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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) 5it 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) 10the 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
15direction;

(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
20be 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
25has 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) 30A 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
35meaning as in section 391O.

130 Power for Secretary of State to obtain information

After section 391R of the Insolvency Act 1986 (inserted by section 129) insert—

General

391S Power for Secretary of State to obtain information

(1) A person mentioned in subsection (2) must give the Secretary of State
40such 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;

Small Business, Enterprise and Employment BillPage 111

(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
5to 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) 10the 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
15may 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.

131 Compliance orders

20After section 391S of the Insolvency Act 1986 (inserted by section 130) insert—

391T Compliance orders

(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) 25any 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,
30it 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.

Power to establish single regulator of insolvency practitioners

132 35Power 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) 40The designated body may be either—

(a) a body corporate established by the regulations, or

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(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) 5establishing 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) 10establishing 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) 15imposing 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) 20The 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) 25Provision 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
30treating 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) 35Expressions 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 133 makes further provision about regulations under this section which
designate an existing body.

(9) Schedule 10 makes supplementary provision in relation to the designation of a
40body by regulations under this section.

133 Regulations under section 132: designation of existing body

(1) The Secretary of State may make regulations under section 132 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
45conferred by the regulations, and

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(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) 5that 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
10or other provisions relating to the exercise of the functions by the designated
body as appear to the Secretary of State to be appropriate.

134 Regulations under section 132: timing and supplementary

(1) Section 132 and, accordingly, section 133 and subsections (3) and (4) below
expire at the end of the relevant period unless the power conferred by
15subsection (1) of section 132 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 132 comes into force.

(3) Regulations under section 132 are subject to affirmative resolution procedure.

(4) If a draft of a statutory instrument containing regulations under section 132
20would, 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

Part 11 Employment

25Whistleblowing

135 Protected disclosures: reporting requirements

(1) The Employment Rights Act 1996 is amended as follows.

(2) In Part 4A (protected disclosures), after section 43F insert—

43FA Prescribed persons: duty to report on disclosures of information

(1) 30The 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
35enable 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.

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(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
5Parliament;

(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
10which 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
15(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).

20Employment tribunals: failure to pay sums

136 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 37 insert—

25 Part 2A Financial penalties for failure to pay sums ordered to be paid or
settlement sums
37A Sums to which financial penalty can relate

(1) This section has effect for the purposes of this Part.

(2) 30“Financial award” means a sum of money ordered by an employment
tribunal, or on a relevant appeal, to be paid by an employer on a claim
involving the employer and a worker, other than a financial penalty
under section 12A.

(3) “Settlement sum” means a sum payable by an employer to a worker
35under the terms of a settlement in respect of which a certificate has been
issued under section 19A(1).

(4) “Relevant sum” means—

(a) a financial award, or

(b) a settlement sum.

(5) 40In subsection (2) “relevant appeal”, in relation to a financial award,
means an appeal against—

Small Business, Enterprise and Employment BillPage 115

(a) the decision on the claim to which it relates,

(b) the making of the financial award,

(c) the amount of the award, or

(d) any decision made on an appeal within paragraphs (a) to (c) or
5this paragraph.

(6) Sections 37B to 37D apply for the purposes of calculating the unpaid
amount on any day of a relevant sum.

37B Financial award: unpaid amount

(1) In the case of a financial award, the unpaid amount on any day means
10the amount outstanding immediately before that day in respect of—

(a) the initial amount of the financial award (see subsection (2)),
and

(b) subject to subsection (4), interest payable in respect of the
financial award by virtue of section 14.

(2) 15The 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)), and

(b) in any other case, the sum of money ordered to be paid,

adjusted in accordance with subsection (3).

(3) 20The initial amount of a financial award—

(a) includes (or, if it is the only amount the employer has been
ordered to pay, comprises) any amount the employer has been
ordered by an employment tribunal to pay in respect of
employment tribunal fees;

(b) 25does not include—

(i) any other amount payable by virtue of section 13 or 13A;

(ii) any amount payable by virtue of section 34;

(iii) any other amount payable in respect of costs or
expenses.

(4) 30Interest in respect of the financial award included under subsection
(1)(b) in the calculation of the unpaid amount does not include interest
(if any) in respect of any amount excluded from the initial amount
under subsection (3).

(5) An amount in respect of a financial award is not to be regarded as
35outstanding—

(a) when the employer or worker could appeal against—

(i) the decision on the claim to which it relates,

(ii) the making of the financial award,

(iii) the amount of the award, or

(iv) 40any decision made on an appeal within sub-paragraphs
(i) to (iii) or this sub-paragraph,

but has not done so, or

(b) when the employer or worker has made such an appeal but the
appeal has not been withdrawn or finally determined.

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37C Settlement sum: unpaid amount

(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) 5interest (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).

37D 10Unpaid amount of relevant sum: further provision

(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) 15a 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,

20any 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) 25the 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) 30interest 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) Where a payment by an employer is made, or purported to be made, in
35respect 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
40payment treated as being in respect of the relevant sum.

37E Warning notice

(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,
45to pay an instalment on or before the day on which it is due to
be paid, or

Small Business, Enterprise and Employment BillPage 117

(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
5relevant 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).

This is subject to subsection (3).

(3) 10Where 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) 15if 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
20on 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
25payment 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) 30about 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) 35The 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
40paid 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.

37F Penalty notice

(1) 45This section applies where an enforcement officer—

(a) has given a warning notice to an employer, and

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(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
5State.

(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) 10the 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) 15the 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) 20If 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
25than 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
30the 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) 35for 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
40to pay any increase in the unpaid amount of the relevant sum between
the specified date and the date of payment.

37G Appeal against penalty notice

(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
45penalty must be paid), appeal against—

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(a) the penalty notice; or

(b) the amount of the financial penalty.

(2) An appeal under subsection (1) lies—

(a) in England and Wales, to the county court;

(b) 5in Scotland, to the sheriff.

(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) 10that 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), the county court or sheriff may—

(a) 15allow 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) 20dismiss 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.

37H Interest and recovery

(1) 25This 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
30notice, 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
35carries 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
40amount 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
45sum were payable under an order of the county court;

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