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Essential Corporate News – Week ending February 26, 2016

Publication February 26, 2016


Introduction

Welcome to Essential Corporate News, our weekly news service covering the latest developments in the UK corporate world.

Government Equalities Office: Consultation on mandatory gender pay gap reporting

On February 12, 2016 the Government Equalities Office published for consultation a draft version of The Equality Act 2010 (Gender Pay Gap Information) Regulations 2016 (the draft regulations). This follows on from its consultation “Closing the Gender Pay Gap” in July 2015. Employers with 250 or more relevant employees, being employees who ordinarily work in Great Britain and whose contract is governed by UK legislation, will fall within the scope of the new reporting regime.

The draft regulations provide:

  • A definition of pay, which is consistent with the definition used by the Office of National Statistics for the Annual Survey of Hours and Earnings, and includes basic pay, paid leave, maternity pay, sick pay, area allowances, shift premium pay, bonus pay and other pay, as well as a definition of bonus pay.
  • A publication timetable providing employers with about 18 months after commencement of the draft regulations to publish the required information for the first time, which must be published annually thereafter. The information will have to be published within 12 months of April 30, 2017.
  • A requirement for employers to publish both their overall mean and median gender pay gaps, as they are complementary indicators; this will facilitate comparisons with national and international figures as well as giving employers a better understanding of any pay gaps identified. Gender pay gaps will have to be calculated using data from a specific pay period every April from 2017 and an hourly pay rate for each employee will have to be calculated.
  • A requirement for employers to publish the difference between the mean bonus payments paid to men and women and the proportion of male and female employees that received a bonus.
  • A requirement for employers to report on the number of men and women in each quartile of their pay distribution.
  • A written statement confirming that the information is accurate must accompany the required information. The information must be published by employers in English on their website and must remain online for three years. The information must also be uploaded to a government-sponsored website.

The draft regulations, subject to the approval of Parliament, will come into force on October 1, 2016.

Responses to the consultation are requested by March 11, 2016.

(Government Equalities Office, Mandatory Gender Pay Gap Reporting: Government Consultation on Draft Regulations, 12.02.16)

BIS: Government response to consultation on de-regulatory changes to financial reporting requirements for LLPs and Qualifying Partnerships

On February 19, 2016 the Department for Business, Innovation & Skills (BIS) published its response to feedback received on its November 2015 consultation paper on the financial reporting requirements for limited liability partnerships (LLPs) and the creation of a new micro-entity regime for LLPs and for those general partnerships and limited partnerships that are Qualifying Partnerships as defined in the Partnerships (Accounts) Regulations 2008. These are partnerships where each of the members is a limited company, an unlimited company or a Scottish partnership, each of whose members is a limited company.

As a result of the responses received:

  • Legislation will be introduced to maintain the alignment between the accounting and audit regulatory frameworks for LLPs and limited companies as implemented by the Companies, Partnerships and Groups (Accounts and Reports) (No.2) Regulations 2015.
  • New requirements will not be introduced beyond those required to maintain consistency with changes introduced for companies.
  • Early adoption of the revised framework will be provided for by LLPs, Qualifying Partnerships and groups who still have not agreed and filed their 2015 accounts prior to the new regulations coming into force in 2016.
  • A micro-entity regime for LLPs and Qualifying Partnerships will be introduced which will allow LLPs and Qualifying Partnerships that meet the eligibility criteria to access a less burdensome regulatory and administrative regime than small LLPs.
  • LLPs that have or are part of a group where one of its members has transferable securities admitted to trading on a regulated market in an EEA state will continue to be required to file audit reports.

(BIS, Government Response to the Consultation on De-Regulatory Changes for Limited Liability Partnership (LLPS) and Qualifying Partnerships: Simplification of the financial reporting requirements for LLPs - Introduction of a new micro-entity accounting regime for LLPs and Qualifying Partnerships, 19.02.16)

Remuneration Consultants’ Group: Review of voluntary Code of Conduct

In January 2016 the Remuneration Consultants’ Group (the RCG) published a review of the effectiveness and implementation of its voluntary Code of Conduct (the Code), which sets out the role of executive remuneration consultants and describes the professional standards by which they advise their clients. The review covers the RCG and its activities in 2015, a review of the Code and its effectiveness, a summary of the main consultation survey for the review of the Code and a survey of consultants on the effectiveness of the Code.

The RCG concludes that overall the Code works well in its current form and very few changes were suggested. Respondents found the Code most helpful in providing reassurance that their adviser is a member of the RCG and is adhering to the guidelines provided in the Code. The majority of participants also agreed that the Code is helpful in establishing working relationships with their advisers. The key themes that came from interviews with participants were:

  • The importance of managing conflicts of interest.
  • The annual meeting between the senior consultant and the remuneration committee chair should be promoted more, and it should be highlighted in the Code that this is a private meeting.
  • In order to aid transparency, the remuneration committee should be made aware of material changes to proposals made by consultants as a result of interaction with management, including where necessary the rationale for such changes.
  • The language of the Code should be updated to reflect changes to the UK Corporate Governance Code.
  • Given the numerous changes in the corporate governance landscape in the last two years, the wording of the Code should be reviewed to ensure it is suggesting that consultants have a role in promoting good practice to their remuneration committees.

As a result of the review, the RCG has made some small drafting changes to highlight that consultants should make remuneration committees aware of any material changes to proposals as a result of interactions with management, to align wording where appropriate with the UK Corporate Governance Code, and to clarify the role of consultants in promoting good practice. These changes are implemented in the revised Voluntary Code of Conduct in Relation to Executive Remuneration Consulting in the United Kingdom, which is dated December 2015.

(Remuneration Consultants’ Group, The biennial review of the Code of Conduct and the annual review of its effectiveness and implementation, 01.16)


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