The Pensions Regulator (TPR) is the body responsible for regulating workplace pension schemes in the UK. Where an employer operates a defined benefit trust-based pension scheme for its employees, legislation requires it to notify TPR if certain events occur. Some events must always be notified, while others only need to be notified in certain circumstances.

Events which employers must always notify

  • Receipt of advice that the employer is wrongfully trading or knowledge that there is no reasonable prospect of the employer avoiding insolvent liquidation.
  • Conviction of a director or partner for a dishonesty offence.
  • A decision which results or is intended to result in non-payment of a debt due to the pension scheme.
  • A decision to cease business or the cessation of business in the UK.

Events which employers only need to notify in certain circumstances

  • Breach of a banking covenant.
  • A decision to relinquish control or relinquishment of control of an employer.

Employers must notify these events if either or both of the following apply:

  • The scheme was not fully funded on the Pension Protection Fund basis at its most recent valuation.
  • The trustees have had to report a non-payment under the schedule of contributions to TPR in the previous 12 months.

Notifications must be made in writing and as soon as reasonably practicable after the employer becomes aware of the event. Failure to notify can result in a fine of up to £5,000 for an individual and up to £50,000 for a company or partnership.

In October, a Pension Schemes Bill was laid before Parliament which would have introduced a more onerous notifiable events regime, including a penalty of up to £1 million for failure to comply with the regime. The Bill did not complete its passage through Parliament before Parliament was dissolved ahead of the December 2019 general election. It is likely that the Bill will be re-laid at some point, but exactly when and in what form is unknown. In addition to complying with the existing notifiable events regime, employers should therefore monitor developments in this area.

TPR has published guidance on the notifiable events regime which employers may find helpful.

In June 2019, the Women and Equalities Select Committee (WESC) published its report on the use of non-disclosure agreements (NDAs) in discrimination and harassment cases. This week, the Government’s response to that report has been published.

The Government had previously (in July) published its proposals for new legislation regarding the use of NDAs, and the response this week restates much of what we knew already: in particular, new legislation will be introduced restricting the use of NDAs in employment contracts and settlement agreements and there will be a requirement for independent legal advice to be provided to individuals asked to sign an NDA.

The Government’s latest response does, however, address some additional points, including the WESC recommendations that it will not be taking forward. These include:

  • Remedies: the WESC had recommended various increases to the remedies available in sexual harassment claims: an introduction of punitive damages, a presumption that employers would pay the employee’s legal costs in successful claims, and a significant increase to awards for injury to feelings. The Government has rejected all of these.
  • Carve-outs from NDAs: the Government has confirmed that its new legislation will require a carve-out in NDAs for disclosures to the police and legal/healthcare professionals, but it will not extend that carve-out to friends, family or victims on the basis that this latter group would not be subject to confidentiality requirements.
  • Legal advice: the Government has confirmed that its new legislation will require independent legal advice to be taken by any individual asked to sign an NDA, but it will not require employers to meet the cost of that advice in full. Instead, the Government response states that employers should ‘contribute appropriately’ to these costs but suggests that the new legislation will not dictate any amounts.
  • Standard wording: the Government will not be mandating standard wording for NDAs but it has committed to produce guidance on the drafting requirements.

Perhaps not surprisingly, some of the more radical proposals made by the WESC have been rejected by the Government, but the commitment to introduce legislation on the use of NDAs remains. With the upcoming general election, we will have to see how quickly that legislation arrives.

For the full text of the Government response, please see the link below:

On 15 October, the eagerly awaited Pension Schemes Bill (the Bill) had its first reading in the House of Lords. Whilst the Bill addresses the launch of collective defined contribution (or CDC) pension schemes and includes provisions enabling pensions dashboards, employers will be particularly impacted by the new requirement on trustees to produce a funding and investment strategy, to which employer agreement must be obtained. However, perhaps of more immediate concern to employers will be the increased powers that the Pensions Regulator (TPR) will be given under the Bill.

The powers that TPR will be given bring into effect the enhanced regulatory tools referred to in the Government’s 2018 consultation on strengthening TPR’s powers. In particular, new criminal offences will be introduced for the following:

  • Failure to comply with a contribution notice – punishable by an unlimited fine.
  • Avoidance of an employer debt under section 75 of the Pensions Act 1995 – punishable by an unlimited fine and/or a maximum of seven years in prison.
  • Conduct which affects the likelihood of accrued scheme benefits being received (which will bring into effect the Government’s plans for “wilful or reckless behaviour” relating to pension schemes to become a criminal offence) – punishable by an unlimited fine and/or a maximum of seven years in prison.

The above punishments are all targeted at employers and in particular seem to be aimed at ensuring that failing sponsors stand behind their pension schemes. On a related note, it is worth noting that the Bill also introduces two new tests for imposing a contribution notice on employers – the “employer insolvency test” and the “employer resources test”.

The Bill also makes it clear that TPR will have the power to issue civil penalties of up to £1 million for any of the above offences, or to an employer that knowingly or recklessly provides TPR (or the trustees or managers of a scheme in certain situations) with false or misleading information.

Under the Bill, TPR will also be able to require employers to attend interviews in order to provide answers to questions and explanations on matters relevant to the exercise of TPR’s regulatory functions. Employers should also be aware that the reasons for which TPR’s inspectors can enter an employer’s premises will be extended to cover situations where TPR wishes to investigate whether it has grounds for issuing a contribution notice, financial support direction or restoration order.

Unanswered questions

The Bill seeks to impose fines of up to £1 million where misleading information is “knowingly or recklessly” provided. There remains uncertainty around the precise definition of “knowingly” or “recklessly” providing information and further guidance is likely to be required on this.

Whether time can be found for the Bill to pass during this busy parliamentary period remains to be seen, but irrespective of this, TPR’s focus on dealing with poor behaviour by employers in connection with their pension schemes is clearly here to stay.

When making certain future changes to their pension scheme, employers should keep in mind the requirement to consult with their employees before making the change. In this blog post, we run through the key aspects of member consultations to provide a reminder of what exactly employers need to do, and why they need to do it.


Employers who have 50 or more employees based in Great Britain are subject to consultation requirements set out in the relevant consultation regulations. This threshold is based on the number of employees the employer has, even if some of those employees are not pension scheme members.

Continue Reading Talking pension changes

Continuing our spotlight posts featuring contributions from our global Employment & Benefits group, here are some recent articles from our teams in France and Germany:

  • Protecting IP with employment agreements in France – Employment & Benefits partner Julien Haure and associate Marine Hamon provide guidance on how employers in France can establish ownership of the intellectual property rights in works created by employees during the course of employment.
  • Increasing demand for flexibility leads to considerable need – Employment & Benefits partner Hagen Köckeritz considers the increasing need in Germany for “external personnel” (e.g. temporary workers or freelancers) and how to manage the associated risks.
  • Hidden no longer – Employment & Benefits senior associate Pauline Moritz examines the often-overlooked area of calculation of leave pay for commission-based employees in Germany.

For further information on the topics covered in these articles, please contact Julien Haure and Marine Hamon (France) or Hagen Köckeritz and Pauline Moritz (Germany).

As you may be aware, since February 2017, all Employment Tribunal and Employment Appeal Tribunal judgments have been published on an online register on the website. A recent case in the Court of Appeal has confirmed that, other than in cases of national security, the online register will always maintain a copy of any judgment.

In this case, the Claimant made an appeal to the Court of Appeal to argue that his judgment should not be published on the online register, and if the judgment was to be published at all, it should be heavily censored to delete reference to his disabilities, and matters connected to his disabilities, as well as anonymising the parties. The Court of Appeal refused to allow his appeal. It confirmed that neither the Employment Tribunal nor the Employment Appeal Tribunal had any power to prevent the publication of a judgment on the register. Similarly, it was correct to refuse to redact the judgments that had been previously been given at the Employment Tribunal and the Employment Appeal Tribunal stage to delete details of the Claimant’s disabilities and consequential matters.

This case is a clear indication from the courts of the importance of the principle of open justice. Whilst, traditionally, employers often take the view that it is a disadvantage to the employer for it to be identified as being on the receiving end of a tribunal case, and for details of the case to appear in the judgment given online, the same often holds true for claimants. Parties who are in negotiations about resolving employment disputes, before the commencement of formal tribunal proceedings, may both wish to bear this in mind. From the point at which proceedings are launched, the case will appear in the public register at a later date. Although it is possible, in limited circumstances, to ensure that parties are anonymised, this is very much the exception to the rule of the principle of open justice

With the introduction of automatic enrolment, increasing longevity, and employees focusing on the full benefit package offered by an employer, rather than just salary, an employer’s pension offering is under the spotlight. However, despite the increased relevance, the difference between types of pension scheme is not always clear. So, what are the key differences between a workplace trust-based pension scheme (“Trust Scheme“) and a workplace contract-based pension scheme (“Contract Scheme“)? Continue Reading To trust or not to trust, that is the question

A traffic policeman on motorway patrol passed a car that appeared to be driving at 11mph. The policeman pulled the car over, and asked the driver why he was going so slowly.

“I saw a sign saying that the speed limit was 11mph” said the driver. “A big blue sign, with white numbering.”

“That’s not the speed limit, that’s the road name – the M11” said the policeman. The policeman then looked at the passenger, who was sitting rigid in her seat, a rictus grin on her face. “What’s the matter with her?” asked the policeman. “Well” said the driver, “we’ve just joined the motorway from the A120.”

Interpreting laws and regulations can be difficult – particularly in highly technical areas such as pensions, where legislation can be opaque at the best of times. The Pensions Act 2004 tried to ameliorate this problem by giving the Pensions Regulator the power to flesh out legislation by issuing Codes of Practice. Codes of Practice have a special status: they have to be laid before Parliament before they come into force; they are admissible in legal proceedings; and if they appear to be relevant to the question the court has to decide, the court has to take them into account. (Albeit, on occasion, judges have “taken into account” Codes of Practice by brusquely dismissing them.)

Continue Reading Sign of the times …

As mentioned in our earlier posts, we will be featuring contributions from our global Employment & Benefits team on this blog, highlighting particular topics and issues of interest to UK employers with operations overseas.

Here is some recent commentary and guidance from our Employment & Benefits team in Hong Kong:

  • Our Employment & Benefits team in Hong Kong produce the “Asia Employment Law: Quarterly Review”, a publication covering 15 jurisdictions in Asia. The twenty-fourth edition flags the anticipated employment law developments during the second quarter of 2019, highlighting some of the major changes to look out for in 2019.
  • Following case law in 2018, in June 2019, the Hong Kong Court of Final Appeal took a further step towards internationally accepted norms by making it unlawful for the Hong Kong government to provide lower benefits to a spouse in a same-sex marriage than to a spouse in a heterosexual marriage. This recent update from Employment & Benefits partners Duncan Abate and Hong Tran provides more information about this key development.
  • On 4 April 2019, the Hong Kong government published the long-awaited Occupational Retirement Schemes (Amendment) Bill 2019. This update from Duncan Abate and Hong Tran provides a flavour of the more important consequences of the legislation and some of the concerns arising from the changes.
  • In addition to the above, this follow-up update from Duncan Abate and Hong Tran dives deeper into the Bill to identify three of the ugliest or weirdest “devils” in the detail of the Bill.

If you would like further guidance on employment and benefits issues in Hong Kong, and/or would like to register for our Asia legal updates, please contact Duncan Abate or Hong Tran.

The possibility of a Pensions Bill in the next parliamentary session should provide clarity on the funding framework for defined benefit (DB) schemes.

The Government’s white paper in March 2018 proposed that the Pensions Regulator should issue a revised code of practice focusing on how prudence is demonstrated when assessing scheme liabilities, appropriate factors for recovery plans, and ensuring that a long-term view is considered when setting the funding objective. Some or all of the funding standards contained in this revised code would be given statutory force.

Continue Reading DB scheme funding: all about the long-term