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GDPR will come into force on 25th May 2018. It’s a big change but it builds on the existing UK data protection regime. So, if you have the basics such as a data protection policy in place, then you will be building from solid foundations. Here are 10 quick tips for HR managers on preparing for the GDPR.

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City Giving Day 2017 – BDBF Supports Smart Works

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Tuesday 26 September 2017 is City Giving Day, and BDBF will be supporting Smart Works.

Smart Works is a UK charity dedicated to supporting unemployed women back into the workplace. This means providing women with a free styling session and an interview outfit they pick out with the support of stylists. Each client selects a full head-to-toe outfit including shoes, accessories and jewellery to ensure that they look and feel confident and professional. Women get to keep the outfit so that they will always be prepared with something to wear in a professional setting for an interview or employment opportunity.

Following the styling session, Smart Works offers each client specialised coaching from experienced executives and HR professionals on interview techniques and presentation skills. This training teaches women what to expect at an interview and the best ways to highlight their strengths to better their chances of employment.

Once women have secured jobs, they are invited back for a second dressing appointment with Smart Works’ stylists to choose five more pieces of workwear that will ensure their wardrobe is professional and suited to their new job. They are also given the opportunity to join a network of other women to share the knowledge and experience they have gained and motivate each other to continue their personal and professional development.

As a firm which deals with people who have lost their jobs on a daily basis, BDBF is proud to support Smart Works’ initiatives to give women a better chance of re-entering the job market.

In order to support the cause, BDBF will be taking donations on City Giving Day of women’s office wear, outer wear, shoes, accessories, jewellery and cosmetics to pass to Smart Works. The collection will take place during business hours at BDBF’s office at Monument Place.

For those who are unable to donate, Smart Works welcomes cash donations to support their work. For more information on ways to donate, and how Smart Works utilises financial donations, please visit:

Smart Works – Get Involved – Donate Money

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Parentlife to Citylife: how to manage the transition

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As a working mum, I know how challenging it can be to return to work after a period at home with your baby. As an employment lawyer, I also know the mistakes made by employees and employers as they try to adjust to this new reality. With uptake of shared parental leave slowly gaining pace, this is a subject that now applies to men and women. Here are my tips for a successful return:

• Start talking to your employer as early as possible (without eating into your leave too much: those last months are precious). • Start talking to your employer as early as possible (without eating into your leave too much: those last months are precious).
• In advance of any discussions with your boss, decide what working pattern you want. Think about the likely objections and be ready to address them. Think creatively: part-time, from home, term-time only, as part of a job share. If you have a partner, discuss with them who is better-placed to ask for flexible working. Be prepared to be flexible but know where your red lines are (i.e. what won’t work for your family). If you are asked to submit a formal flexible working request, make it as thorough as possible, addressing the potential impact on your employer.
• Be aware of your legal rights: for example, your employer is obliged to deal with any flexible working request reasonably and give a decision within 3 months (if your request is refused you may have a sex discrimination claim); it is unlawful to treat you worse than other employees because you have been on leave (e.g. not giving you the best clients or giving you a lower appraisal rating than you deserve); if your colleagues received a pay rise while you were off, you are also entitled to one; your rights regarding your job vary depending upon how long you were off but, in short, your employer needs a very good explanation if it tries to say your old job isn’t available; and your employer must provide suitable facilities for breastfeeding (the toilet does not count). Awareness of your rights is vital, but don’t start quoting those rights too early: it’s always better to try to resolve things informally in the first instance.
• Be prepared for the first month or so to feel very alien. You will likely feel a whirlwind of emotions including guilt (about leaving your child), anxiety (about your ability to do your job and/or how your child is coping), relief (about getting some sense of yourself back), stress (about how little time you have) and tiredness (because you’re a parent!). But take comfort from the fact that so many have successfully managed the transition before you: it does get easier.
• Go back with a positive attitude and do what you can from your side to make it work. Even with the best employer, it will be a challenging time so be wary of blaming your employer for everything. Instead, focus on reminding them what an asset you are.
• While you are at work, enjoy having hot coffee and meeting colleagues and contacts for lunch.  On your break, nip to the local department store for some uninterrupted shopping time!
• Don’t get into bad habits like weekend working or working on your day off, unless it’s absolutely necessary. Once colleagues and clients know you are contactable, the amount of contact will increase and inevitably eat into your family time.
• Keep any new working arrangement under review. If it isn’t working (e.g. you’re working full time hours for a part time salary), say so.
• If you feel that things are not the same on your return, try and work out whether that’s for personal reasons (i.e. you’d rather be at home with your child) or whether it’s related to how you’re being treated. Keep a record of any poor treatment: what was said, by whom and when. Talk to your manager or HR in the first instance. If there is no improvement, consider taking legal advice, contacting ACAS or raising a grievance.
• Don’t do anything rash like resigning without fully considering the financial and reputational implications, and, more personally, whether you will be happy without a job or able to find another one which accommodates your need for flexibility. Constructive dismissal is a difficult claim for an employee to win and it usually better to try and negotiate an exit while you are still employed.
• Also bear in mind whether any contractual pay that you received during your leave will be reclaimed if you resign.

It’s reasonable for your boss to expect you to get back to business fairly quickly but, if he wants to successfully integrate you back into the business, he also needs to appreciate that your needs and priorities are likely to have changed.  Positive attitudes on both sides and keeping the lines of communication open are crucial to a successful return.

Ruth Gamble, Partner at BDBF

A version of this article was first published on European CEO on 5 September 2017

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SMCR extension: now is the time for firms to prepare

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Following the FCA’s publication of its proposed extension of the Senior Managers & Certification Regime (SMCR) to include all financial services firms from 2018 (read more here), and the recent report highlighting the increase in FCA fines against individuals (read more here), now is the time for affected firms to take active steps in preparation.

The SMCR pervades many aspects of the employment relationship, from recruitment, to training, management, promotion and, if relevant, disciplinary and dismissal. Firms will need to:

• Produce and agree statements of responsibility;
• Review their employment contracts:
  • checking the terms allow them to impose necessary responsibilities on senior managers;
  • checking that they make the appropriate references to the need to comply with regulatory requirements under sanction of disciplinary action/dismissal; and
  • add requirements for advance FCA approval to be obtained and maintained in the case of senior managers, and for certification to be obtained and maintained in the case of those in certification functions;
• Give training to employees on the FCA’s Conduct Rules that will apply on an individual basis and ensure that staff handbook and compliance manuals reflect them. At a high level, the rules are:
  • 1: to act with integrity;
  • 2: to act with due skill care and diligence;
  • 3: to be open and cooperative with the FCA, PRA and other regulators;
  • 4: to pay due regard to the interests of customers and treat them fairly; and
  • 5: to observe proper standards of market conduct;
• Give training on the additional Conduct Rules that will apply to the employees the firm designates as senior managers;
• Consider offering those staff who are earmarked for senior manager roles the opportunity to obtain independent legal advice on their statements of responsibility and additional duties;
• Adapt their appraisal and disciplinary processes to ensure that any breaches of the Conduct Rules are identified, fed into the certification process, and where necessary are notified;
• Implement processes and procedures for the annual assessment and certification of fitness and propriety of employees carrying out certification functions;
• In their processes for giving references to new employers, build in compliance with the obligations to give regulatory references, and information relating to matters concerning the individual’s fitness and propriety; and
• Consider the application and consequences of the new rules when settlement agreements are being entered into with affected staff, particularly if there have been conduct or capability issues.

If you need help with any of the issues referenced in this article, please contact Nick.

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Latest statistics show impact of SMCR

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Following the FCA’s recent publication of its proposals to extend the Senior Managers & Certification Regime (SMCR) to all financial services firms from 2018 (read more here), a report issued by consultants Duff & Phelps has highlighted a rapid increase in the proportion of its fines that are against individuals.

The SMCR has applied to banks and PRA-designated investment firms since March 2016. Statistics compiled for the report demonstrate that in 2016 almost two thirds of the enforcement notices issued by the FCA were against regulated individuals rather than firms. This is up from just 37% in 2014.

This increase can be attributed to the effects of the implementation of the SMCR, which has as its core aim an increased focus on the conduct of individuals and holding them to account. With the pending extension of the SMCR to all financial services firms regulated by the FCA, these trends in respect of individuals are very likely to continue in the coming years.

However, firms that will be affected by the regime’s extension would be well-advised to take note of comments made earlier this year by the FCA’s Director of Enforcement and Market Oversight, Mark Steward, in a speech delivered at New York University. He noted that, although the advent of the SMCR marks an important and decisive shift in tackling issues of individual’s misconduct, it does not represent a ‘free pass’ to the firms themselves, who may still be the subject of heavy financial penalties from the regulator in the event of breaches in compliance.

Nick Wilcox is a Senior Associate at BDBF LLP and specialist employment lawyer for financial services and insurance sector clients. Contact NickWilcox@bdbf.co.uk for confidential advice.

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FCA consults on extending Senior Managers and Certification Regime

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The Financial Conduct Authority has finally published its proposals for the extension of the Senior Managers and Certification Regime (or “SMCR”) that currently applies only in banks and other deposit takers to most FCA regulated entities who are not already covered by it.

There is no firm implementation date for the new rules but this is still expected to be in 2018. The proposals remain subject to further consultation and change until 3 November 2017 (and responses to the consultation can be submitted via the link below before then). Nevertheless, the current proposals do give a clearer flavour of how the rules will be rolled out and it would be a brave employer who waits for the final version to start the significant preparations likely to be needed.

Obviously this is a compliance-led issue that will have wide-ranging affect on in-scope business. However, several of the key changes fall within the employment arena and will impact on HR processes. These will take some time to put in place and we recommend that employers start making preparations now if they have not already done so.

Key points to note are that all firms caught by the revised rules (other than limited scope firms) will have to:

• introduce a responsibility map showing who in the company is responsible for various key areas (including certain mandatory responsibilities that must be allocated to someone);
• introduce individual statements of responsibility for Senior Managers, who will be personally liable if they fail to take reasonable steps to prevent or stop an FCA breach in the areas of the business for which they are responsible;
• annually certify a broad category of staff in “certification functions” as “fit and proper”;
• consider whether any performance or misconduct issues that arise breach any of the applicable FCA conduct rules (a sub-set of which will be applied to a much broader category of staff than currently), which cover matters such as the individual’s integrity, and whether they meet standards of due skill, care and diligence, and of market conduct. If the conduct rules are breached, this may require a report to the FCA, and for those in certified functions, may affect the ability of the firm to continue to certify that person as fit and proper and therefore affect the firm’s ability to continue to employ them;
• tell their staff that the conduct rules apply to them and train them on those rules; and
• comply with the enhanced rules on regulatory references that came into effect for banks earlier this year. Where for example there has been a breach by an individual of the conduct rules and disciplinary action has been taken, the firm will have to notify a prospective employer of the individual of that fact and provide details in the regulatory reference.

Additional “enhanced” requirements will also apply to a small sub-set of firms.

On the employment side specifically, HR teams in affected businesses need to start thinking about:

• producing and agreeing (or imposing) statements of responsibility;
• checking whether contracts of employment allow the imposition of necessary responsibilities on current Senior Managers (and changing templates to ensure that they do so in the future) – as one might expect, our experience is that statements of responsibility are hotly negotiated;
• ensuring employment contracts make appropriate references to the need to comply with regulatory requirements under sanction of dismissal, to the requirement for advance FCA approval being obtained and maintained for Senior Managers and for certification being obtained and maintained for Certification Functions;
• including provisions relating to the expanded conduct rules into compliance manuals/staff handbooks;
• setting up processes to annually assess and certify staff in Certification Functions;
• amending processes for appraisals/disciplinary issues to ensure that FCA conduct rules breaches are identified and, where necessary, notified as well as being fed into the certification process; and
• considering application of the new rules when entering into settlement agreements with affected staff, particularly when they have been disciplined for a conduct or capability reason.

The consultation paper can be accessed here.

If you need help with any of the issues referenced in this article, please contact Nick.

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Ruth Gamble comments on the implications of the BBC’s gender pay gap in the Evening Standard, Huffington Post, CNBC and the Guardian

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On 19 July 2017, the BBC for the first time in its history has published a list of its highest earners sorted by pay brackets. The list shows all presenters, journalists and television personalities to whom it pays more than £150,000 per annum.

The list, which published earnings for 96 people in £50,000 brackets, contained only 34 women. The highest 10 earners contained only one woman – Claudia Winkleman.

This move follows the coming into force of The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (the Gender Pay Gap Regulations) in 6 April 2017. According to the Gender Pay Gap Regulations, employers with over 250 employees have a year in which to collate information regarding the pay of its staff, with reports on gender pay disparities due on 6 April 2018.

Ruth Gamble, a BDBF founding Partner, has spoken to the Evening Standard, Huffington Post, CNBC and the Guardian with her thoughts on the BBC’s data and what the implications of it may be under UK employment law.

To read more about the BBC’s data and see Ruth’s comments, please click the following links:

• Evening Standard
• Huffington Post
• CNBC
• The Guardian

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The Court of Appeal clarifies the “public interest test” for whistleblowing claims.

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The Court of Appeal has, this morning, clarified that a disclosure does not need to be in the interest of the public at large in order to attract whistleblower protection. Despite the inclusion of a “public interest test” in whistleblowing legislation, a disclosure can concern only a small group of people, although that the character of the disclosure is relevant.

The Claimant, Mr Nurmohamed, was employed by Chestertons as a senior manager. He made disclosures regarding manipulation of the company’s accounts, which were modified in order to overstate costs and liabilities resulting in lower commission payments for around 100 employees (including himself). Mr Nurmohamed was subsequently dismissed and brought a claim for unfair dismissal against Chestertons.

It was submitted by Chestertons that, as the disclosure only concerned a class of employees (100 employees), it did not satisfy the ‘public interest’ requirement. The EAT had dismissed this and held that disclosure is not required to be of interest to the public at large. A further case, Underwood v Wincanton, widened the definition of a protected disclosure even further by holding that a disclosure affecting just four workers satisfied the public interest test.

Chestertons subsequently appealed this to the Court of Appeal who this morning handed down their judgment in favour of Mr Nurmohamed. Disclosures about a breach of a worker’s own contract can still amount to a whistleblowing disclosure, but factors that will help the worker will be:

1. The number of individuals whose interests the disclosure serves;
2. The importance of the matter being disclosed;
3. Whether the wrongdoing being complained of is deliberate, rather than inadvertent;
   and
4. The prominence of the wrongdoer (such a disclosure about an NHS payroll error affecting thousands of staff would be more likely to attract protection that a complaint about a payroll error in a small, private company).

While Chestertons’ appeal foundered before the Court of Appeal, the judgment is not quite the blank cheque for workers as it may appear. If a matter complained of affects only a very small number of individuals, the Court of Appeal suggests that the would-be whistleblower would need to show one or more of:

• the matter they are complaining of being very important;
• the wrongdoing being deliberate rather than inadvertent; and
• the wrongdoer being a prominent individual or corporate entity.

Nevertheless, the decision does dilute significantly the impact of the inclusion of the “public interest” requirement into whistleblower laws which were intended to prevent claims premised on breaches of an employee’s own rights. The practical point for employers is to carefully consider whether complaints by employees qualify for protection based on these new court guideless and, crucially, to ensure that employment decisions for all employees are based on rational and lawful criteria, not as retaliation.

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Age discrimination: silver quotas

Could the ‘silver quota’ be the answer to improving employment rates in the over 50s? In this article for PLC Magazine, BDBF Partner Polly Rodway considers how such measures sit with UK discrimination law.

This article first appeared in the July 2017 issue of PLC Magazine: http://uk.practicallaw.com/resources/uk-publications/plc-magazine

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National Employee Ownership Day – 2017

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Cerys Williams, Employment Partner at BDBF LLP, specialising in advising businesses on all aspects of employment law speaks to Liz Hunter, Head of Share Schemes at Mazars LLP about the key benefits of Employee Ownership.

What is National Employee Ownership Day?

30 June is National Employee Ownership Day in the UK this year.

The purpose of EO Day is to highlight the benefits of employee ownership to business, whether this is direct ownership, using share plans, or indirect ownership using an employee ownership trust and following the well known John Lewis model; or a hybrid approach using a combination of direct and indirect ownership.

Interest in the wider spectrum of employee ownership possibilities has broadened, especially since the Finance Bill 2014 introduced a number of new tax reliefs to support wider employee ownership. It is these more recent tax reliefs that now make this a particularly attractive consideration when thinking about business ownership succession.

What are the Government’s new tax relief measures?

• a capital gains tax relief on the disposal of a controlling interest of shares into a trust, where a qualifying trust is used as a vehicle for indirect employee ownership (an uncapped tax-free gain on disposal – particularly attractive to anyone who has already exhausted their £10 m lifetime limit for entrepreneur’s relief).
• the annual limits for awards under a Share Incentive Plan (SIP) are £3,600 for Free Shares and £1,800 for Partnership Shares – this is a particularly tax efficient all employee plan suitable for larger employers.
• capital gains tax rates are low (20% or 10%) and with annual exemption of £11,300 but gains on matured SIP shares are tax-free.
  transfers of shares and other assets to qualifying employee ownership trusts will also be exempt from inheritance tax (IHT) providing certain conditions are met.
• an income tax exemption on up to £3,600 per annum in bonuses or equivalent payments for employees of companies that are indirectly employee owned through a qualifying trust. (Employer and employee National Insurance still applies.)
• for those pursuing direct employee ownership, where employees can become shareholders in their employer corporate group, the current dividend tax regime means that employees holding shares can receive up to £5,000 in dividends per annum tax-free. This dividend allowance is applied to a shareholders aggregated dividend income across their entire shareholding portfolio.

Why should a business consider employee ownership now?

With the economic climate still challenging and auto-enrolment, apprenticeship levy, national minimum, living wage and other costs all putting a squeeze on an employer’s purse, many companies cannot afford to pay their employees much more in cash. FDs are looking to preserve or enhance cash flow and do not wish to incur additional pay outlay, especially when you add on the on-costs of NICs and other benefits. Instead, companies are increasingly looking to provide rewards in the form of shares, because equity pay can be designed to give corporate tax deductions, no income tax or NICs and no cash flow out of the business. If profits go down, pay-outs from equity awards could be cut back too, creating a true alignment of pay for performance.

For some, an external exit and employee participation under a share plan in such sale proceeds is a commercial goal. Yet even, or perhaps especially for those business owners who might prefer independence to a traditional trade sale and who wish to see their venture continue sustainably over the longer term, an employee ownership trust can provide a framework for efficient succession handover, secure in the knowledge that there is appropriate stewardship in place.

Is this for UK based companies and employees only?

No, we can advise internationally on the benefits, compliance issues and tax implications across jurisdictions.

What are the employment law issues with international plans?

One of the issues that BDBF has encountered in practice is that international businesses sometimes roll out share plans globally which are governed by the law of their corporate HQ location and which say that disputes must be resolved in that country. For example, a US company might say Delaware law governs the contracts and that disputes must be resolved in the Delaware courts.

This approach conflicts with European laws that say that EU employees can sue – and can only be sued – in the country where they live.

This means that local laws will be brought into play, with unpredictable consequences. A common issue this causes is that post-termination restraints in the plan will be unenforceable because they don’t comply with the laws where the employee lives, even though they work under the law stated to govern the plan.

Care must also be taken to ensure that plans don’t breach local laws on discrimination, for example in respect of the way that vesting or retirement provisions work.

Where’s the evidence it works?

For those of you who would like to see the empirical evidence that employee ownership improves corporate performance, have a look at the employee ownership index.

Free consultation offer and contact Mazars or BDBF to find out more

To celebrate EO Day Mazars are offering a free initial consultation call or meeting to any business looking to discuss matters further.

A final reminder about share plan care and maintenance, and return filing deadlines

Time is running out for finalising all share plan and employment-related securities annual compliance returns. These usually need to be filed online with HMRC by 6 July however, due to an HMRC online system outage in April and May the deadline for 2016/17 returns has now been extended to 24 August 2017.

HMRC are also operating an aggressive employer compliance initiative at present with on-site visits to employers to check employment tax and share plan records. If you wish support with such a review or wish to proactively health-check, update or optimise your existing arrangements then please contact Mazars.

For the experts in bespoke planning, structuring, implementation and compliance of share schemes contact: Liz Hunter, Head of Share Schemes, Mazars LLP Email: Liz.hunter@mazars.co.uk

@Mazars_UK / @LizHunterReward Get Mazars’ latest comments on tax matters on our blogs

For the experts in all employment and HR related matters for businesses contact Email: TomMcLaughlin@bdbf.co.uk

@BDBF_LLP Get BDBF’s latest employment law news and comments

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Are employers’ bans on headscarves at work discriminatory?

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An employer’s ban on wearing religious symbols at work – headscarves, in particular – may or may not be directly discriminatory depending on the reason for the ban.

The European Court of Justice determined two cases where female employees had been prohibited from wearing their headscarves in the workplace. In the first, Achbita, the employer (G4S in Belgium) had a general policy of religious neutrality at work. Ms Achbita refused to comply with this rule, and was dismissed as a result. In the second, Bougnaoui, the French employer asked Ms Bougnaoui to remove her headscarf whilst at work after a customer complained about it. Ms Bougnaoui was dismissed following her refusal. Both women claimed to have been discriminated against on grounds of their religion.

The Court held that the general ban on religious symbols in Ms Achbita’s case was not directly discriminatory, in that it applied to all staff equally, but could in principle be indirectly discriminatory. What it came down to is whether the ban was justified. The steer from the ECJ was that the ban on all religious symbols may well be justified.

On the other hand, the employer’s decision to dismiss Ms Bougnaoui at the behest of its customer was directly discriminatory. A customer’s instruction not to wear a headscarf could not be considered a genuine occupational requirement, as it was subjective to that customer rather than objectively being a demand of the role in context.

Achbita v G4S Secure Solutions NV (Case C-157/15) & Bougnaoui v Micropole SA (Case C-188/15)

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Contractors may be covered by Gender Pay Gap reporting regulations

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The Gender Pay Gap reporting regulations are now in force, and guidance suggests that contractors’ earnings may need to be covered in the reports.

An employers’ obligation to report on the gender pay gap has been in existence since 6 April 2017, and Acas and the Government Equalities Office have now produced guidance to clarify the extent of that duty.

Of note within that guidance is the additional information on the treatment of casual workers and contractors. It has clarified that those who receive no pay during the relevant reporting period should be excluded from the pay gap calculations, though they should be part of the headcount.

In respect of self-employed contractors, where they are working under a contract to personally do work, the guidance says they should be included in both the headcount and the calculations insofar as relevant pay data is available. In some instances, a contractor’s invoices or schedules of fees may yield that data.

It remains the case that there is no penalty for failure to comply with the Regulations.

Acas and the Government Equalities Office: Managing gender pay reporting

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