REUTERS | Clodagh Kilcoyne

What you may have missed over the festive break

The week before Christmas saw several developments in relation to the UK audit market, including publication of the final report of the Kingman review. Meanwhile the government announced extensive employment law reforms following the Taylor Review and published a White Paper on the UK’s future skills-based immigration system. The Court of Appeal also gave judgment in a key employment status case.

Final report of the Kingman review published

BEIS published the final report of the independent review of the Financial Reporting Council (FRC) led by Sir John Kingman on 18 December 2018. The review recommends that the FRC be replaced, as soon as possible, with a new independent regulator to be called the Audit, Reporting and Governance Authority. Among the review’s 82 other recommendations are that the new regulator should be given a range of extensive new powers in the interests of averting major corporate failures, and the government should review and possibly extend the definition of public interest entity.

Independent review of UK audit standards announced

On the same day the Kingman report was published, BEIS also announced an independent review into the quality and effectiveness of the UK audit market. The review will build on the Competition and Markets Authority’s (CMA) market study into the effectiveness of competition in the audit market and the findings of the Kingman review of the FRC. Detailed terms of reference and a project plan will be published in 2019.

CMA update paper on statutory audit proposes reforms to improve competition

Also on 18 December 2018, the CMA published an update paper on its market study into competition in the statutory audit market. The CMA has provisionally found that, due to previous reforms to the statutory audit market there have been some improvements in the functioning of the market, in particular in relation to the number of tenders. However, it considers that there remain concerns about the quality of audits. The CMA is proposing a range of remedies, in the form of recommendations to government for legislative reforms. It invites comments on the issues identified and remedies proposed by 21 January 2019.

Government announces extensive employment law reforms following Taylor Review

The government has published the “Good Work Plan”, a strategy document setting out further detail on its response to the Taylor Review of employment practices in the modern economy. The Good Work Plan confirms the Government’s intention to legislate to:

“improve the clarity of the employment status tests, reflecting the reality of modern working relationships”.

The government also intends to legislate to improve protection for agency workers, zero-hours workers and others with atypical working arrangements. The Good Work Plan also sets out proposals for improving enforcement. For example, the government has now introduced a process for publishing the names of employers who fail to pay tribunal awards on time.

The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 (SI 2018/1378) were laid before Parliament on 17 December 2018, implementing aspects of the government’s Good Work Plan. The regulations come into force on 6 April 2020 and amend the Employment Rights Act 1996 to provide that a written statement of terms must be given on or before the first day of employment, rather than within two months of employment starting.

Government publishes White Paper on the UK’s future skills-based immigration system

The government published its long awaited White Paper on the UK’s future skills-based immigration system on 19 December 2018. The key provisions set out in the White Paper include:

  • Ending freedom of movement.
  • Reducing net migration to sustainable levels.
  • Applying the same UK Immigration Rules to all migrants from 2021.

The government intends to modify Tier 2 of the points based system by simplifying the sponsorship regime, reducing the skills threshold, abolishing the resident labour market test and removing the annual cap on the number of skilled workers.

Court of Appeal holds by majority that Uber drivers have worker status

In Uber BV and others v Aslam and others [2018] EWCA Civ 2748, a majority of the Court of Appeal upheld the decision of an employment tribunal that Uber drivers are workers. The essential question regarding worker status was whether Uber contracts with passengers to provide services which the drivers perform, or whether, as contended by Uber, it acts only as an intermediary, providing booking and payment services, and the drivers work as independent contractors. It now seems certain that this case will ultimately be determined by the Supreme Court as Uber has been given permission to appeal. The case will have wide-ranging implications for the gig economy in general, and its outcome will be keenly awaited.

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