Stay ahead of the key legal and regulatory changes impacting your organisation

This Practice Note highlights key legal and regulatory changes that affect or will affect in-house lawyers in 2022 and beyond. While some are set in stone, others are more speculative at this stage or subject to the parlia-mentary timetable. It was last updated on 6 January 2022.

Category Details Expected or actual date

Vertical agreements block exemption

Since 31 December 2020, the EU Vertical Agreements Block Exemption Regulation (VABER) has been retained in UK law. The retained VABER is due to expire on 31 May 2022.

Following consultation on the issue, the Competition and Markets Authority (CMA) has recommended to the government that the retained VABER should be replaced with a UK-specific Vertical Agreements Block Exemption Order.

See: LNB News 05/11/2021 15.

The existing retained VABER expires on 31 May 2022. If the government agrees with the CMA recommendation, new arrangements will need to be in place with effect from 1 June 2022.

Unjust enrichment and contract drafting

Barton v Gwyn-Jones [2019] EWCA Civ 1999

The Court of Appeal addressed whether the so-called ‘Costello principle’ precluded a claim in unjust enrichment by an agent for an introduction fee where an oral contract governed the arrangement. The court’s analysis turned on the precise interpretation of the remuneration terms and provides a valuable lesson on the failure of parties to cover all possible outcomes by way of express agreement.

See News Analysis: Contractual silence—a gateway for unjust enrichment (Barton v Gwyn-Jones).

Permission to appeal to the Supreme Court granted on 25 February 2021.

Supreme Court hearing awaited.

New powers for CMA

The government is proposing changes to enhance the CMA’s powers and ability to tackle breaches of competition and consumer law, and empower its new Digital Markets Unit.

The changes would see the CMA given power to declare companies in breach of consumer law, without taking them to court first, and levy fines accordingly. The proposals would also enhance the CMA’s competition powers, increasing their speed and effectiveness.

See: LNB News 04/10/2021 94.

TBC

Category Details Expected or actual date

Dividends

The Supreme Court considered whether payment of a lawful dividend may amount to a transaction defrauding creditors contrary to section 423 of the Insolvency Act 1986 (IA 1986).

In BTI 2014 LLC v Sequana SA [2019] EWCA Civ 112, the Court of Appeal clarified when remedial relief under IA 1986, s 423 may be granted and when directors’ duties to have regard to the interests of creditors (the creditors’ interests duty) may apply.

See News Analysis: Challenging lawful dividend payment as a transaction defrauding creditors and for breach of directors’ duties (BTI 2014 LLC v Sequana SA and others; BAT Industries plc v Sequana SA).

Hearing 4–5 May 2021. Judgment awaited.

Climate-related disclosures

The Department for Business, Energy & Industrial Strategy (BEIS) has published the consultation response to proposals to introduce mandatory climate-related financial disclosures by large private companies, publicly quoted companies and limited liability partnerships (LLP).

BEIS has also published draft Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2021 which will amend the Companies Act 2006 to make changes to reporting requirements by affected companies to produce additional disclosures in line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), published in 2017.

LLP regulations applying a modified form of the company provisions to LLPs, will be made after the company regulations have been approved by Parliament.

The UK will become the first G20 country to enshrine in law mandatory TCFD-aligned requirements for Britain’s largest financial institutions and companies to report on climate-related risks and opportunities. From 6 April 2022, subject to parliamentary approval, over 1,300 UK registered financial institutions and companies will have to disclose climate-related financial information on a mandatory basis.

See: LNB News 29/10/2021 14 and LNB News 29/10/2021 20.

The new regulations are separate to a new rule and guidance issued by the FCA on statements to be included in annual financial reports of UK premium listed commercial companies. The FCA requirements apply to accounting periods from 1 January 2021 and will affect financial reports filed from Spring 2022.

The draft Regulations are scheduled to come into force on 6 April 2022.

Financial Conduct Authority (FCA) requirements apply to accounting periods beginning on or after 1 January 2021.

Environmental, social and governance (ESG)

The FCA has released a new environmental, social and governance (ESG) strategy setting out its target outcomes and the actions it expects to take to deliver these. As part of the strategy, the FCA issued discussion paper DP21/4, seeking initial views on new sustainability disclosure requirements for asset managers and FCA-regulated asset owners, as well as a new classification and labelling system for sustainable investment products.

See News Analysis: FCA Discussion Paper DP21/4 Sustainability Disclosure Requirements (SDR) and investment labels and LNB News 03/11/2021 46.

The deadline for comments on the discussion paper was 7 January 2022. A consultation paper is expected in Q2 2022.

Gender diversity

The government is backing a new five-year review (the FTSE Women Leaders Review) to monitor women’s representation in the upper rungs of FTSE companies. The FTSE Women Leaders Review set up an online portal for FTSE 350 companies to submit their gender diversity data from 1 November to 30 November 2021. The next annual report will be published in February 2022.

See: LNB News 01/11/2021 71.

30 November 2021.

The deadline for FTSE 350 companies to submit their gender diversity data to the FTSE Women Leaders Review was 30 November 2021. Next annual report February 2022.

Diversity

The Parker Review, led by Sir John Parker, found that directors of colour are vastly under-represented on the boards of the UK’s leading companies. The review committee recommended that each FTSE 100 company should have at least one director of colour by 2021.

See Practice Note: Diversity in the boardroom.

During 2021—FTSE 100 companies’ target date for achieving Parker Review recommendations.

A FTSE 250 company should have at least one director of colour by 2024.

Category Details Expected or actual date

Processing of employee data

The ICO is looking to update its employment practices guidance, in particular to address new ways of working. A call for views on employment practices was published on 12 August 2021.

See: LNB News 12/08/2021 39.

The consultation closed on 21 October 2021. Draft guidance awaited.

UK data protection and ePrivacy regime

On 10 September 2021, the Department for Digital, Culture, Media & Sport (DCMS) published a consultation on its future plans for the UK data protection regime.

See: LNB News 10/09/2021 45 and News Analysis: Details of UK privacy regime overhaul lay out likely GDPR flashpoints for EU.

The ICO has published its response to the consultation. See: LNB News 07/10/2021 48.

The consultation closed on 19 November 2021 and the government is analysing responses.

EU Standard contractual clauses (SCCs or model clauses)

On 4 June 2021, the European Commission adopted new SCCs for international transfers.

See News Analysis: The new EU GDPR standard contractual clauses for international transfers.

Organisations using the previous SCCs have until 27 December 2022 to switch to the new clauses.

UK international data transfer agreement (IDTA)

The ICO is consulting on a draft IDTA, which is designed to replace SCCs for the purposes of the UK GDPR.

See: LNB News 12/08/2021 6.

The consultation closed on 7 October 2021.

Surveillance camera code of practice

Following a consultation, the Home Office has published an amended version of the Surveillance camera code of . This will be the first revision of the code since it was introduced in 2013.

Subject to parliamentary approval, the updated code is due to be in force from 12 January 2022.

Anonymisation, pseudonymisation and privacy enhancing technologies

The ICO is working on a project to develop further guidance on anonymisation, pseudonymisation and privacy enhancing technologies and has launched a consultation on the first draft chapter of its new guidance.

The consultation closed on 28 November 2021. Final guidance awaited.

Direct marketing code of practice

On 8 January 2020, the ICO published a Consultation on the draft direct marketing code of practice.

The consultation closed on 4 March 2020. Final guidance awaited.

Category Details Expected or actual date

Sanctions

The Office of Financial Sanctions Implementation (OFSI) has announced the UK sanctions list will be changing its format in February 2022. Changes will include new fields and field names, additional file formats and more standardisation of data. The OFSI consolidated list will also be changed to align with the structural changes to the UK sanctions list.

Ahead of the change there will be a three-week period where both old and new formats will be available to view to help prepare for the formal change over.

See: LNB News 14/12/2021 99.

21 February 2022 .

Failure to prevent offence

The Law Commission has consulted on the law regarding corporate criminal liability. Potential improvements suggested by the Law Commission include extending the scope of failure to prevent offences to cover fraud and other economic crimes. The consultation closed on 31 August 2021.

The Law Commission Business Plan 2021–22 indicates an options paper will be presented to the government in 2022.

Economic crime levy for MLR 2017 regulated firms

On 21 September 2021, HM Treasury announced that anti-money laundering (AML) regulated entities with over £10.2m in UK revenue will be charged an economic crime levy of £10,000 to £250,000 depending on UK revenue. The levy will be applied on an annual basis for each financial year, commencing in the tax year 2022/2023. Payment will be due within six months of the end of the financial year, ie by 30 September, although collectors (HMRC, the FCA and the Gambling Commission) may require earlier payment if this aligns with their existing fee processes.

See News Analysis: The Economic Crime (Anti-Money Laundering) Levy.

Consultation closes on 19 NovemberThe first charge for the levy will be for the 2022/2023 financial year with the first payments due to be made before 30 September 2023.

AML and counter-terrorist financing

The government has consulted on further amendments to the Money Laundering Regulations 2017. See: LNB News 22/07/2021 28 and LNB News 22/07/2021 106.

The government has also issued a Call for Evidence seeking views on the systemic effectiveness of the UK’s AML/CTF regulatory and supervisory regimes. See: LNB News 22/07/2021 90.

TBC

European AML package

The European Commission has published a package of proposals, including:

—two draft Regulations (to create a single EU supervisory authority (AMLA) (the AMLA Regulation) and to set out detailed rules and requirements in areas such as client due diligence (the Conduct Regulation))
—a new directive—6MLD

See News Analysis: European Union and UK government initiatives on money laundering and terrorism finance.

The timing is ambitious. AMLA is scheduled to start work in 2024 with the aim of reaching full staffing and direct supervision in 2026.

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 new register was expected to become operational in 2021, but no legislation is currently before Parliament.

Category Details Expected or actual date

Prerequisite for ‘worker’ status under the Equality Act 2010

Nursing and Midwifery Council v Somerville, A2/2021/1185

Whether the EAT was correct to hold that the Court of Appeal’s decision in Windle v Secretary of State for Justice [2016] IRLR 628 does not mean that an irreducible minimum of obligation is a prerequisite for ‘worker’ status under the Equality Act 2010 nor by extension under the Employment Rights Act 1996 (ERA 1996).

In this case, the EAT held that the absence of any obligation on a claimant to accept and perform some minimum amount of work was not fatal to establishing ‘worker’ status under ERA 1996, s 230(3)(b) in circumstances where they had an overarching contract with the employer.

See News Analysis: Worker status does not require minimum obligation on both parties (Nursing and Midwifery Council v Somerville).

Court of Appeal hearing on 2 or 3 February 2022.

Vicarious liability

Chell v Tarmac Cement and Lime, B3/2020/2079

Whether an employer was vicariously liable for the consequences of an employee’s practical joke in the workplace. The High Court held that in the circumstances the employer was not vicariously or directly liable.

See News Analysis: Employer not directly or vicariously liable for personal injury from practical joke gone wrong (Chell v Tarmac).

Permission to appeal granted on the papers on 16 April 2021. Court of Appeal hearing on 24 November 2021. Judgment awaited.

Agency workers

Kocur v Angard Staffing Solutions, A2/2021/0413

Various issues on aspects of agency workers’ rights under the Agency Workers Regulations 2010, SI 2010/93 including the scope of the right under regulation 13(1) to be informed of any relevant vacant posts.

See News Analysis: Agency workers: right to be informed of relevant vacancy does not include right to apply ((1) Angard Staffing Solutions, (2) Royal Mail Group v (1) Kocur, (2) Roberts).

Permission to appeal granted on the papers on 10 May 2021. Court of Appeal hearing on 20 January 2022.

Ownership of copyright in software created by employee

Penhallurick v MD5 Ltd [2021] EWCA Civ 1770

The Court of Appeal upheld the decision of the Intellectual Property Enterprise Court (IPEC), which rejected a claim for copyright infringement in respect of a number of literary works consisting of computer software. The appeal largely focused on whether there had been assignment of copyright by Mr Penhallurick to MD5 Ltd by virtue of a contested agreement.

See News Analysis: Court of Appeal ruling on ownership of copyright in software created in ‘personal time’ (Penhallurick v MD5 Ltd).

Court of Appeal hearing on 2–3 November 2021. Appeal dismissed.

Working time

Harpur Trust v Brazel, UKSC 2019/0209

Calculation of holiday pay for part-time term-time workers. The EAT held it was wrong to apply a cap of 12.07% of annualised hours, the employer must use the average over the preceding 12 weeks under the Working Time Regulations 1998, SI 1998/1833, SI 1998/1833, reg 16.

The Court of Appeal agreed with the EAT and dismissed the employer’s appeal, see News Analysis: Calculating holiday pay for ‘part-year workers’ (Harpur Trust v Brazel (Unison intervening)).

Supreme Court hearing on 9 November 2021. Judgment awaited.

Workforce disability reporting

The Disability Unit of the Cabinet Office is consulting on introducing workforce disability reporting for large employers. The survey will look at employers with 250 employees or above and will address both mandatory and voluntary reporting.

See: LNB News 17/12/2021 17.

The consultation closes at 11.45 pm on 25 March 2022 with the government due to give its response by 17 June 2022.

Criminal records checks

The Police, Crime, Sentencing and Courts Bill was introduced in the House of Commons on 12 May 2021. It includes provisions about the rehabilitation of offenders, following proposals to reduce the time it takes for certain convictions to become ‘spent’ so that they are no longer automatically disclosed on employment checks.

These changes will not apply to convictions relating to serious sexual, violent or terrorist offences for which the sentence was four years or more.

See: LNB News 16/09/2020 83 and LNB News 10/03/2021 3.

Sometime in 2022.

Professional Qualifications Bill

This Bill was announced in the Queen’s Speech on 11 May 2021. It will create a new framework for recognising qualifications from overseas.

See: LNB News 11/05/2021 94.

Sometime in 2022.

Employment Bill

This was announced by the government in the Queen’s Speech on 19 December 2019. The main elements of the Bill are: creating a new, single enforcement body, ensuring tips left for workers go to them in full, introducing a new right for all workers to request a more predictable contract, extending redundancy protections to prevent pregnancy and maternity discrimination, allowing parents to take extended leave for neonatal care, introducing an entitlement to one week’s leave for unpaid carers and, subject to consultation, make flexible working the default unless employers have a good reason not to (see ‘Flexible working’ below).

It was not mentioned in the Queen’s Speech on 11 May 2021 but it is understood that the government intends to introduce it in due course.

See: LNB News 19/12/2019 23 and LNB News 11/05/2021 94.

The consultation on flexible working was published in September 2021, see: LNB News 23/09/2021 57. The government’s response to the 2020 consultation on carer’s leave was published in September 2021, see: LNB News 23/09/2021 53.

Sometime in 2022.

Non-Disclosure Agreements (NDAs)

Following political interest in the alleged misuse of NDAs to prevent reporting of harassment and criminal conduct, BEIS announced its intention to:

—introduce legislation to regulate use of NDAs, and
—consult on a potential requirement that all employers should be entitled to a basic reference

The Women and Equality Select Committee urged the government to treat this issue as a priority on 29 October 2019.

See BEIS: Crack down on misuse of NDAs in the workplace.

A Private Members’ Bill, sponsored by the Conservative MP, Maria Miller, that would restrict the use of NDAs was introduced in June 2021, but subsequently withdrawn in November 2021.

See: LNB News 28/06/2021 24.

Not known.

Flexible working

BEIS is consulting on proposals to reform flexible working regulations. Its Making flexible working the default consultation was published 23 September 2021.

See: LNB News 23/09/2021 57.

Consultation closed 1 December 2021 and the government is analysing responses.

Exclusivity clauses and non-compete clauses

BEIS launched two consultations in December 2020 with a view to introduce new measures to:

extend the ban on exclusivity clauses in contracts of employment
reform post-termination non-compete clauses in contracts of employment

See: LNB News 04/12/2020 125 and LNB News 04/12/2020 60.

Consultations closed 26 February 2021 and the government is analysing responses.

Whistleblowing

Liberal Democrat peer, Baroness Kramer has introduced a new Private Members’ Bill to make provision for an Office of the Whistleblower. The Bill had its second reading on 25 June 2021 and was committed to a Committee of the Whole House.

A line-by-line examination of the Bill is yet to be scheduled.

Category Details Expected or actual date

Independent review of the Modern Slavery Act 2015 (MSA 2015)

The government has been engaged in a review of MSA 2015 since 2018. It has announced a number of changes will be made to MSA 2015 and government guidance.

See Practice Note: How to prepare a slavery and human trafficking statement—Future changes to slavery and human trafficking statements

Revised government guidance was due to be issued in 2020, with further revisions once the legislation has been changed. This guidance is still awaited.

Modern Slavery (Amendment) Bill

This Private Members’ Bill would prohibit the falsification of slavery and human trafficking statements, establish minimum standards of transparency in supply chains in relation to modern slavery and human trafficking, and prohibit companies using supply chains which fail to demonstrate those minimum standards.

It had its first reading on 15 June 2021.

The second reading has not yet been scheduled. However, given this is a Private Members’ Bill and the government has already set out its intention to amend MSA 2015, s 54, it remains to be seen what, if anything, comes of this Bill.

Supply chain due diligence—forest risk commodities

Following a consultation in 2020, the Environment Act 2021 includes new provisions requiring larger businesses to undertake due diligence to show that they have taken proportionate action to ensure they are not using ‘forest risk commodities’ in their supply chains.

The detail of the proposed requirements will be implemented through secondary legislation and the Department for Environment, Food & Rural Affairs (Defra) has launched a further consultation on the implementation of the due diligence provisions to help design the secondary legislation and accompanying guidance.

See: LNB News 03/12/2021.

The consultation on implementation of the provisions closes on 11 March 2022.

Human rights, environmental and good governance due diligence

On 10 March 2021, the European Parliament approved an outline proposal for the EU Directive on Mandatory Human Rights, Environmental and Good Governance Due Diligence. If adopted, the proposals would require companies within scope to conduct environmental and human rights due diligence along their full value chain or face concrete fines, sanctions and/or civil liability.

See News Analysis: EU mandatory environmental and human rights due diligence law—what lawyers need to know.

2022