The Small Business Commissioner, with the support of the Department of Business and Trade has announced that a new Code will be launched to replace the Prompt Payment Code. Details of the new Fair Payment Code will be announced later in the year.

Nothing has changed for the moment. It has simply been announced that a new Code will be launched to replace the Prompt Payment Code. The Fair Payment Code will be launched later in the year and full details of how to apply for the new Code will be made available at that time.

The Prompt Payment Code remains open for signatories, but will be suspended and eventually closed once the new Fair Payment Code is launched. Companies can still apply to the Prompt Payment Code but should be aware that this will change later in the year. Companies expressing an interest in the Prompt Payment Code, as well as existing signatories, will be contacted with details of how to apply for the Fair Payment Code once it is launched.

Feedback from stakeholders highlighted a number of issues with the Prompt Payment Code’s operation which is affecting its effectiveness. A new Fair Payment Code will be more ambitious in setting higher standards, aspirational by supporting business improve payment practices and have more a more robust approach to compliance and enforcement.

The Prompt Payment Code and the new Fair Payment Code do not have a bearing on the requirements under the Prompt Payment Reporting Regulations which are separate. It was announced that enforcement will also be stepped up on the existing late payment performance reporting regulations which require large companies with more than 500 employees to report their payment performance twice yearly on GOV.UK.

Under the new laws, responsible directors at non-compliant companies who don’t report their payment practices could face criminal prosecutions including potentially unlimited fines and criminal records. Details about these requirements are available here.

Full details of the new Fair Payment Code, including the fair payment principles that underpin it will be announced later in the year. Three new Code will have three award categories:

• Gold – For companies paying 95% of their suppliers within 30 days
• Silver – For companies paying 95% of their small business suppliers within 30 days and all other supplier within 60 days.
• Bronze – For companies paying 95% of suppliers within 60 days.

Details of the application process and supporting guidance for companies wishing to apply will be published later in the year. All existing signatories, and other companies interested in the new Code, will be contacted with details when it launches.

No immediate changes have been made to the Prompt Payment Code. Full details of the new Code and transition from the Prompt Payment Code will be announced later in the year. The specifics of any contract are between the parties involved and should be discussed directly.