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Can employers reduce their pension contributions?

  • Yes, if contributions to a defined contribution (“DC”) scheme exceed statutory minimum for auto-enrolment purposes, it may be possible to reduce employer contributions to the statutory minimum, but not further.
  • However, the processes required for reduction of DC employer contributions will necessitate obtaining legal advice:
    • Reducing employer contributions may require changes to the employment contracts of affected staff (as does the furlough process).
    • Reducing employer contributions may also require negotiation with trade unions or other staff representative forums.
    • Where group personal pensions are used, the contractual format may not permit changes of employer contributions, and hence it may also be necessary to enter into a new contractual arrangement. Choosing a new group personal pension plan is a not insignificant task in itself.
    • Employers with at least 50 employees are required to conduct a 60-day consultation process with affected employees if they propose to reduce employer contributions (but please see below).
    • Finally, it may require a change to the scheme rules and engagement with the scheme trustees if the scheme is operated under trust.
  • For DB schemes, specific considerations apply (see the last section, below).

Related FAQs

Is it legally enforceable?

The guidance is non-statutory and is not binding on business. However, businesses should be aware that there might be reputational consequences if they do not follow the guidance; we have already seen in the context of taking advantage of furlough funding that not being in breach of the law is no protection against negative publicity. Further to the extent a contract expressly requires parties to act reasonably, it could be expected that this guidance is one of the factors a court would consider in determining what is reasonable.

What are the publicity requirements for Traffic Regulation Orders?

In making a Traffic Regulation Order (“TRO”) local authorities must follow the regulations, which include provisions relating to publicity requiring publishing the notice in a local newspaper, making the orders available for public inspection at a Council’s offices (which are likely to be closed to the public during this time) and where considered appropriate, posting the notices on the streets.

In recognition of the potential difficulties with complying with the publicity requirements, the Department for Transport has issued guidance as to how a Council may still publicise a TRO. The guidance recognises that not everyone may be able to access local newspapers online and suggests that people and organisations could be adequately informed by means of letter, leaflet drops, or local radio. In respect of making the relevant document available at the Council’s offices, the guidance suggests that notices could be placed online or outside offices with brief details and including a telephone number or email to use to request a hard copy of the documents.

While the guidance is helpful, it is important to note that it is guidance only and that the regulations have not been relaxed. Authorities will still need to demonstrate that they have satisfied all of the publicity arrangements in respect of the TRO.

Can an employee who has the resources to work from home, but struggles to do so, attend their place of work during the national lockdown?

Whilst many employees may now have the resources and equipment to work from home, an employee may struggle to effectively work from home for a number of reasons. For example, an employee may not have a suitable working environment where they can work without being disturbed or alternatively, working from home for prolonged periods of time may be having a detrimental impact on the employee’s mental well-being.

In circumstances such as these, employers must carry out a careful assessment. Unfortunately, there is not any specific guidance as to when an individual cannot ‘reasonably’ work from home – it is likely that each case will be fact specific.

In relation to employees who are struggling with their mental well-being, employers owe their employees a duty of care. It is crucial that procedures are in place which will enable an employer to recognise the signs of stress as early as possible. In the circumstances, it may be appropriate to allow an employee to attend their place of work if this would help alleviate work-related stress or to prevent mental health issues.

What are the consequences of the shake up of the planning Use Class system?

The Town and Country Planning (Use Classes) (Amendment) (England Regulations) 2020 were laid before Parliament and come into force on 1 September 2020. They apply in England only.

The changes include the revocation of the following Use Classes;

  • A1 – shops
  • A2 – financial and professional services
  • A3 – restaurants and cafes
  • A4 – drinking establishments
  • A5 – hot food takeaways
  • B1 – business. Also revoked are the sub parts of B1;
    • B1(a) – offices
    • B1(b) – research and development of products and processes
    • B1(c ) – industrial process
  • D1 – non residential institutions
  • D2 – assembly and leisure

The changes include the amendment of the following Use Class;

  • B2 (industry)

The changes include the introduction of the following Use Classes;

  • E – commercial, business and service
  • F.1 – learning and non-residential institutions
  • F.2 – Local community

There are no changes to the following Use Classes;

  • C1 – hotels, boarding and guest houses
  • C2 – residential institutions
  • C3 – dwellinghouses
  • C4 – small HMO

From 1 September 2020;

  • Small retail shops (not more than 280 sq metres net sales area) selling essential goods including food and at least 1 kilometre from another shop will cease being an A1 use and will become a F.2 (local community) use;
  • Other A1 shops will become an E (commercial, business and service) use;
  • A2 uses will become an E (commercial, business and service) use;
  • A3 uses will become an E (commercial, business and service) use;
  • A4 uses will not be in a Use Class, they will be sui generis, ie not in any use class;
  • A5 uses will not be in a Use Class, they will be sui generis, ie not in any use class;
  • B1 uses (included B1(a), B1 (b) and B1 (c) will become an E (commercial, business and service) use;
  • B2 uses will either be B2 uses or will be Class E uses.
  • Clinics, health centres, creches, day nurseries and day centres (previously D1 uses) will become an E (commercial, business and service) use;
  • Schools, non residential education and training centres, museums, public libraries, public halls, exhibition halls, places of worship, law courts (previously D1 uses) will become an F.1 ( learning and non-residential institutions) use;
  • Cinemas, concert halls, live music performance venues, bingo halls and dance halls (previously D2 uses) and will be sui generis, ie not in any use class;
  • Gyms, indoor sport, recreation or fitness not involving motorised vehicles or firearms principally to visiting members of the public (previously D2 uses) will become an E (commercial, business and service) use;
  • Hall or meeting place for the principal use of the local community (previously D2 uses) will become an F.2 (local community) use;
  • Indoor or outdoor swimming baths, skating rinks, outdoor sports or recreation grounds (not involving motorised vehicles or firearms) (previously D2 uses) will become an F.2 (local community) use.

Changes of use within a Use Class do not constitute development. That being the case, provided the Order is applicable, its operation not having been restricted by planning condition, Agreement or Article 4 (1) Direction for example, planning permission would not be required, development as defined not happening.  If legally binding confirmation is required that planning permission is not required this can only be obtained by way of a successful application for a Certificate of Lawfulness. In the absence of such, there is some risk.

It remains the case that planning permission may be required for operational works to buildings. It also remains the case that other consents and permissions may be necessary for example licenses. Furthermore amendments to leases may be required if the property is rented.

The Regulations additionally include transitional arrangements because of permitted development rights for changes of use in the Town and Country Planning (General Permitted Development) (England) Order amongst others.  To respond to this Regulations introduce a ‘material period’ which is defined as meaning the period beginning 1 September 2020 and ending 31 July 2021. It is expected during the material period the Orders giving permitted development rights for changes for use which do constitute development will be amended / updated to reflect the new use classes.

Click here to view the Regulations.

The above is based on our understanding of the new Regulations at the time of issue and in advance of planning practice guidance being issued.

Will funding audits continue during the coronavirus pandemic?

Funding audits are being paused and no new audits will be commenced during the lockdown period.