119 Application of proceeds of office-holder claims
After section 176ZA of the Insolvency Act 1986 insert—
Application of proceeds of office-holder claims
176ZB (1) This section applies where—
(a) there is a floating charge (whether created before or after the coming into force of this section) which relates to property of a company which—
(i) is in administration, or
(ii) has gone into liquidation; and
(b) the administrator or the liquidator (referred to in this section as “the office-holder”) has—
(i) brought a claim under any provision mentioned in subsection (3), or
(ii) made an assignment (or, in Scotland, assignation) in relation to a right of action under any such provision under section 246ZD.
(2) The proceeds of the claim or assignment (or, in Scotland, assignation) are not to be treated as part of the company's net property, that is to say the amount of its property which would be available for satisfaction of claims of holders of debentures secured by, or holders of, any floating charge created by the company.
(3) The provisions are—
(a) section 213 or 246ZA (fraudulent trading);
(b) section 214 or 246ZB (wrongful trading);
(c) section 238 (transactions at an undervalue (England and Wales));
(d) section 239 (preferences (England and Wales));
(e) section 242 (gratuitous alienations (Scotland));
(f) section 243 (unfair preferences (Scotland));
(g) section 244 (extortionate credit transactions).
(4) Subsection (2) does not apply to a company if or in so far as it is disapplied by—
(a) a voluntary arrangement in respect of the company, or
(b) a compromise or arrangement agreed under Part 26 of the Companies Act 2006 (arrangements and reconstructions).
120 Exercise of powers by liquidator: removal of need for sanction
(1) The Insolvency Act 1986 is amended as follows.
(2) In section 165 (voluntary winding up: powers of liquidator), for subsections (2) and (3) substitute—
(2) The liquidator may exercise any of the powers specified in Parts 1 to 3 of Schedule 4.
(3) In section 167 (winding up by the court: powers of liquidator), for subsection (1) substitute—
(1) Where a company is being wound up by the court, the liquidator may exercise any of the powers specified in Parts 1 to 3 of Schedule 4.
(4) In section 169 (supplementary powers (Scotland)), omit subsection (1).
(5) In Part 2 of Schedule 3 (appeals from orders in Scotland: orders which take effect until matter disposed of by Inner House), omit the entry relating to orders under section 167 or 169.
(6) In Schedule 4 (powers of liquidator in a winding up)—
(a) in paragraph 3, omit “In the case of a winding up in Scotland,”,
(b) omit paragraph 6A, and
(c) omit the headings for each of Parts 1 to 3.
121 Exercise of powers by trustee in bankruptcy: removal of need for sanction
(1) The Insolvency Act 1986 is amended as follows.
(2) In section 314 (bankruptcy: powers of trustee)—
(a) for subsection (1) substitute—
(1) The trustee may exercise any of the powers specified in Parts 1 and 2 of Schedule 5.
,
(b) in subsection (2), omit “With the permission of the creditors' committee or the court,”, and
(c) omit subsections (3) and (4).
(3) In Schedule 5 (powers of trustee in bankruptcy), omit the headings for each of Parts 1 to 3.
122 Abolition of requirements to hold meetings: company insolvency
(1) The Insolvency Act 1986 is amended as follows.
(2) After section 246ZD (as inserted by section 118) insert—
Decisions by creditors and contributories
Decisions by creditors and contributories: general
246ZE (1) This section applies where, for the purposes of this Group of Parts, a person (“P”) seeks a decision about any matter from a company's creditors or contributories.
(2) The decision may be made by any qualifying decision procedure P thinks fit, except that it may not be made by a creditors' meeting or (as the case may be) a contributories' meeting unless subsection (3) applies.
(3) This subsection applies if at least the minimum number of creditors or (as the case may be) contributories make a request to P in writing that the decision be made by a creditors' meeting or (as the case may be) a contributories' meeting.
(4) If subsection (3) applies P must summon a creditors' meeting or (as the case may be) a contributories' meeting.
(5) Subsection (2) is subject to any provision of this Act, the rules or any other legislation, or any order of the court—
(a) requiring a decision to be made, or prohibiting a decision from being made, by a particular qualifying decision procedure (other than a creditors' meeting or a contributories' meeting);
(b) permitting or requiring a decision to be made by a creditors' meeting or a contributories' meeting.
(6) Section 246ZF provides that in certain cases the deemed consent procedure may be used instead of a qualifying decision procedure.
(7) For the purposes of subsection (3) the “minimum number” of creditors or contributories is any of the following—
(a) 10% in value of the creditors or contributories;
(b) 10% in number of the creditors or contributories;
(c) 10 creditors or contributories.
(8) The references in subsection (7) to creditors are to creditors of any class, even where a decision is sought only from creditors of a particular class.
(9) In this section references to a meeting are to a meeting where the creditors or (as the case may be) contributories are invited to be present together at the same place (whether or not it is possible to attend the meeting without being present at that place).
(10) Except as provided by subsection (8), references in this section to creditors include creditors of a particular class.
(11) In this Group of Parts “qualifying decision procedure” means a procedure prescribed or authorised under paragraph 8A of Schedule 8.
Deemed consent procedure
246ZF (1) The deemed consent procedure may be used instead of a qualifying decision procedure where a company's creditors or contributories are to make a decision about any matter, unless—
(a) a decision about the matter is required by virtue of this Act, the rules, or any other legislation to be made by a qualifying decision procedure, or
(b) the court orders that a decision about the matter is to be made by a qualifying decision procedure.
(2) If the rules provide for a company's creditors or contributories to make a decision about the remuneration of any person, they must provide that the decision is to be made by a qualifying decision procedure.
(3) The deemed consent procedure is that the relevant creditors (other than opted-out creditors) or (as the case may be) the relevant contributories are given notice of—
(a) the matter about which they are to make a decision,
(b) the decision that the person giving the notice proposes should be made (the “proposed decision”),
(c) the effect of subsections (4) and (5), and
(d) the procedure for objecting to the proposed decision.
(4) If less than the appropriate number of relevant creditors or (as the case may be) relevant contributories object to the proposed decision in accordance with the procedure set out in the notice, the creditors or (as the case may be) the contributories are to be treated as having made the proposed decision.
(5) Otherwise—
(a) the creditors or (as the case may be) the contributories are to be treated as not having made a decision about the matter in question, and
(b) if a decision about that matter is again sought from the creditors or (as the case may be) the contributories, it must be sought using a qualifying decision procedure.
(6) For the purposes of subsection (4) the “appropriate number” of relevant creditors or relevant contributories is 10% in value of those creditors or contributories.
(7) “Relevant creditors” means the creditors who, if the decision were to be made by a qualifying decision procedure, would be entitled to vote in the procedure.
(8) “Relevant contributories” means the contributories who, if the decision were to be made by a qualifying decision procedure, would be entitled to vote in the procedure.
(9) In this section references to creditors include creditors of a particular class.
(10) The rules may make further provision about the deemed consent procedure.
Power to amend sections 246ZE and 246ZF
246ZG (1) The Secretary of State may by regulations amend section 246ZE so as to change the definition of—
(a) the minimum number of creditors;
(b) the minimum number of contributories.
(2) The Secretary of State may by regulations amend section 246ZF so as to change the definition of—
(a) the appropriate number of relevant creditors;
(b) the appropriate number of relevant contributories.
(3) Regulations under this section may define the minimum number or the appropriate number by reference to any one or more of—
(a) a proportion in value,
(b) a proportion in number,
(c) an absolute number,
and the definition may include alternative, cumulative or relative requirements.
(4) Regulations under subsection (1) may define the minimum number of creditors or contributories by reference to all creditors or contributories, or by reference to creditors or contributories of a particular description.
(5) Regulations under this section may make provision that will result in section 246ZE or 246ZF having different definitions for different cases, including—
(a) for creditors and for contributories,
(b) for different kinds of decisions.
(6) Regulations under this section may make transitional provision.
(7) The power of the Secretary of State to make regulations under this section is exercisable by statutory instrument.
(8) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(3) In Schedule 8 (provisions which may be included in company insolvency rules), after paragraph 8 insert—
8A (1) Provision about the making of decisions by creditors and contributories, including provision—
(a) prescribing particular procedures by which creditors and contributories may make decisions;
(b) authorising the use of other procedures for creditors and contributories to make decisions, if those procedures comply with prescribed requirements.
(2) Provision under sub-paragraph (1) may in particular include provision about—
(a) how creditors and contributories may request that a creditors' meeting or a contributories' meeting be held,
(b) the rights of creditors, contributories and others to be given notice of, and participate in, procedures,
(c) creditors' and contributories' rights to vote in procedures,
(d) the period within which any right to participate or vote is to be exercised,
(e) the proportion of creditors or contributories that must vote for a proposal for it to be approved,
(f) how the value of any debt or contribution should be determined,
(g) the time at which decisions taken by a procedure are to be treated as having been made.
(4) In section 251 (interpretation of first Group of Parts)—
(a) after the definition of “the court” insert—
“deemed consent procedure” means the deemed consent procedure provided for by section 246ZF;
;
(b) after the definition of “prescribed” insert—
“qualifying decision procedure” has the meaning given by section 246ZE(11);
.
123 Abolition of requirements to hold meetings: individual insolvency
(1) The Insolvency Act 1986 is amended as follows.
(2) After section 379 insert—
Creditors' decisions
Creditors' decisions: general
379ZA (1) This section applies where, for the purposes of this Group of Parts, a person (“P”) seeks a decision from an individual's creditors about any matter.
(2) The decision may be made by any creditors' decision procedure P thinks fit, except that it may not be made by a creditors' meeting unless subsection (3) applies.
(3) This subsection applies if at least the minimum number of creditors request in writing that the decision be made by a creditors' meeting.
(4) If subsection (3) applies, P must summon a creditors' meeting.
(5) Subsection (2) is subject to any provision of this Act, the rules or any other legislation, or any order of the court—
(a) requiring a decision to be made, or prohibiting a decision from being made, by a particular creditors' decision procedure (other than a creditors' meeting);
(b) permitting or requiring a decision to be made by a creditors' meeting.
(6) Section 379ZB provides that in certain cases the deemed consent procedure may be used instead of a creditors' decision procedure.
(7) For the purposes of subsection (3) the “minimum number” of creditors is any of the following—
(a) 10% in value of the creditors;
(b) 10% in number of the creditors;
(c) 10 creditors.
(8) The references in subsection (7) to creditors are to creditors of any class, even where a decision is sought only from creditors of a particular class.
(9) In this section references to a meeting are to a meeting where the creditors are invited to be present together at the same place (whether or not it is possible to attend the meeting without being present at that place).
(10) Except as provided by subsection (8), references in this section to creditors include creditors of a particular class.
(11) In this Group of Parts “creditors' decision procedure” means a procedure prescribed or authorised under paragraph 11A of Schedule 9.
Deemed consent procedure
379ZB (1) The deemed consent procedure may be used instead of a creditors' decision procedure where an individual's creditors are to make a decision about any matter, unless—
(a) a decision about the matter is required by virtue of this Act, the rules or any other legislation to be made by a creditors' decision procedure, or
(b) the court orders that a decision about the matter is to be made by a creditors' decision procedure.
(2) If the rules provide for an individual's creditors to make a decision about the remuneration of any person, they must provide that the decision is to be made by a creditors' decision procedure.
(3) The deemed consent procedure is that the relevant creditors (other than opted-out creditors) are given notice of—
(a) the matter about which the creditors are to make a decision,
(b) the decision the person giving the notice proposes should be made (the “proposed decision”),
(c) the effect of subsections (4) and (5), and
(d) the procedure for objecting to the proposed decision.
(4) If less than the appropriate number of relevant creditors object to the proposed decision in accordance with the procedure set out in the notice, the creditors are to be treated as having made the proposed decision.
(5) Otherwise—
(a) the creditors are to be treated as not having made a decision about the matter in question, and
(b) if a decision about that matter is again sought from the creditors, it must be sought using a creditors' decision procedure.
(6) For the purposes of subsection (4) the “appropriate number” of relevant creditors is 10% in value of those creditors.
(7) “Relevant creditors” means the creditors who, if the decision were to be made by a creditors' decision procedure, would be entitled to vote in the procedure.
(8) In this section references to creditors include creditors of a particular class.
(9) The rules may make further provision about the deemed consent procedure.
Power to amend sections 379ZA and 379ZB
379ZC (1) The Secretary of State may by regulations amend section 379ZA so as to change the definition of the minimum number of creditors.
(2) The Secretary of State may by regulations amend section 379ZB so as to change the definition of the appropriate number of relevant creditors.
(3) Regulations under this section may define the minimum number or the appropriate number by reference to any one or more of—
(a) a proportion in value,
(b) a proportion in number,
(c) an absolute number,
and the definition may include alternative, cumulative or relative requirements.
(4) Regulations under subsection (1) may define the minimum number of creditors by reference to all creditors, or by reference to creditors of a particular description.
(5) Regulations under this section may make provision that will result in section 379ZA or 379ZB having different definitions for different cases, including for different kinds of decisions.
(6) Regulations under this section may make transitional provision.
(7) The power of the Secretary of State to make regulations under this section is exercisable by statutory instrument.
(8) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(3) In Schedule 9 (provisions which may be included in individual insolvency rules), after paragraph 11 insert—
11A (1) Provision about the making of decisions by creditors, including provision—
(a) prescribing particular procedures by which creditors may make decisions;
(b) authorising the use of other procedures for creditors to make decisions, if those procedures comply with prescribed requirements.
(2) Provision under sub-paragraph (1) may in particular include provision about—
(a) how creditors may request that a creditors' meeting be held,
(b) the rights of creditors and others to be given notice of, and participate in, procedures,
(c) creditors' rights to vote in procedures,
(d) the period within which any right to participate or vote is to be exercised,
(e) the proportion of creditors that must vote for a proposal for it to be approved,
(f) how the value of any debt should be determined,
(g) the time at which decisions taken by a procedure are to be treated as having been made.
(4) In section 385(1) (miscellaneous definitions relating to individual insolvency)—
(a) after the definition of “the court” insert—
“creditors' decision procedure” has the meaning given by section 379ZA(11);
;
(b) after the definition of “debt relief order” insert—
“deemed consent procedure” means the deemed consent procedure provided for by section 379ZB;
.
124 Ability for creditors to opt not to receive certain notices: company insolvency
(1) The Insolvency Act 1986 is amended as follows.
(2) For the italic heading before section 246B substitute— “ Giving of notices etc by office-holders ”.
(3) After section 246B insert—
Creditors' ability to opt out of receiving certain notices
246C (1) Any provision of the rules which requires an office-holder of a company to give a notice to creditors of the company does not apply, in circumstances prescribed by the rules, in relation to opted-out creditors.
(2) Subsection (1)—
(a) does not apply in relation to a notice of a distribution or proposed distribution to creditors;
(b) is subject to any order of the court requiring a notice to be given to all creditors (or all creditors of a particular category).
(3) Except as provided by the rules, a creditor may participate and vote in a qualifying decision procedure or a deemed consent procedure even though, by virtue of being an opted-out creditor, the creditor does not receive notice of it.
(4) In this section—
“give” includes deliver, furnish or send;
“notice” includes any document or information in any other form;
“office-holder”, in relation to a company, means—
a liquidator, provisional liquidator, administrator or administrative receiver of the company,
a receiver appointed under section 51 in relation to any property of the company, or
the supervisor of a voluntary arrangement which has taken effect under Part 1 in relation to the company.
(4) After section 248 insert—
“Opted-out creditor”
248A (1) For the purposes of this Group of Parts “opted-out creditor”, in relation to an office-holder of a company, means a person who—
(a) is a creditor of the company, and
(b) in accordance with the rules has elected (or is deemed to have elected) to be (and not to cease to be) an opted-out creditor in relation to the office-holder.
(2) In this section, “office-holder”, in relation to a company, means—
(a) a liquidator, provisional liquidator, administrator or administrative receiver of the company,
(b) a receiver appointed under section 51 in relation to any property of the company, or
(c) the supervisor of a voluntary arrangement which has taken effect under Part 1 in relation to the company.
(5) In Schedule 8 (provisions which may be included in company insolvency rules), after paragraph 5 insert—
5A Provision for enabling a creditor of a company to elect to be, or to cease to be, an opted-out creditor in relation to an office-holder of the company (within the meaning of section 248A), including, in particular, provision—
(a) for requiring an office-holder to provide information to creditors about how they may elect to be, or cease to be, opted-out creditors;
(b) for deeming an election to be, or cease to be, an opted-out creditor in relation to a particular office-holder of a company to be such an election also in relation to any other office-holder of the company.
125 Ability for creditors to opt not to receive certain notices: individual insolvency
(1) The Insolvency Act 1986 is amended as follows.
(2) For the italic heading before section 379B substitute— “ Giving of notices etc by office-holders ”.
(3) After section 379B insert—
Creditors' ability to opt out of receiving certain notices
379C (1) Any provision of the rules which requires an office-holder to give a notice to creditors of an individual does not apply, in circumstances prescribed by the rules, in relation to opted-out creditors.
(2) Subsection (1)—
(a) does not apply in relation to a notice of a distribution or proposed distribution to creditors;
(b) is subject to any order of the court requiring a notice to be given to all creditors (or all creditors of a particular category).
(3) Except as provided by the rules, a creditor may participate and vote in a creditors' decision procedure or a deemed consent procedure even though, by virtue of being an opted-out creditor, the creditor does not receive notice of it.
(4) In this section—
“give” includes deliver, furnish or send;
“notice” includes any document or information in any other form;
“office-holder”, in relation to an individual, means—
where a bankruptcy order is made against the individual, the official receiver or the trustee in bankruptcy;
where an interim receiver of the individual's property is appointed, the interim receiver;
the supervisor of a voluntary arrangement approved under Part 8 in relation to the individual.
(4) After section 383 insert—
“Opted-out creditor”
383A (1) For the purposes of this Group of Parts “opted-out creditor” in relation to an office-holder for an individual means a person who—
(a) is a creditor of the individual, and
(b) in accordance with the rules has elected (or is deemed to have elected) to be (and not to cease to be) an opted-out creditor in relation to the office-holder.
(2) In this section, “office-holder”, in relation to an individual, means—
(a) where a bankruptcy order is made against the individual, the official receiver or the trustee in bankruptcy;
(b) where an interim receiver of the individual's property is appointed, the interim receiver;
(c) the supervisor of a voluntary arrangement approved under Part 8 in relation to the individual.
(5) In Schedule 9 (provisions capable of inclusion in individual insolvency rules), after paragraph 7 insert—
7F Provision for enabling a creditor of an individual to elect to be, or to cease to be, an opted-out creditor in relation to an office-holder for the individual (within the meaning of section 383A), including, in particular, provision—
(a) for requiring an office-holder to provide information to creditors about how they may elect to be, or cease to be, opted-out creditors;
(b) for deeming an election to be, or cease to be, an opted-out creditor in relation to a particular office-holder for an individual to be such an election also in relation to any other office-holder for the individual.
Schedule 9 (abolition of requirements to hold meetings; opted-out creditors)—
(a) makes amendments relating to sections 122 to 125, and
(b) removes requirements to hold a general meeting of a company when the company's affairs are fully wound up.
In paragraph 76(2)(b) of Schedule B1 to the Insolvency Act 1986 (administrator's term of office may be extended for up to six months by consent) for “six months” substitute “ one year ”.
128 Administration: payments to unsecured creditors
(1) Schedule B1 to the Insolvency Act 1986 (administration) is amended as follows.
(2) In paragraph 65(3) (restrictions on distribution to unsecured creditors) for “unless” substitute
unless—
(a) the distribution is made by virtue of section 176A(2)(a), or
(b)
.
(3) In paragraph 83 (power to move from administration to creditors' voluntary liquidation), in sub-paragraphs (1)(b) and (2)(b), after “any)” insert “ which is not a distribution by virtue of section 176A(2)(a) ”.
(1) Schedule B1 to the Insolvency Act 1986 (administration) is amended as follows.
(2) Paragraph 60 (power of administrators) becomes sub-paragraph (1) of that paragraph.
(3) After that sub-paragraph insert—
(2) But the power to sell, hire out or otherwise dispose of property is subject to any regulations that may be made under paragraph 60A.
(4) After paragraph 60 insert—
60A (1) The Secretary of State may by regulations make provision for—
(a) prohibiting, or
(b) imposing requirements or conditions in relation to,
the disposal, hiring out or sale of property of a company by the administrator to a connected person in circumstances specified in the regulations.
(2) Regulations under this paragraph may in particular require the approval of, or provide for the imposition of requirements or conditions by—
(a) creditors of the company,
(b) the court, or
(c) a person of a description specified in the regulations.
(3) In sub-paragraph (1), “connected person”, in relation to a company, means—
(a) a relevant person in relation to the company, or
(b) a company connected with the company.
(4) For the purposes of sub-paragraph (3)—
(a) “relevant person”, in relation to a company, means—
(i) a director or other officer, or shadow director, of the company;
(ii) a non-employee associate of such a person;
(iii) a non-employee associate of the company;
(b) a company is connected with another if any relevant person of one is or has been a relevant person of the other.
(5) In sub-paragraph (4), “non-employee associate” of a person means a person who is an associate of that person otherwise than by virtue of employing or being employed by that person.
(6) Subsection (10) of section 435 (extended definition of company) applies for the purposes of sub-paragraphs (3) to (5) as it applies for the purposes of that section.
(7) Regulations under this paragraph may—
(a) make different provision for different purposes;
(b) make incidental, consequential, supplemental and transitional provision.
(8) Regulations under this paragraph are to be made by statutory instrument.
(9) Regulations under this paragraph may not be made unless a draft of the statutory instrument containing the regulations has been laid before Parliament and approved by a resolution of each House of Parliament.
(10) This paragraph expires at the end of the period of 5 years beginning with the day on which it comes into force unless the power conferred by it is exercised during that period.
130 Attachment of floating charges on administration (Scotland)
(1) Paragraph 115 of Schedule B1 (administration) to the Insolvency Act 1986 is amended as follows.
(2) After sub-paragraph (1) insert—
(1A) In Scotland, sub-paragraph (1B) applies in connection with the giving by the court of permission as provided for in paragraph 65(3)(b).
(1B) On the giving by the court of such permission, any floating charge granted by the company shall, unless it has already so attached, attach to the property which is subject to the charge.
(3) In sub-paragraph (3), omit the words from “and” to the end.
(4) After that sub-paragraph insert—
(4) Attachment of a floating charge under sub-paragraph (1B) or (3) has effect as if the charge is a fixed security over the property to which it has attached.
131 Creditors not required to prove small debts: company insolvency
In Schedule 8 to the Insolvency Act 1986 (provisions capable of inclusion in company insolvency rules) after paragraph 13 insert—
13A Provision for a creditor who has not proved a small debt to be treated as having done so for purposes relating to the distribution of a company's property (and for provisions of, or contained in legislation made under, this Act to apply accordingly).
132 Creditors not required to prove small debts: individual insolvency
In Schedule 9 to the Insolvency Act 1986 (provisions capable of inclusion in individual insolvency rules) after paragraph 18 insert—
18A Provision for a creditor who has not proved a small debt to be treated as having done so for purposes relating to the distribution of a bankrupt's estate (and for provisions of, or contained in legislation made under, this Act to apply accordingly).
(1) In the Insolvency Act 1986, before section 292 insert—
First trustee in bankruptcy
291A (1) On the making of a bankruptcy order the official receiver becomes trustee of the bankrupt's estate, unless the court appoints another person under subsection (2).
(2) If when the order is made there is a supervisor of a voluntary arrangement approved in relation to the bankrupt under Part 8, the court may on making the order appoint the supervisor of the arrangement as the trustee.
(3) Where a person becomes trustee of a bankrupt's estate under this section, the person must give notice of that fact to the bankrupt's creditors (or, if the court so allows, advertise it in accordance with the court's directions).
(4) A notice or advertisement given by a trustee appointed under subsection (2) must explain the procedure for establishing a creditors' committee under section 301.
(2) Schedule 10 makes consequential amendments.
In section 262(3)(a) of the Insolvency Act 1986 (time limit for challenging voluntary arrangement), for the words from “the report” to “section 259” substitute “ the creditors decided whether to approve the proposed voluntary arrangement or, where a report was required to be made to the court under section 259(1)(b), the day on which the report was made ”.
135 Abolition of fast-track voluntary arrangements
(1) Omit sections 263A to 263G of the Insolvency Act 1986 (fast-track voluntary arrangements (England and Wales)) and the cross heading immediately before section 263A.
(2) In consequence of the repeals made by subsection (1), in the Insolvency Act 1986—
(a) in section 282 (court's power to annul bankruptcy order), in subsection (4), omit “or 263D”, and
(b) in Schedule 4A (bankruptcy restrictions order and undertaking), in paragraph 11, omit “, 263D”.
(3) Also in consequence of the repeals made by subsection (1), in the Enterprise Act 2002—
(a) omit section 264(2) to (4) (orders to extend application of provisions of sections 263B to 263G of the Insolvency Act 1986),
(b) in Schedule 22, omit paragraph 2 (fast-track voluntary arrangements) and the heading immediately before it, and
(c) in Schedule 23 (minor and consequential amendments), omit paragraph 4(a) and the “and” immediately after it.
(4) The repeals made by this section have no effect in relation to a case where a debtor has submitted the document and statement mentioned in section 263B(1) to the official receiver before this section comes into force.
(1) The Insolvency Act 1986 is amended as follows.
(2) In section 92A (progress reports in members' voluntary winding-up)—
(a) in subsection (1), for the words from “in the event” to “one year,” substitute “ where the company is registered in England and Wales ”;
(b) in the heading, omit “at year's end”.
(3) In section 104A (progress reports in creditors' voluntary winding-up)—
(a) in subsection (1), for the words from “If the” to “one year,” substitute “ Where the company is registered in England and Wales ”;
(b) in the heading, omit “at year's end”.
(4) In the table in Schedule 10 (punishment of offences)—
(a) in the entry for section 92A(2), in column 2, omit “at year's end”;
(b) in the entry for section 104A(2), in column 2, omit “at year's end”.
(1) In Part 13 of the Insolvency Act 1986 (insolvency practitioners), for section 391 (recognised professional bodies) (as substituted by section 17 of the Deregulation Act 2015) substitute—
Recognised professional bodies
391 (1) The Secretary of State may by order, if satisfied that a body meets the requirements of subsection (4), declare the body to be a recognised professional body which is capable of providing its insolvency specialist members with full authorisation or partial authorisation.
(2) The Secretary of State may by order, if satisfied that a body meets the requirements of subsection (4), declare the body to be a recognised professional body which is capable of providing its insolvency specialist members with partial authorisation only of the kind specified in the order (as to which, see section 390A(1)).
(3) Section 391A makes provision about the making by a body of an application to the Secretary of State for an order under this section.
(4) The requirements are that—
(a) the body regulates (or is going to regulate) the practice of a profession,
(b) the body has rules which it is going to maintain and enforce for securing that its insolvency specialist members—
(i) are fit and proper persons to act as insolvency practitioners, and
(ii) meet acceptable requirements as to education and practical training and experience, and
(c) the body's rules and practices for or in connection with authorising persons to act as insolvency practitioners, and its rules and practices for or in connection with regulating persons acting as such, are designed to ensure that the regulatory objectives are met (as to which, see section 391C).
(5) An order of the Secretary of State under this section has effect from such date as is specified in the order.
(6) An order under this section may be revoked by an order under section 391L or 391N (and see section 415A(1)(b)).
(7) In this Part—
(a) references to members of a recognised professional body are to persons who, whether members of that body or not, are subject to its rules in the practice of the profession in question;
(b) references to insolvency specialist members of a professional body are to members who are permitted by or under the rules of the body to act as insolvency practitioners.
(8) A reference in this Part to a recognised professional body is to a body recognised under this section (and see sections 391L(6) and 391N(5)).
Application for recognition as recognised professional body
391A (1) An application for an order under section 391(1) or (2) must—
(a) be made to the Secretary of State in such form and manner as the Secretary of State may require,
(b) be accompanied by such information as the Secretary of State may require, and
(c) be supplemented by such additional information as the Secretary of State may require at any time between receiving the application and determining it.
(2) The requirements which may be imposed under subsection (1) may differ as between different applications.
(3) The Secretary of State may require information provided under this section to be in such form, and verified in such manner, as the Secretary of State may specify.
(4) An application for an order under section 391(1) or (2) must be accompanied by—
(a) a copy of the applicant's rules,
(b) a copy of the applicant's policies and practices, and
(c) a copy of any guidance issued by the applicant in writing.
(5) The reference in subsection (4)(c) to guidance issued by the applicant is a reference to guidance or recommendations which are—
(a) issued or made by it which will apply to its insolvency specialist members or to persons seeking to become such members,
(b) relevant for the purposes of this Part, and
(c) intended to have continuing effect,
including guidance or recommendations relating to the admission or expulsion of members.
(6) The Secretary of State may refuse an application for an order under section 391(1) or (2) if the Secretary of State considers that recognition of the body concerned is unnecessary having regard to the existence of one or more other bodies which have been or are likely to be recognised under section 391.
(7) Subsection (8) applies where the Secretary of State refuses an application for an order under section 391(1) or (2); and it applies regardless of whether the application is refused on the ground mentioned in subsection (6), because the Secretary of State is not satisfied as mentioned in section 391(1) or (2) or because a fee has not been paid (see section 415A(1)(b)).
(8) The Secretary of State must give the applicant a written notice of the Secretary of State's decision; and the notice must set out the reasons for refusing the application.
(2) An order under section 391(1) or (2) of the Insolvency Act 1986 made before the coming into force of this section is, following the coming into force of this section, to be treated as if it were made under section 391(1) or (as the case may be) (2) as substituted by subsection (1) of this section.
(1) After section 391A of the Insolvency Act 1986 (inserted by section 137) insert—
Regulatory objectives
Application of regulatory objectives
391B (1) In discharging regulatory functions, a recognised professional body must, so far as is reasonably practicable, act in a way—
(a) which is compatible with the regulatory objectives, and
(b) which the body considers most appropriate for the purpose of meeting those objectives.
(2) In discharging functions under this Part, the Secretary of State must have regard to the regulatory objectives.
Meaning of “regulatory functions” and “regulatory objectives”
391C (1) This section has effect for the purposes of this Part.
(2) “Regulatory functions”, in relation to a recognised professional body, means any functions the body has—
(a) under or in relation to its arrangements for or in connection with—
(i) authorising persons to act as insolvency practitioners, or
(ii) regulating persons acting as insolvency practitioners, or
(b) in connection with the making or alteration of those arrangements.
(3) “Regulatory objectives” means the objectives of—
(a) having a system of regulating persons acting as insolvency practitioners that—
(i) secures fair treatment for persons affected by their acts and omissions,
(ii) reflects the regulatory principles, and
(iii) ensures consistent outcomes,
(b) encouraging an independent and competitive insolvency-practitioner profession whose members—
(i) provide high quality services at a cost to the recipient which is fair and reasonable,
(ii) act transparently and with integrity, and
(iii) consider the interests of all creditors in any particular case,
(c) promoting the maximisation of the value of returns to creditors and promptness in making those returns, and
(d) protecting and promoting the public interest.
(4) In subsection (3)(a), “regulatory principles” means—
(a) the principles that regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed, and
(b) any other principle appearing to the body concerned (in the case of the duty under section 391B(1)), or to the Secretary of State (in the case of the duty under section 391B(2)), to lead to best regulatory practice.
(2) In section 419 of the Insolvency Act 1986 (regulations for the purposes of Part 13), at the end insert—
(5) In making regulations under this section, the Secretary of State must have regard to the regulatory objectives (as defined by section 391C(3)).
(1) After section 391C of the Insolvency Act 1986 (inserted by section 138) insert—
Oversight of recognised professional bodies
Directions
391D (1) This section applies if the Secretary of State is satisfied that an act or omission of a recognised professional body (or a series of such acts or omissions) in discharging one or more of its regulatory functions has had, or is likely to have, an adverse impact on the achievement of one or more of the regulatory objectives.
(2) The Secretary of State may, if in all the circumstances of the case satisfied that it is appropriate to do so, direct the body to take such steps as the Secretary of State considers will counter the adverse impact, mitigate its effect or prevent its occurrence or recurrence.
(3) A direction under this section may require a recognised professional body—
(a) to take only such steps as it has power to take under its regulatory arrangements;
(b) to take steps with a view to the modification of any part of its regulatory arrangements.
(4) A direction under this section may require a recognised professional body—
(a) to take steps with a view to the institution of, or otherwise in respect of, specific regulatory proceedings;
(b) to take steps in respect of all, or a specified class of, such proceedings.
(5) For the purposes of this section, a direction to take steps includes a direction which requires a recognised professional body to refrain from taking a particular course of action.
(6) In this section “regulatory arrangements”, in relation to a recognised professional body, means the arrangements that the body has for or in connection with—
(a) authorising persons to act as insolvency practitioners, or
(b) regulating persons acting as insolvency practitioners.
Directions: procedure
391E (1) Before giving a recognised professional body a direction under section 391D, the Secretary of State must give the body a notice accompanied by a draft of the proposed direction.
(2) The notice under subsection (1) must—
(a) state that the Secretary of State proposes to give the body a direction in the form of the accompanying draft,
(b) specify why the Secretary of State has reached the conclusions mentioned in section 391D(1) and (2), and
(c) specify a period within which the body may make written representations with respect to the proposal.
(3) The period specified under subsection (2)(c)—
(a) must begin with the date on which the notice is given to the body, and
(b) must not be less than 28 days.
(4) On the expiry of that period, the Secretary of State must decide whether to give the body the proposed direction.
(5) The Secretary of State must give notice of that decision to the body.
(6) Where the Secretary of State decides to give the proposed direction, the notice under subsection (5) must—
(a) contain the direction,
(b) state the time at which the direction is to take effect, and
(c) specify the Secretary of State's reasons for the decision to give the direction.
(7) Where the Secretary of State decides to give the proposed direction, the Secretary of State must publish the notice under subsection (5); but this subsection does not apply to a direction to take any step with a view to the institution of, or otherwise in respect of, regulatory proceedings against an individual.
(8) The Secretary of State may revoke a direction under section 391D; and, where doing so, the Secretary of State—
(a) must give the body to which the direction was given notice of the revocation, and
(b) must publish the notice and, if the notice under subsection (5) was published under subsection (7), must do so (if possible) in the same manner as that in which that notice was published.
Financial penalty
391F (1) This section applies if the Secretary of State is satisfied—
(a) that a recognised professional body has failed to comply with a requirement to which this section applies, and
(b) that, in all the circumstances of the case, it is appropriate to impose a financial penalty on the body.
(2) This section applies to a requirement imposed on the recognised professional body—
(a) by a direction given under section 391D, or
(b) by a provision of this Act or of subordinate legislation under this Act.
(3) The Secretary of State may impose a financial penalty, in respect of the failure, of such amount as the Secretary of State considers appropriate.
(4) In deciding what amount is appropriate, the Secretary of State—
(a) must have regard to the nature of the requirement which has not been complied with, and
(b) must not take into account the Secretary of State's costs in discharging functions under this Part.
(5) A financial penalty under this section is payable to the Secretary of State; and sums received by the Secretary of State in respect of a financial penalty under this section (including by way of interest) are to be paid into the Consolidated Fund.
(6) In sections 391G to 391I, “penalty” means a financial penalty under this section.
Financial penalty: procedure
391G (1) Before imposing a penalty on a recognised professional body, the Secretary of State must give notice to the body—
(a) stating that the Secretary of State proposes to impose a penalty and the amount of the proposed penalty,
(b) specifying the requirement in question,
(c) stating why the Secretary of State is satisfied as mentioned in section 391F(1), and
(d) specifying a period within which the body may make written representations with respect to the proposal.
(2) The period specified under subsection (1)(d)—
(a) must begin with the date on which the notice is given to the body, and
(b) must not be less than 28 days.
(3) On the expiry of that period, the Secretary of State must decide—
(a) whether to impose a penalty, and
(b) whether the penalty should be the amount stated in the notice or a reduced amount.
(4) The Secretary of State must give notice of the decision to the body.
(5) Where the Secretary of State decides to impose a penalty, the notice under subsection (4) must—
(a) state that the Secretary of State has imposed a penalty on the body and its amount,
(b) specify the requirement in question and state—
(i) why it appears to the Secretary of State that the requirement has not been complied with, or
(ii) where, by that time, the requirement has been complied with, why it appeared to the Secretary of State when giving the notice under subsection (1) that the requirement had not been complied with, and
(c) specify a time by which the penalty is required to be paid.
(6) The time specified under subsection (5)(c) must be at least three months after the date on which the notice under subsection (4) is given to the body.
(7) Where the Secretary of State decides to impose a penalty, the Secretary of State must publish the notice under subsection (4).
(8) The Secretary of State may rescind or reduce a penalty imposed on a recognised professional body; and, where doing so, the Secretary of State—
(a) must give the body notice that the penalty has been rescinded or reduced to the amount stated in the notice, and
(b) must publish the notice; and it must (if possible) be published in the same manner as that in which the notice under subsection (4) was published.
Appeal against financial penalty
391H (1) A recognised professional body on which a penalty is imposed may appeal to the court on one or more of the appeal grounds.
(2) The appeal grounds are—
(a) that the imposition of the penalty was not within the Secretary of State's power under section 391F;
(b) that the requirement in respect of which the penalty was imposed had been complied with before the notice under section 391G(1) was given;
(c) that the requirements of section 391G have not been complied with in relation to the imposition of the penalty and the interests of the body have been substantially prejudiced as a result;
(d) that the amount of the penalty is unreasonable;
(e) that it was unreasonable of the Secretary of State to require the penalty imposed to be paid by the time specified in the notice under section 391G(5)(c).
(3) An appeal under this section must be made within the period of three months beginning with the day on which the notice under section 391G(4) in respect of the penalty is given to the body.
(4) On an appeal under this section the court may—
(a) quash the penalty,
(b) substitute a penalty of such lesser amount as the court considers appropriate, or
(c) in the case of the appeal ground in subsection (2)(e), substitute for the time imposed by the Secretary of State a different time.
(5) Where the court substitutes a penalty of a lesser amount, it may require the payment of interest on the substituted penalty from such time, and at such rate, as it considers just and equitable.
(6) Where the court substitutes a later time for the time specified in the notice under section 391G(5)(c), it may require the payment of interest on the penalty from the substituted time at such rate as it considers just and equitable.
(7) Where the court dismisses the appeal, it may require the payment of interest on the penalty from the time specified in the notice under section 391G(5)(c) at such rate as it considers just and equitable.
(8) In this section, “the court” means the High Court or, in Scotland, the Court of Session.
Recovery of financial penalties
391I (1) If the whole or part of a penalty is not paid by the time by which it is required to be paid, the unpaid balance from time to time carries interest at the rate for the time being specified in section 17 of the Judgments Act 1838 (but this is subject to any requirement imposed by the court under section 391H(5), (6) or (7)).
(2) If an appeal is made under section 391H in relation to a penalty, the penalty is not required to be paid until the appeal has been determined or withdrawn.
(3) Subsection (4) applies where the whole or part of a penalty has not been paid by the time it is required to be paid and—
(a) no appeal relating to the penalty has been made under section 391H during the period within which an appeal may be made under that section, or
(b) an appeal has been made under that section and determined or withdrawn.
(4) The Secretary of State may recover from the recognised professional body in question, as a debt due to the Secretary of State, any of the penalty and any interest which has not been paid.
Reprimand
391J (1) This section applies if the Secretary of State is satisfied that an act or omission of a recognised professional body (or a series of such acts or omissions) in discharging one or more of its regulatory functions has had, or is likely to have, an adverse impact on the achievement of one or more of the regulatory objectives.
(2) The Secretary of State may, if in all the circumstances of the case satisfied that it is appropriate to do so, publish a statement reprimanding the body for the act or omission (or series of acts or omissions).
Reprimand: procedure
391K (1) If the Secretary of State proposes to publish a statement under section 391J in respect of a recognised professional body, it must give the body a notice—
(a) stating that the Secretary of State proposes to publish such a statement and setting out the terms of the proposed statement,
(b) specifying the acts or omissions to which the proposed statement relates, and
(c) specifying a period within which the body may make written representations with respect to the proposal.
(2) The period specified under subsection (1)(c)—
(a) must begin with the date on which the notice is given to the body, and
(b) must not be less than 28 days.
(3) On the expiry of that period, the Secretary of State must decide whether to publish the statement.
(4) The Secretary of State may vary the proposed statement; but before doing so, the Secretary of State must give the body notice—
(a) setting out the proposed variation and the reasons for it, and
(b) specifying a period within which the body may make written representations with respect to the proposed variation.
(5) The period specified under subsection (4)(b)—
(a) must begin with the date on which the notice is given to the body, and
(b) must not be less than 28 days.
(6) On the expiry of that period, the Secretary of State must decide whether to publish the statement as varied.
(2) In section 415A of the Insolvency Act 1986 (fees orders: general), after subsection (1A) (inserted by section 17 of the Deregulation Act 2015) insert—
(1B) In setting under subsection (1) the amount of a fee in connection with maintenance of recognition, the matters to which the Secretary of State may have regard include, in particular, the costs of the Secretary of State in connection with any functions under sections 391D, 391E, 391J, 391K and 391N.
140 Recognised professional bodies: revocation of recognition
(1) After section 391K of the Insolvency Act 1986 (inserted by section 139) insert—
Revocation etc of recognition
Revocation of recognition at instigation of Secretary of State
391L (1) An order under section 391(1) or (2) in relation to a recognised professional body may be revoked by the Secretary of State by order if the Secretary of State is satisfied that—
(a) an act or omission of the body (or a series of such acts or omissions) in discharging one or more of its regulatory functions has had, or is likely to have, an adverse impact on the achievement of one or more of the regulatory objectives, and
(b) it is appropriate in all the circumstances of the case to revoke the body's recognition under section 391.
(2) If the condition set out in subsection (3) is met, an order under section 391(1) in relation to a recognised professional body may be revoked by the Secretary of State by an order which also declares the body concerned to be a recognised professional body which is capable of providing its insolvency specialist members with partial authorisation only of the kind specified in the order (see section 390A(1)).
(3) The condition is that the Secretary of State is satisfied—
(a) as mentioned in subsection (1)(a), and
(b) that it is appropriate in all the circumstances of the case for the body to be declared to be a recognised professional body which is capable of providing its insolvency specialist members with partial authorisation only of the kind specified in the order.
(4) In this Part—
(a) an order under subsection (1) is referred to as a “revocation order”;
(b) an order under subsection (2) is referred to as a “partial revocation order”.
(5) A revocation order or partial revocation order—
(a) has effect from such date as is specified in the order, and
(b) may make provision for members of the body in question to continue to be treated as fully or partially authorised (as the case may be) to act as insolvency practitioners for a specified period after the order takes effect.
(6) A partial revocation order has effect as if it were an order made under section 391(2).
Orders under section 391L: procedure
391M (1) Before making a revocation order or partial revocation order in relation to a recognised professional body, the Secretary of State must give notice to the body—
(a) stating that the Secretary of State proposes to make the order and the terms of the proposed order,
(b) specifying the Secretary of State's reasons for proposing to make the order, and
(c) specifying a period within which the body, members of the body or other persons likely to be affected by the proposal may make written representations with respect to it.
(2) Where the Secretary of State gives a notice under subsection (1), the Secretary of State must publish the notice on the same day.
(3) The period specified under subsection (1)(c)—
(a) must begin with the date on which the notice is given to the body, and
(b) must not be less than 28 days.
(4) On the expiry of that period, the Secretary of State must decide whether to make the revocation order or (as the case may be) partial revocation order in relation to the body.
(5) The Secretary of State must give notice of the decision to the body.
(6) Where the Secretary of State decides to make the order, the notice under subsection (5) must specify—
(a) when the order is to take effect, and
(b) the Secretary of State's reasons for making the order.
(7) A notice under subsection (5) must be published; and it must (if possible) be published in the same manner as that in which the notice under subsection (1) was published.
Revocation of recognition at request of body
391N (1) An order under section 391(1) or (2) in relation to a recognised professional body may be revoked by the Secretary of State by order if—
(a) the body has requested that an order be made under this subsection, and
(b) the Secretary of State is satisfied that it is appropriate in all the circumstances of the case to revoke the body's recognition under section 391.
(2) An order under section 391(1) in relation to a recognised professional body may be revoked by the Secretary of State by an order which also declares the body concerned to be a recognised professional body which is capable of providing its insolvency specialist members with partial authorisation only of the kind specified in the order (see section 390A(1)) if—
(a) the body has requested that an order be made under this subsection, and
(b) the Secretary of State is satisfied that it is appropriate in all the circumstances of the case for the body to be declared to be a recognised professional body which is capable of providing its insolvency specialist members with partial authorisation only of the kind specified in the order.
(3) Where the Secretary of State decides to make an order under this section the Secretary of State must publish a notice specifying—
(a) when the order is to take effect, and
(b) the Secretary of State's reasons for making the order.
(4) An order under this section—
(a) has effect from such date as is specified in the order, and
(b) may make provision for members of the body in question to continue to be treated as fully or partially authorised (as the case may be) to act as insolvency practitioners for a specified period after the order takes effect.
(5) An order under subsection (2) has effect as if it were an order made under section 391(2).
(2) In section 415A of the Insolvency Act 1986 (fees orders: general), after subsection (4) insert—
(5) Section 391M applies for the purposes of an order under subsection (1)(b) as it applies for the purposes of a revocation order made under section 391L.
141 Court sanction of insolvency practitioners in public interest cases
After section 391N of the Insolvency Act 1986 (inserted by section 140) insert—
Court sanction of insolvency practitioners in public interest cases
Direct sanctions orders
391O (1) For the purposes of this Part a “direct sanctions order” is an order made by the court against a person who is acting as an insolvency practitioner which—
(a) declares that the person is no longer authorised (whether fully or partially) to act as an insolvency practitioner;
(b) declares that the person is no longer fully authorised to act as an insolvency practitioner but remains partially authorised to act as such either in relation to companies or individuals, as specified in the order;
(c) declares that the person's authorisation to act as an insolvency practitioner is suspended for the period specified in the order or until such time as the requirements so specified are complied with;
(d) requires the person to comply with such other requirements as may be specified in the order while acting as an insolvency practitioner;
(e) requires the person to make such contribution as may be specified in the order to one or more creditors of a company, individual or insolvent partnership in relation to which the person is acting or has acted as an insolvency practitioner.
(2) Where the court makes a direct sanctions order, the relevant recognised professional body must take all necessary steps to give effect to the order.
(3) A direct sanctions order must not be made against a person whose authorisation to act as an insolvency practitioner was granted by the Department of Enterprise, Trade and Investment in Northern Ireland (see section 390A(2)(b)).
(4) A direct sanctions order must not specify a contribution as mentioned in subsection (1)(e) which is more than the remuneration that the person has received or will receive in respect of acting as an insolvency practitioner in the case.
(5) In this section and section 391P—
“the court” means the High Court or, in Scotland, the Court of Session;
“relevant recognised professional body”, in relation to a person who is acting as an insolvency practitioner, means the recognised professional body by virtue of which the person is authorised so to act.
Application for, and power to make, direct sanctions order
391P (1) The Secretary of State may apply to the court for a direct sanctions order to be made against a person if it appears to the Secretary of State that it would be in the public interest for the order to be made.
(2) The Secretary of State must send a copy of the application to the relevant recognised professional body.
(3) The court may make a direct sanctions order against a person where, on an application under this section, the court is satisfied that condition 1 and at least one of conditions 2, 3, 4 and 5 are met in relation to the person.
(4) The conditions are set out in section 391Q.
(5) In deciding whether to make a direct sanctions order against a person the court must have regard to the extent to which—
(a) the relevant recognised professional body has taken action against the person in respect of the failure mentioned in condition 1, and
(b) that action is sufficient to address the failure.
Direct sanctions order: conditions
391Q (1) Condition 1 is that the person, in acting as an insolvency practitioner or in connection with any appointment as such, has failed to comply with—
(a) a requirement imposed by the rules of the relevant recognised professional body;
(b) any standards, or code of ethics, for the insolvency-practitioner profession adopted from time to time by the relevant recognised professional body.
(2) Condition 2 is that the person—
(a) is not a fit and proper person to act as an insolvency practitioner;
(b) is a fit and proper person to act as an insolvency practitioner only in relation to companies, but the person's authorisation is not so limited; or
(c) is a fit and proper person to act as an insolvency practitioner only in relation to individuals, but the person's authorisation is not so limited.
(3) Condition 3 is that it is appropriate for the person's authorisation to act as an insolvency practitioner to be suspended for a period or until one or more requirements are complied with.
(4) Condition 4 is that it is appropriate to impose other restrictions on the person acting as an insolvency practitioner.
(5) Condition 5 is that loss has been suffered as a result of the failure mentioned in condition 1 by one or more creditors of a company, individual or insolvent partnership in relation to which the person is acting or has acted as an insolvency practitioner.
(6) In this section “relevant recognised professional body” has the same meaning as in section 391O.
Direct sanctions direction instead of order
391R (1) The Secretary of State may give a direction (a “direct sanctions direction”) in relation to a person acting as an insolvency practitioner to the relevant recognised professional body (instead of applying, or continuing with an application, for a direct sanctions order against the person) if the Secretary of State is satisfied that—
(a) condition 1 and at least one of conditions 2, 3, 4 and 5 are met in relation to the person (see section 391Q), and
(b) it is in the public interest for the direction to be given.
(2) But the Secretary of State may not give a direct sanctions direction in relation to a person without that person's consent.
(3) A direct sanctions direction may require the relevant recognised professional body to take all necessary steps to secure that—
(a) the person is no longer authorised (whether fully or partially) to act as an insolvency practitioner;
(b) the person is no longer fully authorised to act as an insolvency practitioner but remains partially authorised to act as such either in relation to companies or individuals, as specified in the direction;
(c) the person's authorisation to act as an insolvency practitioner is suspended for the period specified in the direction or until such time as the requirements so specified are complied with;
(d) the person must comply with such other requirements as may be specified in the direction while acting as an insolvency practitioner;
(e) the person makes such contribution as may be specified in the direction to one or more creditors of a company, individual or insolvent partnership in relation to which the person is acting or has acted as an insolvency practitioner.
(4) A direct sanctions direction must not be given in relation to a person whose authorisation to act as an insolvency practitioner was granted by the Department of Enterprise, Trade and Investment in Northern Ireland (see section 390A(2)(b)).
(5) A direct sanctions direction must not specify a contribution as mentioned in subsection (3)(e) which is more than the remuneration that the person has received or will receive in respect of acting as an insolvency practitioner in the case.
(6) In this section “relevant recognised professional body” has the same meaning as in section 391O.
142 Power for Secretary of State to obtain information
After section 391R of the Insolvency Act 1986 (inserted by section 141) insert—
General
Power for Secretary of State to obtain information
391S (1) A person mentioned in subsection (2) must give the Secretary of State such information as the Secretary of State may by notice in writing require for the exercise of the Secretary of State's functions under this Part.
(2) Those persons are—
(a) a recognised professional body;
(b) any individual who is or has been authorised under section 390A to act as an insolvency practitioner;
(c) any person who is connected to such an individual.
(3) A person is connected to an individual who is or has been authorised to act as an insolvency practitioner if, at any time during the authorisation—
(a) the person was an employee of the individual;
(b) the person acted on behalf of the individual in any other way;
(c) the person employed the individual;
(d) the person was a fellow employee of the individual's employer;
(e) in a case where the individual was employed by a firm, partnership or company, the person was a member of the firm or partnership or (as the case may be) a director of the company.
(4) In imposing a requirement under subsection (1) the Secretary of State may specify—
(a) the time period within which the information in question is to be given, and
(b) the manner in which it is to be verified.
After section 391S of the Insolvency Act 1986 (inserted by section 142) insert—
Compliance orders
391T (1) If at any time it appears to the Secretary of State that—
(a) a recognised professional body has failed to comply with a requirement imposed on it by or by virtue of this Part, or
(b) any other person has failed to comply with a requirement imposed on the person by virtue of section 391S,
the Secretary of State may make an application to the court.
(2) If, on an application under this section, the court decides that the body or other person has failed to comply with the requirement in question, it may order the body or person to take such steps as the court considers will secure that the requirement is complied with.
(3) In this section, “the court” means the High Court or, in Scotland, the Court of Session.
144 Power to establish single regulator of insolvency practitioners
(1) The Secretary of State may by regulations designate a body for the purposes of—
(a) authorising persons to act as insolvency practitioners, and
(b) regulating persons acting as such.
(2) The designated body may be either—
(a) a body corporate established by the regulations, or
(b) a body (whether a body corporate or an unincorporated association) already in existence when the regulations are made (an “existing body”).
(3) The regulations may, in particular, confer the following functions on the designated body—
(a) establishing criteria for determining whether a person is a fit and proper person to act as an insolvency practitioner;
(b) establishing the requirements as to education, practical training and experience which a person must meet in order to act as an insolvency practitioner;
(c) establishing and maintaining a system for providing full authorisation or partial authorisation to persons who meet those criteria and requirements;
(d) imposing technical standards for persons so authorised and enforcing compliance with those standards;
(e) imposing professional and ethical standards for persons so authorised and enforcing compliance with those standards;
(f) monitoring the performance and conduct of persons so authorised;
(g) investigating complaints made against, and other matters concerning the performance or conduct of, persons so authorised.
(4) The regulations may require the designated body, in discharging regulatory functions, so far as is reasonably practicable, to act in a way—
(a) which is compatible with the regulatory objectives, and
(b) which the body considers most appropriate for the purpose of meeting those objectives.
(5) Provision made under subsection (3)(d) or (3)(e) for the enforcement of the standards concerned may include provision enabling the designated body to impose a financial penalty on a person who is or has been authorised to act as an insolvency practitioner.
(6) The regulations may, in particular, include provision for the purpose of treating a person authorised to act as an insolvency practitioner by virtue of being a member of a professional body recognised under section 391 of the Insolvency Act 1986 immediately before the regulations come into force as authorised to act as an insolvency practitioner by the body designated by the regulations after that time.
(7) Expressions used in this section which are defined for the purposes of Part 13 of the Insolvency Act 1986 have the same meaning in this section as in that Part.
(8) Section 145 makes further provision about regulations under this section which designate an existing body.
(9) Schedule 11 makes supplementary provision in relation to the designation of a body by regulations under this section.
145 Regulations under section 144: designation of existing body
(1) The Secretary of State may make regulations under section 144 designating an existing body only if it appears to the Secretary of State that—
(a) the body is able and willing to exercise the functions that would be conferred by the regulations, and
(b) the body has arrangements in place relating to the exercise of those functions which are such as to be likely to ensure that the conditions in subsection (2) are met.
(2) The conditions are—
(a) that the functions in question will be exercised effectively, and
(b) where the regulations are to contain any requirements or other provisions prescribed under subsection (3), that those functions will be exercised in accordance with any such requirements or provisions.
(3) Regulations which designate an existing body may contain such requirements or other provisions relating to the exercise of the functions by the designated body as appear to the Secretary of State to be appropriate.
146 Regulations under section 144: timing and supplementary
(1) Section 144 and, accordingly, section 145 and subsections (3) and (4) below expire at the end of the relevant period unless the power conferred by subsection (1) of section 144 is exercised before the end of that period.
(2) The “relevant period” is the period of 7 years beginning with the day on which section 144 comes into force.
(3) Regulations under section 144 are subject to affirmative resolution procedure.
(4) If a draft of a statutory instrument containing regulations under section 144 would, apart from this subsection, be treated for the purposes of the Standing Orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not a hybrid instrument.
(1) The Employment Rights Act 1996 is amended as follows.
(2) In Part 4A (protected disclosures), after section 43F insert—
Prescribed persons: duty to report on disclosures of information
43FA (1) The Secretary of State may make regulations requiring a person prescribed for the purposes of section 43F to produce an annual report on disclosures of information made to the person by workers.
(2) The regulations must set out the matters that are to be covered in a report, but must not require a report to provide detail that would enable either of the following to be identified—
(a) a worker who has made a disclosure;
(b) an employer or other person in respect of whom a disclosure has been made.
(3) The regulations must make provision about the publication of a report, and such provision may include (but is not limited to) any of the following requirements—
(a) to send the report to the Secretary of State for laying before Parliament;
(b) to include the report in another report or in information required to be published by the prescribed person;
(c) to publish the report on a website.
(4) The regulations may make provision about the time period within which a report must be produced and published.
(5) Regulations under subsections (2) to (4) may make different provision for different prescribed persons.
(3) In section 236 (orders and regulations)—
(a) in subsection (3), before “43K(4)” insert “ 43FA (but see subsection (3A)), ”;
(b) after subsection (3) insert—
(3A) Subsection (3) does not apply to regulations under section 43FA that contain only the provision mentioned in section 43FA(2), (3) or (4).
149 Protection for applicants for employment etc in the health service
(1) The Employment Rights Act 1996 is amended as follows.
(2) After section 49A insert—
PART 5A Protection for applicants for employment etc in the health service
Regulations prohibiting discrimination because of protected disclosure
49B (1) The Secretary of State may make regulations prohibiting an NHS employer from discriminating against an applicant because it appears to the NHS employer that the applicant has made a protected disclosure.
(2) An “applicant”, in relation to an NHS employer, means an individual who applies to the NHS employer for—
(a) a contract of employment,
(b) a contract to do work personally, or
(c) appointment to an office or post.
(3) For the purposes of subsection (1), an NHS employer discriminates against an applicant if the NHS employer refuses the applicant's application or in some other way treats the applicant less favourably than it treats or would treat other applicants in relation to the same contract, office or post.
(4) Regulations under this section may, in particular—
(a) make provision as to circumstances in which discrimination by a worker or agent of an NHS employer is to be treated, for the purposes of the regulations, as discrimination by the NHS employer;
(b) confer jurisdiction (including exclusive jurisdiction) on employment tribunals or the Employment Appeal Tribunal;
(c) make provision for or about the grant or enforcement of specified remedies by a court or tribunal;
(d) make provision for the making of awards of compensation calculated in accordance with the regulations;
(e) make different provision for different cases or circumstances;
(f) make incidental or consequential provision, including incidental or consequential provision amending—
(i) an Act of Parliament (including this Act),
(ii) an Act of the Scottish Parliament,
(iii) a Measure or Act of the National Assembly for Wales, or
(iv) an instrument made under an Act or Measure within any of sub-paragraphs (i) to (iii).
(5) Subsection (4)(f) does not affect the application of section 236(5) to the power conferred by this section.
(6) “NHS employer” means an NHS public body prescribed by regulations under this section.
(7) “NHS public body” means—
(a) the National Health Service Commissioning Board;
(b) a clinical commissioning group;
(c) a Special Health Authority;
(d) an NHS trust;
(e) an NHS foundation trust;
(f) the Care Quality Commission;
(g) Health Education England;
(h) the Health Research Authority;
(i) the Health and Social Care Information Centre;
(j) the National Institute for Health and Care Excellence;
(k) Monitor;
(l) a Local Health Board established under section 11 of the National Health Service (Wales) Act 2006;
(m) the Common Services Agency for the Scottish Health Service;
(n) Healthcare Improvement Scotland;
(o) a Health Board constituted under section 2 of the National Health Service (Scotland) Act 1978;
(p) a Special Health Board constituted under that section.
(8) The Secretary of State must consult the Welsh Ministers before making regulations prescribing any of the following NHS public bodies for the purposes of the definition of “NHS employer”—
(a) a Special Health Authority established under section 22 of the National Health Service (Wales) Act 2006;
(b) an NHS trust established under section 18 of that Act;
(c) a Local Health Board established under section 11 of that Act.
(9) The Secretary of State must consult the Scottish Ministers before making regulations prescribing an NHS public body within any of paragraphs (m) to (p) of subsection (7) for the purposes of the definition of “NHS employer”.
(10) For the purposes of subsection (4)(a)—
(a) “worker” has the extended meaning given by section 43K, and
(b) a person is a worker of an NHS employer if the NHS employer is an employer in relation to the person within the extended meaning given by that section.
(3) In section 230(6) (interpretation of references to employees, workers etc) for “and 47B(3)” substitute “ , 47B(3) and 49B(10) ”.
(4) In section 236(3) (orders and regulations subject to affirmative procedure) after “47C,” insert “ 49B, ”.
150 Financial penalty for failure to pay sums ordered by employment tribunal etc
(1) The Employment Tribunals Act 1996 is amended as provided in subsections (2) to (6).
(2) After section 37ZC insert—
PART 2A Financial penalties for failure to pay sums ordered to be paid or settlement sums
Sums to which financial penalty can relate
37A (1) This section has effect for the purposes of this Part.
(2) “Financial award”—
(a) means a sum of money (or, if more than one, the sums of money) ordered by an employment tribunal on a claim involving an employer and a worker, or on a relevant appeal, to be paid by the employer to the worker, and
(b) includes—
(i) any sum (a “costs sum”) required to be paid in accordance with an order in respect of costs or expenses which relate to proceedings on, or preparation time relating to, the claim or a relevant appeal, and
(ii) in a case to which section 16 applies, a sum ordered to be paid to the Secretary of State under that section.
(3) Subsection (2)(b)(i) applies irrespective of when the order was made or the amount of the costs sum was determined.
(4) “Settlement sum” means a sum payable by an employer to a worker under the terms of a settlement in respect of which a certificate has been issued under section 19A(1).
(5) “Relevant sum” means—
(a) a financial award, or
(b) a settlement sum.
(6) “Relevant appeal”, in relation to a financial award, means an appeal against—
(a) the decision on the claim to which it relates,
(b) a decision to make, or not to make, an order in respect of a financial award (including any costs sum) on the claim,
(c) the amount of any such award, or
(d) any decision made on an appeal within paragraphs (a) to (c) or this paragraph.
(7) Sections 37B to 37D apply for the purposes of calculating the unpaid amount on any day of a relevant sum.
Financial award: unpaid amount
37B (1) In the case of a financial award, the unpaid amount on any day means the amount outstanding immediately before that day in respect of—
(a) the initial amount of the financial award (see subsection (2)), and
(b) interest payable in respect of the financial award by virtue of section 14.
(2) The initial amount of a financial award is—
(a) in a case to which section 16 applies, the monetary award within the meaning of that section (see section 17(3)), together with any costs sum, and
(b) in any other case, the sum or sums of money ordered to be paid (including any costs sum).
(3) An amount in respect of a financial award is not to be regarded as outstanding—
(a) when the worker could make an application for an order for a costs sum in relation to—
(i) proceedings on the claim to which the financial award relates,
(ii) proceedings on a relevant appeal,
(b) when the worker has made such an application but the application has not been withdrawn or finally determined,
(c) when the employer or worker could appeal against—
(i) the decision on the claim to which it relates,
(ii) a decision to make, or not to make, a financial award (including any costs sum) on the claim,
(iii) the amount of any such award, or
(iv) any decision made on an appeal within sub-paragraphs (i) to (iii) or this sub-paragraph,
but has not done so, or
(d) when the employer or worker has made such an appeal but the appeal has not been withdrawn or finally determined.
Settlement sum: unpaid amount
37C (1) In the case of a settlement sum, the unpaid amount on any day means the amount outstanding immediately before that day in respect of—
(a) the settlement sum, and
(b) interest (if any) calculated in accordance with the settlement (within the meaning of section 19A).
(2) Subject to section 37D(2) and (3), an amount in respect of a settlement sum is not to be regarded as outstanding if the settlement sum is not recoverable under section 19A(3).
Unpaid amount of relevant sum: further provision
37D (1) Subsections (2) and (3) apply where—
(a) a relevant sum is to be paid by instalments,
(b) any instalment is not paid on or before the day on which it is due to be paid, and
(c) a warning notice (see section 37E) is given in consequence of the failure to pay that instalment (“the unpaid instalment”).
(2) For the purposes of calculating the unpaid amount for—
(a) that warning notice, and
(b) any penalty notice given in respect of that warning notice,
any remaining instalments (whether or not yet due) are to be treated as having been due on the same day as the unpaid instalment.
(3) Accordingly, the amount outstanding in respect of the financial award or settlement sum is to be taken to be—
(a) the aggregate of—
(i) the unpaid instalment, and
(ii) any remaining instalments,
including, in the case of a settlement sum, any amount which is not recoverable under section 19A(3) by reason only of not being due,
(b) interest on those amounts calculated in accordance with section 37B(1)(b) or 37C(1)(b) (and subsection (2)).
(4) Subsections (2) and (3) are not to be taken to affect the time at which any remaining instalment is due to be paid by the employer.
(5) The provisions of this Part apply where a financial award consists of two or more sums (whether or not any of them is a costs sum) which are required to be paid at different times as if—
(a) it were a relevant sum to be paid by instalments, and
(b) those sums were the instalments.
(6) Where a payment by an employer is made, or purported to be made, in respect of a relevant sum, an enforcement officer may determine whether, and to what extent, the payment is to be treated as being—
(a) in respect of that relevant sum or instead in respect of some other amount owed by the employer;
(b) in respect of the initial amount or interest on it, in the case of a payment treated as being in respect of the relevant sum.
Warning notice
37E (1) This section applies where an enforcement officer considers that an employer who is required to pay a relevant sum has failed—
(a) in the case of a relevant sum which is to be paid by instalments, to pay an instalment on or before the day on which it is due to be paid, or
(b) in any other case, to pay the relevant sum in full on or before the day on which it is due to be paid.
(2) The officer may give the employer a notice (a “warning notice”) stating the officer's intention to impose a financial penalty in respect of the relevant sum unless before a date specified in the warning notice (“the specified date”) the employer has paid in full the amount so specified (“the specified amount”).
This is subject to subsection (3).
(3) Where a penalty notice has previously been given in respect of the relevant sum, the officer may not give a warning notice until—
(a) 3 months have elapsed since the end of the relevant period (within the meaning of section 37H) relating to the last penalty notice given in respect of the relevant sum, and
(b) if the relevant sum is to be paid by instalments, the last instalment has become due for payment.
(4) The specified date must be after the end of the period of 28 days beginning with the day on which the warning notice is given.
(5) The specified amount must be the unpaid amount of the relevant sum on the day on which the warning notice is given.
(6) A warning notice must identify the relevant sum and state—
(a) how the specified amount has been calculated;
(b) the grounds on which it is proposed to impose a penalty;
(c) the amount of the financial penalty that would be imposed if no payment were made in respect of the relevant sum before the specified date;
(d) that the employer may before the specified date make representations about the proposal to impose a penalty, including representations—
(i) about payments which the employer makes in respect of the relevant sum after the warning notice is given;
(ii) about the employer's ability to pay both a financial penalty and the relevant sum;
(e) how any such representations may be made.
(7) The statement under subsection (6)(e) must include provision for allowing representations to be made by post (whether or not it also allows them to be made in any other way).
(8) If the employer pays the specified amount before the specified date, the relevant sum is to be treated for the purposes of this Part as having been paid in full.
(9) Subsection (8) is not to be taken to affect the liability of the employer to pay any increase in the unpaid amount between the date of the warning notice and the date of payment.
Penalty notice
37F (1) This section applies where an enforcement officer—
(a) has given a warning notice to an employer, and
(b) is satisfied that the employer has failed to pay the specified amount in full before the specified date.
(2) The officer may give the employer a notice (a “penalty notice”) requiring the employer to pay a financial penalty to the Secretary of State.
(3) A penalty notice must identify the relevant sum and state—
(a) the grounds on which the penalty notice is given;
(b) the unpaid amount of the relevant sum on the specified date and how it has been calculated;
(c) the amount of the financial penalty (see subsections (4) to (6));
(d) how the penalty must be paid;
(e) the period within which the penalty must be paid;
(f) how the employer may pay a reduced penalty instead of the financial penalty;
(g) the amount of the reduced penalty (see subsection (8));
(h) how the employer may appeal against the penalty notice;
(i) the consequences of non-payment.
(4) Subject to subsections (5) and (6), the amount of the financial penalty is 50% of the unpaid amount of the relevant sum on the specified date.
(5) If the unpaid amount on the specified date is less than £200, the amount of the penalty is £100.
(6) If the unpaid amount on the specified date is more than £10,000, the amount of the financial penalty is £5,000.
(7) The period specified under subsection (3)(e) must be a period of not less than 28 days beginning with the day on which the penalty notice is given.
(8) The amount of the reduced penalty is 50% of the amount of the financial penalty.
(9) Subsection (10) applies if, within the period of 14 days beginning with the day on which the penalty notice is given, the employer—
(a) pays the unpaid amount of the relevant sum on the specified date (as stated in the notice under subsection (3)(b)), and
(b) pays the reduced penalty to the Secretary of State.
(10) The employer is to be treated—
(a) for the purposes of this Part, as having paid the relevant sum in full, and
(b) by paying the reduced penalty, as having paid the whole of the financial penalty.
(11) Subsection (10)(a) is not to be taken to affect the liability of the employer to pay any increase in the unpaid amount of the relevant sum between the specified date and the date of payment.
Appeal against penalty notice
37G (1) An employer to whom a penalty notice is given may, before the end of the period specified under section 37F(3)(e) (period within which penalty must be paid), appeal against—
(a) the penalty notice; or
(b) the amount of the financial penalty.
(2) An appeal under subsection (1) lies to an employment tribunal.
(3) An appeal under subsection (1) may be made on one or more of the following grounds—
(a) that the grounds stated in the penalty notice under section 37F(3)(a) were incorrect;
(b) that it was unreasonable for the enforcement officer to have given the notice;
(c) that the calculation of an amount stated in the penalty notice was incorrect.
(4) On an appeal under subsection (1), an employment tribunal may—
(a) allow the appeal and cancel the penalty notice;
(b) in the case of an appeal made on the ground that the calculation of an amount stated in the penalty notice was incorrect, allow the appeal and substitute the correct amount for the amount stated in the penalty notice;
(c) dismiss the appeal.
(5) Where an employer has made an appeal under subsection (1), the penalty notice is not enforceable until the appeal has been withdrawn or finally determined.
Interest and recovery
37H (1) This section applies if all or part of a financial penalty which an employer is required by a penalty notice to pay is unpaid at the end of the relevant period.
(2) The relevant period is—
(a) if no appeal is made under section 37G(1) relating to the penalty notice, the period specified in the penalty notice under section 37F(3)(e);
(b) if such an appeal is made, the period ending when the appeal is withdrawn or finally determined.
(3) The outstanding amount of the financial penalty for the time being carries interest—
(a) at the rate that, on the last day of the relevant period, was specified in section 17 of the Judgments Act 1838,
(b) from the end of the relevant period until the time when the amount of interest calculated under this subsection equals the amount of the financial penalty,
(and does not also carry interest as a judgment debt under that section).
(4) The outstanding amount of a penalty and any interest is recoverable—
(a) in England and Wales, if the county court so orders, under section 85 of the County Courts Act 1984 or otherwise as if the sum were payable under an order of the county court;
(b) in Scotland, by diligence as if the penalty notice were an extract registered decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom in Scotland.
(5) Any amount received by the Secretary of State under this Part is to be paid into the Consolidated Fund.
Withdrawal of warning notice
37I (1) Where—
(a) a warning notice has been given (and not already withdrawn),
(b) it appears to an enforcement officer that—
(i) the notice incorrectly omits any statement or is incorrect in any particular, or
(ii) the warning notice was given in contravention of section 37E(3), and
(c) if a penalty notice has been given in relation to the warning notice, any appeal made under section 37G(1) has not been determined,
the officer may withdraw the warning notice by giving notice of withdrawal to the employer.
(2) Where a warning notice is withdrawn, no penalty notice may be given in relation to it.
(3) Where a warning notice is withdrawn after a penalty notice has been given in relation to it—
(a) the penalty notice ceases to have effect;
(b) any sum paid by or recovered from the employer by way of financial penalty payable under the penalty notice must be repaid to the employer with interest at the appropriate rate running from the date when the sum was paid or recovered;
(c) any appeal under section 37G(1) relating to the penalty notice must be dismissed.
(4) In subsection (3)(b), the appropriate rate means the rate that, on the date the sum was paid or recovered, was specified in section 17 of the Judgments Act 1838.
(5) A notice of withdrawal under this section must indicate the effect of the withdrawal (but a failure to do so does not make the notice of withdrawal ineffective).
(6) Withdrawal of a warning notice relating to a relevant sum does not preclude a further warning notice being given in relation to that sum (subject to section 37E(3)).
Withdrawal of penalty notice
37J (1) Where—
(a) a penalty notice has been given (and not already withdrawn or cancelled), and
(b) it appears to an enforcement officer that—
(i) the notice incorrectly omits any statement required by section 37F(3), or
(ii) any statement so required is incorrect in any particular,
the officer may withdraw it by giving notice of the withdrawal to the employer.
(2) Where a penalty notice is withdrawn and no replacement penalty notice is given in accordance with section 37K—
(a) any sum paid by or recovered from the employer by way of financial penalty payable under the notice must be repaid to the employer with interest at the appropriate rate running from the date when the sum was paid or recovered;
(b) any appeal under section 37G(1) relating to the penalty notice must be dismissed.
(3) In a case where subsection (2) applies, the notice of withdrawal must indicate the effect of that subsection (but a failure to do so does not make the withdrawal ineffective).
(4) In subsection (2)(a), “the appropriate rate” means the rate that, on the date the sum was paid or recovered, was specified in section 17 of the Judgments Act 1838.
Replacement penalty notice
37K (1) Where an enforcement officer—
(a) withdraws a penalty notice (“the original penalty notice”) under section 37J, and
(b) is satisfied that the employer failed to pay the specified amount in full before the specified date in accordance with the warning notice in relation to which the original penalty notice was given,
the officer may at the same time give another penalty notice in relation to the warning notice (“the replacement penalty notice”).
(2) The replacement penalty notice must—
(a) indicate the differences between it and the original penalty notice that the enforcement officer reasonably considers material, and
(b) indicate the effect of section 37L.
(3) Failure to comply with subsection (2) does not make the replacement penalty notice ineffective.
(4) Where a replacement penalty notice is withdrawn under section 37J, no further replacement penalty notice may be given under subsection (1) pursuant to the withdrawal.
(5) Nothing in this section affects any power that arises apart from this section to give a penalty notice.
Effect of replacement penalty notice
37L (1) This section applies where a penalty notice is withdrawn under section 37J and a replacement penalty notice is given in accordance with section 37K.
(2) If an appeal relating to the original penalty notice has been made under section 37G(1) and has not been withdrawn or finally determined before the time when that notice is withdrawn—
(a) the appeal (“the earlier appeal”) is to have effect after that time as if it were against the replacement penalty notice, and
(b) the employer may exercise the right under section 37G to appeal against the replacement penalty notice only after withdrawing the earlier appeal.
(3) If a sum was paid by or recovered from the employer by way of financial penalty under the original penalty notice—
(a) an amount equal to that sum (or, if more than one, the total of those sums) is to be treated as having been paid in respect of the replacement penalty notice, and
(b) any amount by which that sum (or total) exceeds the amount of the financial penalty payable under the replacement penalty notice must be repaid to the employer with interest at the appropriate rate running from the date when the sum (or, if more than one, the first of them) was paid or recovered.
(4) In subsection (3)(b) “the appropriate rate” means the rate that, on the date mentioned in that provision, was specified in section 17 of the Judgments Act 1838.
Enforcement officers
37M The Secretary of State may appoint or authorise persons to act as enforcement officers for the purposes of this Part.
Power to amend Part 2A
37N (1) The Secretary of State may by regulations—
(a) amend subsection (5) or (6) of section 37F by substituting a different amount;
(b) amend subsection (4) or (8) of that section by substituting a different percentage;
(c) amend section 37E(4) or 37F(7) or (9) by substituting a different number of days.
(2) Any provision that could be made by regulations under this section may instead be included in an order under section 12A(12).
Modification in particular cases
37O (1) The Secretary of State may by regulations make provision for this Part to apply with modifications in cases where—
(a) two or more financial awards were made against an employer on claims relating to different workers that were considered together by an employment tribunal, or
(b) settlement sums are payable by an employer under two or more settlements in cases dealt with together by a conciliation officer.
(2) Regulations under subsection (1) may in particular provide for any provision of this Part to apply as if any such financial awards or settlement sums, taken together, were a single relevant sum.
(3) The Secretary of State may by regulations make provision for this Part to apply with modifications in cases where a financial award has been made against an employer but is not regarded as outstanding by virtue only of the fact that an application for an order for a costs sum has not been finally determined (or any appeal within section 37B(3)(c) so far as relating to the application could still be made or has not been withdrawn or finally determined).
(4) Regulations under subsection (3) may in particular provide—
(a) for any provision of this Part to apply, or to apply if the enforcement officer so determines, as if the application had not been, and could not be, made;
(b) for any costs sum the amount of which is subsequently determined, or the order for which is subsequently made, to be treated for the purposes of this Part as a separate relevant sum.
Giving of notices
37P (1) For the purposes of section 7 of the Interpretation Act 1978 in its application to this Part, the proper address of an employer is—
(a) if the employer has notified an enforcement officer of an address at which the employer is willing to accept notices, that address;
(b) otherwise—
(i) in the case of a body corporate, the address of the body's registered or principal office;
(ii) in the case of a partnership or an unincorporated body or association, the principal office of the partnership, body or association;
(iii) in any other case, the last known address of the person in question.
(2) In the case of—
(a) a body corporate registered outside the United Kingdom,
(b) a partnership carrying on business outside the United Kingdom, or
(c) an unincorporated body or association with offices outside the United Kingdom,
the references in subsection (1) to its principal office include references to its principal office within the United Kingdom (if any).
Financial penalties for non-payment: interpretation
37Q (1) In this Part, the following terms have the following meanings—
“claim”—
means anything that is referred to in the relevant legislation as a claim, a complaint or a reference, other than a reference made by virtue of section 122(2) or 128(2) of the Equality Act 2010 (reference by court of question about a non-discrimination or equality rule etc), and
also includes an application, under regulations made under section 45 of the Employment Act 2002, for a declaration that a person is a permanent employee;
“costs sum” has the meaning given by section 37A;
“employer” has the same meaning as in section 12A;
“enforcement officer” means a person appointed or authorised to act under section 37M;
“financial award” has the meaning given by section 37A;
“penalty notice” has the meaning given by section 37F;
“relevant appeal” has the meaning given by section 37A;
“relevant sum” has the meaning given by section 37A;
“settlement sum” has the meaning given by section 37A;
“specified amount” and “specified date”, in relation to a warning notice or a penalty notice given in relation to it, have the meanings given by section 37E(2);
“unpaid amount”—
in relation to a financial award, has the meaning given by section 37B;
in relation to a settlement sum, has the meaning given by section 37C;
subject, in each case, to section 37D;
“warning notice” has the meaning given by section 37E(2);
“worker” has the same meaning as in section 12A.
(2) References in this Part to an employer, in relation to a warning notice or penalty notice, are to the person to whom the notice is given (whether or not the person is an employer at the time in question).
(3) For the purposes of this Part a relevant sum is to be regarded as having been paid in full when the amount unpaid in respect of that sum on the date of payment has been paid.
(4) For the purposes of this Part, a penalty notice is given in relation to a warning notice if it is given as the result of a failure by the employer to pay the specified amount before the specified date.
(5) The Secretary of State may by regulations amend this section so as to alter the meaning of “claim”.
(6) Any provision that could be made by regulations under subsection (5) may instead be included in an order under section 12A(12).
(3) In section 12A (financial penalties), after subsection (12) insert—
(12A) Any provision that could be made by an order under subsection (12) may instead—
(a) in the case of provision that could be made under paragraph (a) or (b) of that subsection, be included in regulations under section 37N;
(b) in the case of provision that could be made under paragraph (c) of that subsection, be included in regulations under section 37Q.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) In section 41 (orders, regulations and rules), in subsection (2)—
(a) after “38(4),” omit “and”;
(b) after “40,” insert “ and no regulations are to be made under section 37N, 37O or 37Q(5), ”;
(c) for “or order” substitute “ , order or regulations ”,
and in subsection (3)(b) for “regulations” substitute “ any other regulations ”.
(6) In section 42(1) (interpretation), after “In this Act” insert “ (except where otherwise expressly provided) ”.
(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8) The amendments made by this section have effect only in relation to relevant sums where—
(a) in the case of a financial award, the decision of the employment tribunal on the claim to which the financial award relates is made on or after the day on which this section comes into force;
(b) in the case of a settlement sum, the certificate under section 19A(1) of the Employment Tribunals Act 1996 in respect of the settlement under whose terms it is payable is issued on or after that day.
(1) The Employment Tribunals Act 1996 is amended as follows.
(2) In section 7 (employment tribunal procedure regulations), after subsection (3ZA) insert—
(3ZB) Provision in employment tribunal procedure regulations about postponement of hearings may include provision for limiting the number of relevant postponements available to a party to proceedings.
(3ZC) For the purposes of subsection (3ZB)—
(a) “relevant postponement”, in relation to a party to proceedings, means the postponement of a hearing granted on the application of that party in—
(i) the proceedings, or
(ii) any other proceedings identified in accordance with the regulations,
except in circumstances determined in accordance with the regulations, and
(b) “postponement” includes adjournment.
(3) In section 13 (costs and expenses), after subsection (2) insert—
(3) Provision included in employment tribunal procedure regulations under subsection (1) must include provision for requiring an employment tribunal, in any proceedings in which a late postponement application has been granted, to consider whether to make an award against the party who made the application in respect of any costs or expenses connected with the postponement, except in circumstances specified in the regulations.
(4) For the purposes of subsection (3)—
(a) a late postponement application is an application for the postponement of a hearing in the proceedings which is made after a time determined in accordance with the regulations (whether before or after the hearing has begun), and
(b) “postponement” includes adjournment.
(4) In section 13A (payments in respect of preparation time), after subsection (2) insert—
(2A) Provision included in employment tribunal procedure regulations under subsection (1) must include provision for requiring an employment tribunal, in any proceedings in which a late postponement application has been granted, to consider whether to make an order of the kind mentioned in subsection (1) against the party who made the application in respect of any time spent in connection with the postponement, except in circumstances specified in the regulations.
(2B) For the purposes of subsection (2A)—
(a) a late postponement application is an application for the postponement of a hearing in the proceedings which is made after a time determined in accordance with the regulations (whether before or after the hearing has begun), and
(b) “postponement” includes adjournment.
153 Exclusivity terms unenforceable in zero hours contracts
(1) The Employment Rights Act 1996 is amended as follows.
(2) After section 27 insert—
PART 2A Zero hours workers
Exclusivity terms unenforceable in zero hours contracts
27A (1) In this section “zero hours contract” means a contract of employment or other worker's contract under which—
(a) the undertaking to do or perform work or services is an undertaking to do so conditionally on the employer making work or services available to the worker, and
(b) there is no certainty that any such work or services will be made available to the worker.
(2) For this purpose, an employer makes work or services available to a worker if the employer requests or requires the worker to do the work or perform the services.
(3) Any provision of a zero hours contract which—
(a) prohibits the worker from doing work or performing services under another contract or under any other arrangement, or
(b) prohibits the worker from doing so without the employer's consent,
is unenforceable against the worker.
(4) Subsection (3) is to be disregarded for the purposes of determining any question whether a contract is a contract of employment or other worker's contract.
Power to make further provision in relation to zero hours workers
27B (1) The Secretary of State may by regulations make provision for the purpose of securing that zero hours workers, or any description of zero hours workers, are not restricted by any provision or purported provision of their contracts or arrangements with their employers from doing any work otherwise than under those contracts or arrangements.
(2) In this section, “zero hours workers” means—
(a) employees or other workers who work under zero hours contracts;
(b) individuals who work under non-contractual zero hours arrangements;
(c) individuals who work under worker's contracts of a kind specified by the regulations.
(3) The worker's contracts which may be specified by virtue of subsection (2)(c) are those in relation to which the Secretary of State considers it appropriate for provision made by the regulations to apply, having regard, in particular, to provision made by the worker's contracts as to income, rate of pay or working hours.
(4) In this section “non-contractual zero hours arrangement” means an arrangement other than a worker's contract under which—
(a) an employer and an individual agree terms on which the individual will do any work where the employer makes it available to the individual and the individual agrees to do it, but
(b) the employer is not required to make any work available to the individual, nor the individual required to accept it,
and in this section “employer”, in relation to a non-contractual zero hours arrangement, is to be read accordingly.
(5) Provision that may be made by regulations under subsection (1) includes provision for—
(a) modifying—
(i) zero hours contracts;
(ii) non-contractual zero hours arrangements;
(iii) other worker's contracts;
(b) imposing financial penalties on employers;
(c) requiring employers to pay compensation to zero hours workers;
(d) conferring jurisdiction on employment tribunals;
(e) conferring rights on zero hours workers.
(6) Provision that may be made by virtue of subsection (5)(a) may, in particular, include provision for exclusivity terms in prescribed categories of worker's contracts to be unenforceable, in cases in which section 27A does not apply.
For this purpose an exclusivity term is any term by virtue of which a worker is restricted from doing any work otherwise than under the worker's contract.
(7) Regulations under this section may—
(a) make different provision for different purposes;
(b) make provision subject to exceptions.
(8) For the purposes of this section—
(a) “zero hours contract” has the same meaning as in section 27A;
(b) an employer makes work available to an individual if the employer requests or requires the individual to do it;
(c) references to work and doing work include references to services and performing them.
(9) Nothing in this section is to be taken to affect any worker's contract except so far as any regulations made under this section expressly apply in relation to it.
(3) In section 236(3) (orders and regulations subject to affirmative procedure), after “made under section” insert “ 27B, ”.
153A Regulations to restrict public sector exit payments
(1) Regulations may make provision to secure that the total amount of exit payments made to a person in respect of a relevant public sector exit does not exceed £95,000.
(2) Where provision is made under subsection (1) it must also secure that if, in any period of 28 consecutive days, two or more relevant public sector exits occur in respect of the same person, the total amount of exit payments made to the person in respect of those exits does not exceed the amount provided for in subsection (1).
(3) An exit payment is in respect of a relevant public sector exit if it is made—
(a) to an employee of a prescribed public sector authority in consequence of the employee leaving employment, or
(b) to a holder of a prescribed public sector office in consequence of the office-holder leaving office.
(4) An exit payment is a payment of a prescribed description.
(5) The descriptions of payment which may be prescribed include—
(a) any payment on account of dismissal by reason of redundancy (read in accordance with section 139 of the Employment Rights Act 1996);
(b) any payment on voluntary exit;
(c) any payment to reduce or eliminate an actuarial reduction to a pension on early retirement or in respect of the cost to a pension scheme of such a reduction not being made;
(d) any severance payment or other ex gratia payment;
(e) any payment in respect of an outstanding entitlement;
(f) any payment of compensation under the terms of a contract;
(g) any payment in lieu of notice;
(h) any payment in the form of shares or share options.
(6) In this section a reference to a payment made to a person includes a reference to a payment made in respect of that person to another person.
(7) For the purposes of subsection (2), a public sector exit occurs when the person leaves the employment or office in question (regardless of when any exit payment is made).
(8) Regulations may include—
(a) provision which exempts from any provision made under subsection (1) exit payments, or exit payments of a prescribed description, made in prescribed circumstances;
(b) provision which, in consequence of provision made under subsection (1), amends a relevant public sector scheme so as to make any duty or power under the scheme to make exit payments subject to any restriction imposed by regulations under subsection (1) (taking account of any relaxation of such a restriction which may be made under section 153C);
(c) provision which makes an amendment of any provision made by or under an enactment (whenever passed or made) which is necessary or expedient in consequence of any provision made by or under this section.
(9) Regulations may substitute a different amount for the amount for the time being specified in subsection (1).
(10) Nothing in this section applies in relation to payments made by authorities who wholly or mainly exercise functions which could be conferred by provision included in an Act of the Northern Ireland Assembly made without the consent of the Secretary of State (see sections 6 to 8 of the Northern Ireland Act 1998).
(11) In this section—
“enactment” includes an Act of the Scottish Parliament, a Measure or Act of the National Assembly for Wales and Northern Ireland legislation;
“prescribed” means prescribed by regulations under this section;
“relevant public sector scheme” means—
a scheme under section 1 of the Superannuation Act 1972 (civil servants);
a scheme under section 7 of that Act (local government workers);
a scheme under section 9 of that Act (teachers);
a scheme under section 10 of that Act (health service workers);
a scheme under section 1 of the Public Service Pensions Act 2013 (schemes for persons in public service);
a scheme under section 26 of the Fire Services Act 1947 or section 34 of the Fire and Rescue Services Act 2004 (fire and rescue workers);
a scheme under section 1 of the Police Pensions Act 1976 or section 48 of the Police and Fire Reform (Scotland) Act 2012 (members of police forces);
any other prescribed scheme (whether established by or under an enactment or otherwise).
153B Supplementary provision about regulations under section 153A
(1) Subject to subsection (2), the power to make regulations under section 153A is exercisable—
(a) by the Scottish Ministers, in relation to payments made by a relevant Scottish authority;
(b) by the Welsh Ministers, in relation to relevant Welsh exit payments;
(c) by the Treasury, in relation to any other payments.
(2) Where the relevant Scottish authority is the Scottish Administration (or a part of it) the power to make regulations under section 153A is exercisable by the Treasury (instead of the Scottish Ministers)—
(a) in relation to payments made to the holders of offices in the Scottish Administration which are not ministerial offices (read in accordance with section 126(8) of the Scotland Act 1998), and
(b) in relation to payments made to members of the staff of the Scottish Administration (read in accordance with section 126(7)(b) of that Act).
(3) The power to make provision of the kind mentioned in section 153A(8)(b) (power to amend public sector schemes), so far as exercisable by the Treasury, is also exercisable concurrently by any other Minister of the Crown (within the meaning of the Ministers of the Crown Act 1975) with the consent of the Treasury.
(4) Regulations under section 153A—
(a) if made by the Treasury, are subject to the affirmative resolution procedure;
(b) if made by the Scottish Ministers, are subject to the affirmative procedure;
(c) if made by the Welsh Ministers, may not be made unless a draft of the statutory instrument containing them has been laid before, and approved by a resolution of, the National Assembly for Wales.
(5) In this section “relevant Scottish authority” means—
(a) the Scottish Parliamentary Corporate Body, or
(b) any authority which wholly or mainly exercises functions within devolved competence (within the meaning of section 54 of the Scotland Act 1998).
(6) In this section “relevant Welsh exit payments” means exit payments made to holders of the following offices—
(a) member of the National Assembly for Wales;
(b) the First Minister for Wales;
(c) Welsh Minister appointed under section 48 of the Government of Wales Act 2006;
(d) Counsel General to the Welsh Government;
(e) Deputy Welsh Minister;
(f) member of a county council or a county borough council in Wales;
(g) member of a National Park Authority in Wales;
(h) member of a Fire and Rescue Authority in Wales.
153C Power to relax restriction on public sector exit payments
(1) A Minister of the Crown may relax any restriction imposed by regulations made by the Treasury under section 153A.
(2) The Scottish Ministers may relax any restriction imposed by regulations made by the Scottish Ministers under section 153A.
(3) The Welsh Ministers may relax any restriction imposed by regulations made by the Welsh Ministers under section 153A.
(4) A requirement may be relaxed—
(a) in respect of a particular employee or office-holder or a description of employees or office-holders;
(b) in relation to the whole or any part of an exit payment, or a description of exit payments.
(5) Regulations under section 153A made by the Treasury may—
(a) make provision for the power under subsection (1) to be exercisable on behalf of a Minister of the Crown by a person specified in the regulations;
(b) except in relation to exit payments made by a devolved Welsh authority, make provision for a requirement to be relaxed only—
(i) with the consent of the Treasury, or
(ii) following compliance with any directions given by the Treasury;
(c) make provision as to the publication of information about any relaxation of a requirement granted.
(6) Regulations under section 153A made by the Scottish Ministers may—
(a) make provision for the power under subsection (2) to be exercisable on behalf of the Scottish Ministers by a person specified in the regulations;
(b) where provision is made by virtue of paragraph (a), make provision for a requirement to be relaxed only—
(i) with the consent of the Scottish Ministers, or
(ii) following compliance with any directions given by the Scottish Ministers;
(c) make provision as to the publication of information about any relaxation of a requirement granted.
(7) Regulations under section 153A made by the Welsh Ministers may—
(a) make provision for the power under subsection (3) to be exercisable on behalf of the Welsh Ministers by a person specified in the regulations;
(b) where provision is made by virtue of paragraph (a), make provision for a requirement to be relaxed only—
(i) with the consent of the Welsh Ministers, or
(ii) following compliance with any directions given by the Welsh Ministers;
(c) make provision as to the publication of information about any relaxation of a requirement granted.
(8) Regulations made by the Treasury under section 153A(1)—
(a) must, if they make provision in relation to exit payments made by a devolved Welsh authority, provide for the power conferred on a Minister of the Crown by subsection (1) to be exercised instead by the Welsh Ministers in relation to those exit payments;
(b) may provide for the power conferred on a Minister of the Crown by subsection (1) to be exercised instead by the Welsh Ministers in relation to exit payments made by any other authority who is not a devolved Welsh authority but who wholly or mainly exercises functions in relation to Wales (but this does not limit the provision that may be made under subsection (5)(a)).
(9) In this section—
“Minister of the Crown” has the same meaning as in the Ministers of the Crown Act 1975;
“devolved Welsh authority” has the same meaning as in the Government of Wales Act 2006 (see section 157A of that Act).
154 Regulations in connection with repayment of public sector exit payments
(1) Regulations may make provision requiring the repayment of some or all of any qualifying exit payment in qualifying circumstances (see section 155).
(2) The regulations may make such other provision in connection with the repayment mentioned in subsection (1) as the person making the regulations thinks fit.
(3) A qualifying exit payment is a payment of a prescribed description—
(a) made to an employee of a prescribed public sector authority in consequence of the employee leaving employment, or
(b) made to a holder of a prescribed public sector office in consequence of the office holder leaving office.
(4) The descriptions of payment which may be prescribed by virtue of subsection (3) include—
(a) any payment on account of dismissal by reason of redundancy (read in accordance with section 139 of the Employment Rights Act 1996),
(b) any payment on voluntary exit,
(c) any payment to reduce or eliminate an actuarial reduction to a pension on early retirement or in respect of the cost to a pension scheme of such a reduction not being made ,
(d) any severance payment or other ex gratia payment,
(e) any payment in respect of an outstanding entitlement (such as to annual leave or an allowance),
(f) any payment of compensation under the terms of a contract,
(g) any payment in lieu of notice, and
(h) any payment in the form of shares or share options.
(5) If more than one qualifying exit payment is payable to an employee or office holder the provision made in the exit payments regulations is to apply in relation to the aggregated payments.
(6) For the purposes of this section and sections 155 and 157—
an “exit payee” is an employee or office holder to whom any qualifying exit payment is payable,
the “exit payments regulations” are regulations under subsection (1),
a “responsible authority” means an authority by which any qualifying exit payments are payable, and
“prescribed” means prescribed by the exit payments regulations.
(7) In this section a reference to a payment made to a person includes a reference to a payment made in respect of that person to another person.
(1) For the purposes of section 154(1) circumstances are qualifying circumstances if—
(a) an exit payee becomes—
(i) an employee or a contractor of a prescribed public sector authority, or
(ii) a holder of a prescribed public sector office,
(b) less than one year has elapsed between the exit payee leaving the employment or office in respect of which a qualifying exit payment is payable and the event mentioned in paragraph (a), and
(c) any other prescribed conditions are met.
(2) The exit payment regulations may, in particular, make provision—
(a) exempting an exit payee from the requirement to repay in the prescribed circumstances;
(b) exempting some or all of a qualifying exit payment from that requirement in the prescribed circumstances;
(c) for the amount required to be repaid to be tapered according to the time which has elapsed between an exit payee leaving employment or office and the event mentioned in subsection (1)(a);
(d) imposing duties, in connection with a qualifying exit payment, on—
(i) an exit payee,
(ii) a responsible authority, and
(iii) a subsequent authority;
(e) as to the arrangements required to be made by an exit payee to repay to a responsible authority the amount of a qualifying exit payment required to be repaid;
(f) for preventing an exit payee from becoming an employee or a contractor, or a holder of a public sector office, as mentioned in subsection (1)(a) until the arrangements required by virtue of paragraph (e) have been made;
(g) as to the consequences of an exit payee failing to repay the amount required to be repaid (including the dismissal of the exit payee).
(3) In subsection (2)(d)(iii) a “subsequent authority” means—
(a) in relation to an exit payee who becomes an employee or a contractor, a public sector authority of which the exit payee becomes an employee or a contractor, or
(b) in relation to an exit payee who becomes a holder of a public sector office, an authority which is responsible for the appointment.
(4) For the purposes of this section an exit payee becomes a contractor of a public sector authority if the exit payee provides services to the authority under a contract for services.
156 Power to make regulations under section 154(1) to be exercisable by the Treasury or Scottish Ministers
(1) The power to make regulations under section 154(1) is exercisable—
(a) by the Scottish Ministers in relation to payments made by a relevant Scottish authority;
(b) by the Treasury in relation to any other payments,
(but this subsection is subject to subsection (2)).
(2) Where the relevant Scottish authority is the Scottish Administration the power to make regulations under section 154(1) is exercisable by the Treasury (instead of the Scottish Ministers) in relation to payments made to—
(a) the holders of offices in the Scottish Administration which are not ministerial offices (read in accordance with section 126(8) of the Scotland Act 1998), and
(b) the members of the staff of the Scottish Administration (read in accordance with section 126(7)(b) of that Act).
(3) In this section “relevant Scottish authority” means—
(a) the Scottish Parliamentary Corporate Body, or
(b) any authority which wholly or mainly exercises functions which would be within devolved competence (within the meaning of section 54 of the Scotland Act 1998).
(4) The first regulations made by the Treasury under section 154(1) are subject to the affirmative resolution procedure.
(4A) The first regulations made by the Scottish Ministers under section 154(1) are subject to the affirmative procedure.
(5) Any other regulations under section 154(1)—
(a) if made by the Treasury, are subject to negative resolution procedure;
(b) if made by the Scottish Ministers, are subject to the negative procedure.