minor shareholding in a competitor—see report of 27 July 2017.

The Supreme Court allowed the employer’s appeal, holding 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—see report of 15 July 2019.

Restrictive covenants can provide important business protection but careful drafting of the contract provisions is essential. It's often tempting to place onerous restrictions to forbid employees from competing with you after termination—but provisions that go too far can be invalidated and leave you with no protection.

Archived—2019 Case tracker—Employment.

Judgment dated 3 July 2019

Termination payments

Legislation making all termination payments above £30,000 threshold subject to employer class 1A NICs was delayed and will now apply from 6 April 2020. The Act received Royal Assent on 24 July 2019.

Termination payments and tax and LNB News 26/07/2019 3.

6 April 2020

Individual rights arising from Union membership

Kostal UK v Dunkley A2/2018/0108, [2019] EWCA Civ 1009, UKSC 2019/0153
Case about whether an employer's attempt to bypass a recognised trade union by negotiating directly with individual employees regarding changes to terms and conditions amounted to unlawful inducement contrary to section 145B of the Trade Union and Labour Relations (Consolidation) Act 1992.

The Employment Appeal Tribunal (EAT) held that the Employment Tribunal had not erred in finding that it did—see report of 15 December 2017. The Court of Appeal allowed the employer’s appeal, held that it did not amount to unlawful inducement and dismissed the claim—see report of 14 June 2019.

Permission to appeal granted on 1 August 2018. Hearing on 22 May 2019. Court of Appeal handed down judgment on 13 June 2019. Relevant to employers who recognise trade unions.

Case tracker—Employment.

Application for permission to appeal lodged on 11 July 2019. Supreme Court (seeking permission to appeal).

Non Disclosure Agreements

Following political interest in the alleged misuse of non disclosure agreements to prevent reporting of harassment and criminal conduct, DBEIS announced its intention introduce legislation to regulate of NDAs.

Crack down on misuse of NDAs in the workplace.

Announcement 21 July 2019 following consultation issued in March.

Whistleblowing

Royal Mail Group v Jhuti UKSC 2017/0207

Case about whether a dismissal was automatically unfair under section 103A of the Employment Rights Act 1996 where the dismissing officer was unaware of the protected disclosure because he was misled by the claimant’s line manager (to whom the protected disclosure was made).

The EAT held that it was—see report of 13 July 2016.

The Court of Appeal allowed the respondent’s appeal—see report of 26 October 2017 and Case tracker—Employment.

Appealed to Supreme Court.

Application for permission to appeal lodged on 16 November 2017. Permission granted in part on 19 March 2018. Hearing on 12–13 June 2019. Awaiting reserved judgment. Supreme Court

Vicarious liability for sexual assault

Barclays Bank v Various Claimants UKSC 2018/0164

Case about whether an employer is vicariously liable for the actions of an independent contractor doctor who allegedly committed sexual assaults on employees during medical examinations requested by the employer.

The High Court held that the employer was liable for any such assaults that were proved—see report of 9 August 2017.

That decision was upheld by the Court of Appeal—see report of 24 July 2018. Appealed to Supreme Court.

Hearing 28 November 2019 Supreme Court

Category Details Link to Further Material Expected date

ePrivacy

The Draft Regulation on privacy and electronic communications is intended to replace the current ePrivacy Directive (Directive 2002/58/EC) and align electronic privacy requirements with the General Data Protection Regulation, Regulation (EU) 2016/679 (GDPR).

For any organisation other than technology communication providers, the main areas to watch will be the implications on direct marketing and cookies.

The draft regulation remains in the Council of the EU where it has been under discussion since the European Parliament adopted its position in October 2017.

The next stage is trialogue discussions between the European institutions, but the Council has not yet been able to agree a general approach. Finland took over the presidency from Romania on 1 July 2019 and has issued two sets of proposed changes for discussion by the Council’s telecommunications working party. The next meeting is scheduled to take place in September 2019.

With the 24-month grace period contained in the current draft, it is not expected that the regulation will apply in Europe before the end of 2021.

ePrivacy Regulation—timeline

2021

Data Protection

Various claimants v WM Morrisons Supermarkets PLC UKSC 2018/0213

Claim by 6,000 staff in relation to a data breach by a rogue employee who illegally shared online a spreadsheet containing bank, salary and NI details of 99,998 Morrison's staff.

The High Court held that the employer supermarket was vicariously liable for the leak of the personal data of employees. See Various Claimants v Wm Morrisons Supermarket plc [2017] EWHC 3113 (QB) and LNB News 05/12/2017 132.

The Court of Appeal agreed—see report of 23 October 2018 and Various Claimants v WM Morrison Supermarkets plc [2018] All ER (D) 89 (Oct), [2018] EWCA Civ 2339. Appealed to Supreme Court.

Hearing 6-7 November 2019 Supreme Court

Category Details Link to Further Material Expected date

Patents

Shanks (Appellant) v Unilever Plc (Respondents) [UKSC 2017/0032]

The Supreme Court considered what amounts to an ‘outstanding benefit’ for the purposes of determining whether an employee who has made an invention belonging to an employer for which a patent has been granted is entitled to compensation pursuant to section 40(1) of the Patents Act 1977.

Patents tracker

Heard by the Supreme Court. Judgment awaited.

Copyright

The EU Directive on Copyright in the Digital Single Market (Directive (EU) 2019/790) is intended to harmonise copyright laws to create an effective single digital market was approved in April 2019.

In view of Brexit it is not clear whether the UK will implement any part of the directive however the directive has been met with dire predictions in many industries and bears watching.

Directive dated 17 April 2019. All or part of it may come into force by 7 July 2021 depending on Brexit.

Category Details Link to Further Material Expected date

Dishonest directors

Singularis Holdings Ltd (In Official Liquidation) (A Company Incorporated in the Cayman Islands) (Respondent) v Daiwa Capital Markets Europe Ltd (Appellant) [2018] EWCA Civ 84

The appeal concerns whether the dishonest state of mind of the sole shareholder and a director of a company is attributable to the company for the purposes of a claim in negligence against a third party bank or broker and, if so, what the consequences are of that attribution. The Court also considered the extent to which AML legislation is a public policy consideration affecting the three stage test in Patel v Mirza [2017] AC 467, [2016] UKSC 42. Permission to appeal was granted in part on 9 July 2018.

Dispute resolution: key appeal cases—2019 and News Analysis: Liability of financial institutions for fraudulent transactions (Singularis Holdings v Daiwa Capital Markets Europe).

Appeal heard by Supreme Court on 23 and 24 July 2019

Category Details Link to Further Material Expected date

New deal for Consumers

The EU announced its planned package of reforms to deliver a new deal for consumers, these include:

  • —‘GDPR level’ fines for mass harm cases
  • —making it easier to bring group actions against businesses
  • —additional consumer rights where consumers have suffered unfair, aggressive or misleading marketing and
  • —more transparency for on-line market places

The form of Directive was proposed in March 2019 and considered by the EU in April 2019. A final form is expected imminently. There will be a two–year transition period.

Whether this is applicable to the UK will be dependent on Brexit, however the UK government is progressing plans for a similar package of changes to consumer law. A comprehensive consumer whitepaper will be forthcoming which is likely to include proposals for the CMA to determine breaches of consumer law and impose fines directly.

Brexit—consumer protection—The ‘New Deal for Consumers’ package

Implementation at EU level 2021

Enforcement

The Competition and Markets Authority (CMA) has undertaken a number of sector specific enforcement projects seeking to enforce consumer law and has announced new investigations into the car hire market and the funerals sector. See Practice Note: UK market studies and market investigation references—ongoing cases tracker.

The CMA also announced its decision to fine guitar supplier Fender for a failure to produce documents in the course of an investigation—see LNB News 26/03/2019 68, CMA investigation: Fender Europe fined £25,000 for concealing documents during CMA inspection. Care homes continue to feature in the CMA’s enforcement work alongside construction companies and retailers.

For information on the CMA’s ongoing competition enforcement work, see Practice Note: UK behavioural investigations—ongoing cases tracker.

Various

Loyalty penalty

The CMA, FCA and Ofcom have each issued updates on their approach to the “loyalty penalty” where existing customers are charged more than new customers.

It is a major concern across five markets, including mobile broadband, banking and insurance products.

CMA update 19 June 2019 (LNB News 19/06/2019 40)

Ofcom update 17 June 2019

FCA update 19 June 2019 (LNB News 19/06/2019 64)

Category Details Link to Further Material Expected date

Brexit

The UK was scheduled to leave the EU on the 29th March 2019 which has now been extended to 31 October 2019. There are broadly two options:

  • — a ‘cliff edge’ no deal and transition to the WTO rules
  • — status quo transitional arrangements which are proposed to end on 31 December 2020

Guidance has been published by most government departments and extensive legislation has been provisionally amended to make provision with effect from ‘exit day’.

Brexit risk management guide and Brexit toolkit—Commercial

31 October 2019

Overseas property register

Proposed register of ownership and control of foreign companies that purchase property in the UK.

The draft Registration of Overseas Entities Bill was considered by a select committee in May 2019. The select committee reported and generally endorsed the proposal with some recommended improvements to minimise possible avoidance.

The government responded in July 2019. It stated that the types of overseas entity that will be exempt will be set out in secondary legislation, which will also set out any evidence that might be required to be presented to the land registries to demonstrate that an overseas entity is or was exempt (eg a conveyancer’s certificate). It confirmed it intends to publish, and consult on, draft regulations to ensure that the proposals are workable and will have no unintended consequences.

This moves the UK one step closer to a ‘world-first’ public register of overseas entities owning UK property. From 2021, 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.

Relevant to overseas businesses that purchase property in the UK.

Risk & Compliance forecast.

Subject to parliamentary approval, the new register is expected to become operational in 2021

Civil Procedure

The Courts and Tribunals (Online Procedure) Bill makes proposals for online procedures in civil and family courts and in the tribunal system including employment tribunals.

Tracker—legislation and consultations—Dispute Resolution—Civil justice reform

This bill has fallen away as a result of the proroguing of Parliament—see News Analysis: Brexit Bulletin—key Bills fall away on prorogation of Parliament—LNB News 11/09/2019 76

Professional Regulation

The SRA’s widespread changes to regulation of solicitors (including separate codes of conduct for individuals and entities) will come into effect in November 2019. In-house lawyers may need to review their professional arrangements to ensure continued compliance.

Regulation of in-house lawyers, including Practice Notes:

25 November 2019

The smart data review

Recently out for consultation, the Smart Data Review is principally aimed at empowering consumers by taking advantage of new technology to create better information, including comparison information.

Views were sought by the government on smart data initiatives and as to whether and in how far the roll out of smart data projects should be extended beyond regulated industries. Consumer empowerment is at the heart of such initiatives and smart data looks set to be part of a framework for market facilitation in future.

LNB News 12/06/2019 96

Consultation closed 6 August 2019

Connect with us: