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 2021. While some are set in stone, others are more speculative at this stage or subject to the parliamentary timetable. It was last updated on 8 November 2021.

Category Details Expected or actual date

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 the 2021–2022 year.

Economic crime levy for MLR 2017 regulated firms

On 21 September 2021, HM Treasury announced that AML regulated entities with over £10.2m in UK revenue will be charged an economic crime levy, commencing the tax year 2022/2023. The first set of levy payments be made in the tax year 2023/24, ie 1 April 2023 to 31 March 2024.

The government also published a policy paper introducing draft legislation. This was subject to a technical consultation ahead of inclusion in the 2021-22 Finance Bill. See LNB News 22/9/2021 48.

The consultation closed on 15 October 2021.

Anti-money laundering (AML) and counter-terrorist financing

The government issued a consultation on further amendments to the MLR 2017. These are required to ensure the UK continues to meet international standards set by the Financial Action Task Force, while also strengthening and ensuring clarity on how the AML regime operates. See: LNB News 22/07/2021 28 and LNB News 22/07/2021 106.

The government 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.

Both consultations closed on 14 October 2021

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 and no new information is available on whether the register will be introduced at this time.

Category Details Expected or actual date

Customs and Excise Border Procedures (Miscellaneous Amendments) (EU Exit) Regulations 2021, SI 2021/830

These Regulations amend eight pieces of UK secondary legislation in relation to customs.

See: LNB News 13/07/2021 59.

Regulations come fully into force 1 January 2022

Directive on consumer contracts for the supply of digital content

Directive (EU) 2019/770 seeks to ensure consumer rules and protections also apply to digital content and digital services.

It sets out rules on conformity of digital content, remedies for nonconformity or a failure to supply and how to exercise these remedies, and also deals with modification of digital content or a digital service.

See Practice Note: The EU Digital Content Directive.

Member States must adopt the Directive and publish the measures necessary to comply with the Directive by 1 July 2021, and must apply those measures from 1 January 2022.

New powers for CMA

The Competition and Markets Authority (CMA) has responded to the government’s proposals to enhance its 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

Economic duress

Paki-stan International Airline Corporation v Times Travel (UK) Ltd, [2021] UKSC 40

The Supreme Court has considered and comprehensively stated the law on lawful act economic duress in the context of a dispute between an airline and a travel agent.

See News Analysis: Supreme Court clarifies the law on lawful act economic duress (Pakistan International Airline Corporation v Times Travel (UK) Ltd).

Judgment: 18 August 2021

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 CA 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.

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 has 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 LNB News 03/11/2021 46.

The deadline for comments is 7 January 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 has opened 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.

Deadline for FTSE 350 companies to submit their gender diversity data to the FTSE Women Leaders Review.

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.

Consultation closed 21 October 2021

Use of browser-generated information without consent

In Lloyd v Google LLC [2019] EWCA Civ 1599, [2020] QB 747, the Court of Appeal held that in principle damages were capable of being awarded for loss of control of data pursuant to UK data protection law, without the claimant being able to prove pecuniary loss or even specific distress (the distress in theory being established by the fact of a loss of control of personal data (even where unknown at the time of the loss)).

Thus, in principle, the loss of control of the data was held to be sufficient to ground a claim for non-pecuniary damages.

Appealed to Supreme Court and heard on 28 April 2021

Judgment expected 10 November 2021

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.

Consultation closes on 19 November 2021.

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

The Surveillance Camera Commissioner has proposed draft changes to its surveillance camera code of practice. This will be the first revision of the code since it was introduced in 2013.

The consultation closed on 8 September 2021.

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 closes on 28 November 2021.

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

Individual rights arising from trade union membership

Kostal UK v Dunkley A2/2018/0108, [2019] EWCA Civ 1009, UKSC 2019/0153

Whether an employer's attempt to bypass a recognised trade union by negotiating directly with individual workers 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 EAT held that the ET had not erred in finding that it did. The Court of Appeal allowed the employer’s appeal and held that it did not amount to unlawful inducement and dismissed the claims.

The Supreme Court allowed the workers’ appeal.

See News Analysis: Unionised workforces—when is a direct offer to workers lawful? (Kostal UK Ltd v Dunkley and others).

Supreme Court reserved judgment handed down on 27 October 2021.

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 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 s 230(3)(b) of the ERA 1996 in circumstances where he 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 or 25 November 2021.

Agency workers

Kocur v Angard Staffing Solutions, A2/2021/0413

Various issues on aspects of agency workers’ rights under the AWR 2010 including the scope of the right under reg 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 19 or 20 January 2022.

Ownership of copyright in software created by employee

Penhallurick v MD5 Ltd, A3/2021/0936

Whether the High Court was correct to hold (see [2021] EWHC 293 (IPEC)) that the employer was the owner of copyright in software created by an employee, despite being created predominantly at home outside of working hours and the employee having identified himself as the author.

Court of Appeal hearing on 2–3 November 2021.

Age discrimination

Pitcher v Oxford University (conjoined with Ewart v Oxford University), UKEAT/0083/20 (conjoined with UKEAT/0032/20)

Both cases challenge the University's retirement policy of 67. In both cases, the ET held the policy did have legitimate aims. In Pitcher the ET agreed with the University that it was a proportionate means of achieving those aims, but in Ewart the ET rejected the University's arguments to find it was not proportionate. The EAT dismissed both appeals.

See News Analysis: The evidential burden to show justification in discrimination claims (Pitcher v University of Oxford, University of Oxford v Ewart).

Hearing on 29 June 2021 to 1 July 2021. Judgment handed down by the EAT on 27 September 2021.

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 WTR 1998, 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)).

Application for permission to appeal lodged on 23 October 2019. Supreme Court granted permission on the papers on 19 June 2020. Hearing on 9 November 2021.

Working time

BX v Unitatea administrativ-teritorială D, C-909/19

Whether time spent on compulsory vocational training at premises away from the workplace without performing any services for the employer, counts as working time.

The CJEU held that Article 2(1) of the Working Time Directive must be interpreted that it does count, see judgment here.

Romanian reference lodged on 11 December 2019. CJEU judgment handed down on 28 October 2021.

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 (see below), 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.

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 has now been introduced.

See: LNB News 28/06/2021 24.

Second reading of the Non-Disclosure Agreements Bill expected in December 2021.

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 closes 1 December 2021.

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.

Whistleblowing

The EU Whistleblowing Directive (EU) 2019/1937 entered into force in December 2019. Member States must implement the Directive by 17 December 2021.

The UK will not transpose the Directive into UK law. The UK government has confirmed it will review the whistleblowing framework and, as part of this, it will look at the protections offered in other countries.

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

In August 2020, the government launched a consultation on proposals to introduce new legislation designed to prevent forests and other important natural areas from being illegally converted into agricultural land. It proposes to make it illegal for larger businesses to use so-called ‘forest risk commodities’ that have not been produced in accordance with relevant local laws, and would require larger businesses to undertake due diligence to show that they have taken proportionate action to ensure this is the case.

Following the consultation, the government has introduced an amendment to the Environment Bill placing new responsibilities on larger businesses using forest risk commodities in their supply chains. The detail of the proposed requirements will be implemented through secondary legislation, which will be subject to further consultation.

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