As the name suggests, the Small Business, Enterprise and Employment Bill (“the Bill”) is very broad in scope, covering matters such as finance, childcare, education and employment. The Bill is currently going through its final stages in the House of Lords and is due to receive Royal Assent before the General Election in May 2015. Although the Bill largely seeks to encourage small businesses to innovate, grow and compete, its passing will affect the education sector. The childcare and schools, education evaluation, employment law and company law measures in the Bill will particularly affect the way some education establishments currently operate.
Childcare and schools...
The Bill will introduce measures to allow information supplied by HMRC and the Department for Work and Pensions to be shared for the purposes of providing funding related to the early education entitlement (which includes the Early Years Pupil Premium). The Bill will make it easier for schools to make provision for two year old children by removing the requirement to register separately with Ofsted for such provision (as has already been done for three and four year old provision). Additionally, multiple premises will be able to benefit from single registration for the provision of childcare.
The Bill contains measures intended to ensure new and improved information on learning outcomes. The government aims to achieve this by tracking students through education into the labour market and then sharing, at student level, information on the destinations of former students with colleges in England and Wales. Broadening the range of information available to parents and students will provide evidence of which schools and colleges best enable their students to progress to positive destinations and sustainable employment and will also enable the institutions to identify areas in which they need to improve.
Public sector exit payments...
Several employment law measures will be introduced by the Bill, one of which relates to public sector exit payments. The Bill will provide powers for Her Majesty’s Treasury to make regulations which will ensure a robust legal framework for the recovery of exit payments to high earners leaving a public sector role and then returning to a similar role within the public sector after a short period of time.
As companies limited by guarantee, academies will also be affected by company law changes. The Bill introduces the following changes.
This measure will make individuals involved in companies transparent and more accountable by introducing a new requirement for all UK companies to keep available for inspection a register of people with significant control over the company (the “PSC Register”). A person with significant control (“PSC”) is any person who exercises control over the company and its management, defined as any individual who has an interest of more than 25% of the shares or voting rights or who otherwise exercises control over the management. Companies will be required to provide an initial statement about their PSCs to Companies House on incorporation and must update this information at least once every 12 months. This measure will also prohibit the use of one company as a director for another company (“corporate directors”) with limited exceptions. The main objective of these provisions is to prevent corrupt individuals hiding behind secret companies.
The Bill will simplify filing requirements for companies. Examples of how it seeks to achieve this include simplifying the filing requirements when directors are appointed, allowing companies to confirm that their basic company information is correct, replacing the need to file an annual return at a specific time each year, and allowing companies the option to update the public register rather than keeping certain company registers.
This measure aims to create a more simplified system for reporting director misconduct and provides for more compensation for creditors who have suffered from director misconduct. It will also provide greater transparency as to what director misconduct can lead to disqualification. There is also to be a wider list of factors to be considered when looking at whether an individual is unfit to be a director, for example, track record and misconduct overseas. These provisions are intended to give greater confidence that directors who are guilty of misconduct will be barred from acting as a director.
Directors’ Duties applying to Shadow Directors
Shadow directors will be subject to the general duties that apply to directors “where they are capable of so complying.” The extent to which these duties will apply to shadow directors will only become clear once regulations have been published, but potentially shadow directors could be sued by the company if they breach the relevant directors’ duties. This will be of interest to academy sponsors.