1 October 2007 Working Time (Amendment) Regulations 2007
These Regulations implement the Government's manifesto commitment to increase the statutory minimum holiday entitlement from 4 weeks (20 days for a full-time worker) to 5.6 weeks (28 days). Although the additional days are intended to represent the 8 bank holidays, there is nothing in the Regulations stipulating that statutory leave must be taken on bank holidays. However, if an employer allows its employees to take off bank holidays as paid leave, these will count towards the statutory entitlement to annual leave.
The Regulations add a new regulation 13A to the Working Time Regulations 1998 to to introduce this "additional annual leave". Regulation 13A(2) provides that workers become eligible for the first additional 0.8 weeks (equivalent to 4 days for a full-time worker) from 1 October 2007 and the second 0.8 weeks (to make a total of 8 additional days) from 1st April 2009. The aggregate entitlement is capped at 28 days' annual leave. Leave may not be replaced by a payment in lieu except where the employment is terminated or for an initial transitional phase until 1 April 2009. Regulation 13A(7) provides for the possibility of limited carry over of the additional annual leave in that a relevant agreement may provide for leave to be carried forward into the leave year immediately following the leave year in respect of which the entitlement is due.
A new regulation 26A is added to the Working Time Regulations 1998 to provide that regulation 13A shall not apply to a worker whose employer already provides each worker employed by him with an entitlement to additional annual leave of 1.6 weeks or 8 days (whichever is the lesser), as at 1 October 2007, by virtue of a relevant agreement that satisfies certain specified conditions.
A copy of the Regulations may be found here: http://www.opsi.gov.uk/si/si2007/uksi_20072079_en.pdf
1 October 2007 Companies Act 2006
Most of Part 10 of the Companies Act 2006 will be brought into force from 1 October 2007. The new provisions include the following:
- Definition of a service contract - Part 10 of the Companies Act 2006 contains, for the first time, a definition of a director's service contract which will include contracts of service, contracts for services and non-executive letters of appointment. The definition will also include an arrangement where a director's services are provided through a personal services company (s.227 CA 2006). This broader definition is relevant to, for example, the requirement to obtain shareholder approval for long-term service contracts which is discussed in more detail below.
- The general directors' duties - Four of the new codified directors' duties will come into force on 1 October 2007: the duty to act within powers, the duty to promote the success of the company for the benefit of its members, the duty to exercise independent judgment and the duty to exercise reasonable care, skill and diligence. The provisions relating to directors' conflict of interest duties, the duty not to accept benefits from third parties and the duty to declare interests in proposed transactions or arrangements will come into force on 1 October 2008.
- Service contracts - New provisions on the requirement for members' approval in relation to directors' service contracts which have a guaranteed term of longer than two years will also come into force on 1 October 2007 (s.188 CA 2006). Under the Companies Act 1985, shareholder approval was only required for contracts of more than five years. There is also a new statutory requirement for a company to keep copies of every director's service contract (or where there is no written contract, a memorandum of the terms) open to inspection by shareholders without charge (s.228 CA 2006). This obligation applies regardless of the length of the service contract and whether or not it is terminable within 12 months. In a significant new development, members will also have the right to request copies of directors' service contracts (or, if not in writing, a memorandum of its terms) upon payment of a prescribed fee (s.229 CA 2006).
- Substantial property transactions - New provisions on the requirement for members' approval on substantial property transactions will come into force on 1 October 2007 (s.190 CA 2006).
- Loans - New provisions on the circumstances in which shareholder approval will be required in relation to loans, quasi-loans and credit transactions will also come into force on 1 October 2007 (ss. 197 - 214)
- Payments for loss of office - Shareholder approval is required for payments to directors for loss of office or in connection with a takeover or transfer of company property unless one of the specified exemptions applies (ss.215 - 222 CA 2006). There is a new broader definition of what constitutes a payment for loss of office which includes compensation for (i) loss of office, (ii) loss of any other office or employment in connection with the management of the affairs of the company or of any subsidiary undertaking, (iii) consideration for or in connection with retirement from his office as a director or (iv) consideration for or in connection with his retirement from any other office or employment in connection with the management of the affairs of the company or of any subsidiary company. Shareholder approval is not required for a payment made in good faith in one of the following situations: (a) discharge of an existing legal obligation; (b) by way of damages for breach of such an obligation; (c) by way of settlement or compromise of any claim arising in connection with the termination of a person's office or employment; or (d) by way of pension in respect of past services.The provisions broaden the circumstances in which shareholder approval will be required and close some of the loopholes that existed under the old Companies Act 1985 regime.
- Some of Part 10 delayed until 1 October 2008 - Certain other provisions in Part 10 such as those relating to directors' residential addresses, underage directors and the requirement for all companies to have one natural director will be delayed until 1 October 2008.
Other parts of the Companies Act 2006 coming into force on 1 October 2007 which may be relevant to employment lawyers:
- Derivative actions - Part 11 (Derivative claims and proceedings by members) containing the new statutory procedure for derivative claims, a claim by a shareholder on behalf of a company against a director, will also be brought into force in October 2007. This new regime will allow a broader range of claims to be brought more easily than is presently the case at common law.
- Resolutions and meetings - Part 13 (Resolutions and meetings), and, related to this, sections 485-488 of Part 16 (Audit), will be commenced in October 2007. The law relating to shareholder meetings and resolutions is substantially changed by the 2006 Act. For private companies, there are relaxations, for example a private company will no longer be required to hold an AGM. For quoted companies there are new shareholder rights which will increase their administrative burden in relation to meetings in some respects. There will be various procedural issues for all companies to get to grips with, including a new procedure for written resolutions and new rights and procedures for proxies.
- Business review - Section 417 of Part 15 (Contents of directors' report: business review), including the new enhanced business review requirements for quoted companies, is also being introduced from 1 October 2007. It is expected to apply for financial years beginning on or after 1 October 2007. In addition to the current requirements set out in the Companies Act 1985, quoted companies will be required to disclose the main trends and factors likely to affect the future development, performance or position of the business to the extent necessary for an understanding of the development, performance or position of the business.
1 October 2007 Racial and Religious Hatred Act 2006
The Act will create new criminal offences of stirring up hatred against persons on religious grounds, which will augment the existing offences in the Public Order Act 1986. The new criminal offence will be punishable by a fine or prison sentence of up to seven years. The Racial and Religious Hatred Act 2006 (Commencement No. 1) Order 2007 will bring most of the Act into force on 1 October 2007. See http://www.opsi.gov.uk/acts/acts2006/20060001.htm http://www.opsi.gov.uk/si/si2007/20072490.htm
1 October 2007 Equality Act
A single Commission for Equality and Human Rights will be established which will take over functions from the EOC, DRC and CRE from 1 October 2007.
1 October 2007 National minimum wage – annual increases
The national minimum wage rate will increase to £5.52 an hour for adults, £4.60 for 18-21 year olds and £3.40 for 16 and 17 year olds from 1 October 2007.
Other forthcoming developments
19 October 2007 Temporary and Agency Workers (Prevention of Less Favourable Treatment) Bill – second reading
This private members' bill has been published. It had its first reading on 13 December 2006 and will have its second reading on 19 October 2007 (postponed from 2 March 2007). It prohibits direct (but not indirect) discrimination against agency workers, unless objectively justified, obliges an end-user to inform all agency workers of "any vacancies in the organisation" (not limited to suitable vacancies) and allows for Regulations providing for joint liability between agency worker and end-user. As a private member's bill it may have little chance of reaching the statute books.
19 October 2007 Flexible Working Bill– second reading
This bill will have its Second Reading in the House of Commons.
19 October 2007 Trade Union Rights and Freedoms Bill– second reading
This bill will have its Second Reading in the House of Commons.
24 October 2007 Data protection Act 1998
All remaining provisions of the Data Protection Act 1988 come into force. Any manual filing systems in existence before 24 October 1998 will be required to comply with the Act.
? Regulations to amend the Sex Discrimination Act 1975
The Government was expected to bring in regulations on 1 October 2007 amending the Sex Discrimination Act 1975, following the Equal Opportunity Commission's successful judicial review earlier this year. However, these have been delayed. The Women and Equality Unit has indicated that the the Regulations will be brought in at the earliest opportunity.