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UK Regulatory Outlook

February 2019

2 Regulatory Outlook | Helping you succeed in tomorrow’s world

Contents


With less than two months until the UK leaves the EU, a ‘no deal’ Brexit still remains the default outcome.

In this edition of the Regulatory Outlook, we look at the potential impact of a no deal Brexit across 15 areas of business regulation, in addition to our usual survey of current regulatory issues and dates for your diary.

From this Brexit analysis, some overarching themes emerge:

Time to get granularMany businesses will by now have well-established Brexit planning groups in place to mitigate business-critical risks in the event of a no deal Brexit. But there is much in the detail of certain regulatory regimes, and the practical processes around them, that has the potential to cause disruption on the ground. Will bid teams know where to look for public tenders once they are no longer being advertised in the Official Journal of the EU, and be familiar with new e-notification systems and forms? For goods being sold in the EU, do you know which EU entity will take on ‘importer’ responsibilities for ensuring that the product complies with EU law, and have labels been re-designed to include their details? Have you identified where personal data is transferred across borders, for example where IT services are outsourced or where data is transferred intra-group?

As with all aspects of regulatory compliance, training, workflows and communication will be essential to ensuring that rules are followed on the ground, and that flows of goods and services are not interrupted.

Understand what it will mean for your workforceOne of the areas about which we are asked most frequently is the impact of Brexit on workforces. The UK government has said that in a no deal scenario, the EU Settlement Scheme will be open to EEA nationals already in the UK as at 29 March 2019. But relevant employees will need to apply for settled status, and different rules will apply to EEA nationals coming to the UK after 29 March 2019. The position for UK nationals in the EEA will differ by country.

Understanding what this means for your business depends on having an accurate and up-to-date picture: not only of how may EEA nationals are currently employed in the UK, or vice-versa, but also where in the business they work. Is there a danger of a skills shortage in certain areas, and if so, is there action that can be taken to mitigate that, for example through training or use of technology? Might this have an impact on your recruitment strategy?

Consider the wider impact on regulationBrexit continues to take up time and resource – not only for businesses but also for legislators and regulators. We have seen a noticeable drop-off in non-Brexit-related legislation and regulation. In a no deal scenario, this could persist for some time, and as regulators such as the CMA and HSE take up new responsibilities previously held by EU institutions, this could impact on levels of enforcement and other activity.

What would a ‘no deal’ Brexit mean for UK business regulation?

Catherine WolfendenPartner and Head of Osborne Clarke’s Regulatory Group

T: +44 117 917 3600 E: [email protected]

Ashley MorganSenior Knowledge Lawyer



Looking further forward, the UK would need to establish its own regulatory priorities and strategies in certain areas. Whilst the potential for divergence from the EU will depend on what is agreed at a political level, businesses will have a vital role in shaping the direction and detail of UK regulation. Consultations, trade bodies and more direct lobbying will all have a part to play, and businesses should start to consider what part they can play.

How can we help?At Osborne Clarke, we are helping business to understand both the risks and the opportunities that Brexit presents. To discuss how we can help you prepare for Brexit, please contact one of the experts listed in relation to the relevant area, or your usual Osborne Clarke contact.

Catherine Wolfenden & Ashley Morgan

Stay informed

It is more important than ever for businesses to keep up to date with developments and guidance on no deal preparations. The UK government has put together a Partnership Pack to help businesses prepare for a no deal Brexit and continues to publish ‘no deal notices’ covering a range of sectors and issues The European Commission has published its own series of no deal ‘preparedness notices’.

You can find Insights from Osborne Clarke on our Brexit page, or sign up to receive our regular Brexit Business Brief.

https://www.gov.uk/government/publications/partnership-pack-preparing-for-a-no-deal-eu-exit

https://www.gov.uk/government/collections/how-to-prepare-if-the-uk-leaves-the-eu-with-no-deal

https://ec.europa.eu/info/brexit/brexit-preparedness/preparedness-notices_en

https://ec.europa.eu/info/brexit/brexit-preparedness/preparedness-notices_en

https://www.osborneclarke.com/insights/topics/brexit/location/uk/

https://sites-osborneclarke.vuturevx.com/10/3541/english/subscribe.asp


Current issues

Adverts depicting ‘harmful gender stereotypes’ to be banned From 14 June 2019, adverts will be prohibited from depicting ‘harmful gender stereotypes’. The intention is to prohibit adverts which suggest that certain activities or roles are exclusively associated with one gender. Particular care will need to be taken when advertising to certain groups, such as new mums or children.

BVA updated its ‘pets in advertising’ guidance Although the British Veterinary Association guidance does not have any legal force, the Advertising Standards Authority (ASA) has described it as ‘authoritative guidance’ and therefore it is likely that any significant breach of the guidance would be considered serious by the ASA.

Increased sanctions for unsolicited direct marketing and unlawful use of automated calling systems The rules regarding direct marketing and automated calling have not changed. However, there was a perception that they were widely disregarded due to the lack of practical sanctions.

To address this, the Information Commissioner’s Office (ICO) has been given the power to impose new sanctions, including the ability to impose fines of up to £500,000 on directors of companies. The new rules are intended to improve compliance by making directors and other senior officers personally liable.

In addition to allowing the ICO to fine directors and other senior officers, individuals may also be disqualified from holding a directorship.

CAP consults (again) on GDPR implications for advertising codesCAP had previously consulted on the implications of the General Data Protection Regulation (GDPR) for the regulation of advertising. This consultation had closed. However, the responses indicated that further consultation was needed, specifically on the age of consent for children and the lawful grounds for publishing the names of prizewinners.

This second consultation has now closed and we are awaiting a response from CAP on how the rules will be amended to make them compliant with the GDPR. In the meantime, the ASA has stated that it will not enforce the current obligation to publish the names of prizewinners.

Advertising & Marketing

Nick JohnsonPartner


01

Katrina AndersonAssociate


https://ico.org.uk/about-the-ico/what-we-do/legislation-we-cover/privacy-and-electronic-communications-regulations/

https://www.asa.org.uk/news/cap-consultation-on-marketing-to-children-and-naming-prizewinners.html


In Focus: No deal Brexit

What would be the impact of a no deal Brexit for UK businesses trading with the EU? The principles of advertising regulation are based in EU law. However, each Member State has its own specific rules, guidance and regulators. Any UK business advertising in a EU 27 Member State will therefore still need to comply with the local regimes in each Member State in which they advertise.

What would be the impact of a no deal Brexit for non-UK businesses trading with the UK? UK advertising regulation is primarily in the form of a domestic self-regulatory code, which applies to all advertising in the UK (regardless of where the advertiser is based). The regime is enforced by the ASA. In some instances this is based on EU law. However, given that all existing EU law is being imported into UK law under the EU (Withdrawal) Act on 29 March 2019 in a no deal Brexit, we do not anticipate any immediate change to the law as a result of Brexit, with the exception of some minor changes as a result of ‘correcting powers’ under the EU (Withdrawal) Act 2018. For example, the offence of advertising or promoting tobacco online will now be limited to websites targeting the UK.

In the longer term, a ‘hard’ Brexit in which the UK is not required to maintain regulatory alignment with the EU would likely mean that UK advertising law would diverge from EU advertising law. For example, if the UK does not implement any new EU privacy regulation, new restrictions in relation to the EU, such as in relation to the way that consent needs to be obtained from consumers, may not apply in the UK. As a consequence taking a consistent approach to advertising across Europe may be challenging in the longer term.

What should businesses be doing now to prepare for a no deal Brexit?Businesses should keep up-to-date on announcements from the ASA and the UK government regarding how advertising rules may change in the future as a result of Brexit.

Businesses should also consider the potential knock-on effects for advertising arising from other issues, such as any contractual arrangements which underlie the advertising.

Where advertising makes use of intellectual property such as EU trade marks or geographical indicators, advertisers should make sure they review whether any additional registrations or notifications are needed (such as applying for a equivalent UK trade mark) before using this IP in advertising.

Dates for the diary

14 June 2019

Rules on gender stereotyping in adverts come into effect.


Current issues

SFO priorities in 2019 The new Director of the SFO has promised a regime which will see greater co-operation with international enforcement agencies, greater use of informants and greater use of technology. She has also undertaken to reduce the, often oppressively long, periods that SFO investigations can take.

It is hoped that this approach will see more businesses coming forward to self-report issues to secure leniency in the form of a Deferred Prosecution Agreement (DPA). In turn, it is likely that increased prosecution of individuals will follow from the evidence provided by the self-reporting businesses.

In theory, this is an attractive proposition for businesses (in contrast to the individuals), which should encourage self-reporting. However, given that there have only been four DPAs to date, with only one of these leading to an (unsuccessful) prosecution, this may turn out not to be the reality of the position.

Against a backdrop of the SFO not being able to demonstrate that it can bring successful high profile prosecutions, businesses may well need to think very carefully about the relative merits of the self-reporting regime.

National Economic Crime Centre If the SFO is unable to point to tangible success, the NECC, which commenced operations in late 2018, may come into play. The NECC is a multi-agency body comprising the National Crime Agency, HM Revenue & Customs, SFO, FCA and the police. It is housed within the NCA and so reports to the Home Office, thus potentially bringing the SFO under the control of the Home Office. It is intended that the NECC will be able to direct SFO operations and, if so, it will represent the first time that the SFO’s independence has been compromised since its foundation in 1987.

If the SFO fails to make progress with its headline cases, the political will to make use of the NECC’s powers and exercise greater control over the agency may grow as the year progresses.

First prosecutions under failure to prevent facilitation of tax evasion offence? One development that should be expected in 2019 is the first use of the corporate failure to prevent the facilitation of tax evasion offences. Enacted by the Criminal Finance Act 2017, the offences are not retrospective and the tax returns which might lead to tax evasion being uncovered have only recently been submitted.

Anti-Bribery, Corruption & Financial Crime

Jeremy SummersPartner


02


HMRC has a dedicated unit responsible for investigating the offences and historically as an agency it has been keen to bring targeted high-profile prosecutions to deter similar conduct by others. Professional enablers such as accountants or tax advisors who fail to prevent clients from facilitating tax evasion committed by others may be an area of focus.

Trends in investigations Whilst the Court of Appeal ruling in ENRC may have restored the status quo in terms of the ambit of litigation privilege as it was previously understood, businesses faced with the need to conduct an external investigation still need to exercise great care.

Companies that self-report, whether to the SFO or other agencies, will continue to be required to demonstrate full co-operation if they are to secure leniency, which may include a request to provide documents relating to internal investigations.

The SFO may also be more likely to make compulsory requests to produce material held outside the jurisdiction following the decision last year in KBR. The High Court in that case rejected KBR’s challenge to the SFO’s use of compulsory powers to require documents, finding that production of material overseas could be compelled provided that there is ‘sufficient connection’ between the company and the UK.

The decision may also lead to the SFO insisting on businesses providing documents held overseas voluntarily, as part of full co-operation for the purposes of a DPA or other leniency.


What would be the impact of a no deal Brexit for UK businesses trading with the EU? Anti-bribery and economic crime offences, although often following on from commitments made at the supranational level, are generally set at the national level. UK businesses trading with the EU will therefore already need to ensure compliance with the national regimes in countries in which they trade. This will not change as a result of Brexit.

However, law enforcement agencies currently benefit from a range of EU-wide cooperation mechanisms and resources, most notably the Europol database and the European Arrest Warrant but also cross-border surveillance, joint special investigations and cooperation between customs authorities, amongst other things. Under the draft EU-UK Withdrawal Agreement, these are expressly preserved for the duration of a transition period, but this would not be the case in a no deal scenario.

Nevertheless, it is anticipated that even in a no deal scenario, alternative law enforcement cooperation mechanisms would be agreed fairly swiftly, for the benefit of both the UK and the EU. If so, the impact of a no deal Brexit in terms of law enforcement tools would be relatively limited.

What would be the impact of a no deal Brexit for non-UK businesses trading with the UK? As discussed above, given that anti-bribery and economic crime offences are largely matters of national law, businesses will continue to need to ensure compliance with relevant national regimes, many of which (including the UK) have an extra-territorial reach.

If replacement cooperation mechanisms could be found in the short-term, there may also be a limited impact on law enforcement.

Brexit may, though, have an indirect effect on UK prosecutors in relation to the political will and resources behind certain priorities or options. For example, the potential role of the NECC discussed above may be affected by the challenges that the Home Office may be facing in relation to immigration in a no deal Brexit scenario.

What should businesses be doing now to prepare for a no deal Brexit? As businesses carry out reviews of procedures and policies for the purposes of no deal planning, this may be a good opportunity to review those procedures and policies from a compliance point of view, and consider where revisions may be necessary.

Times of uncertainty and economic challenge can also raise the risks of economic crime. Businesses should be alive to any risks within their organisation and have clear procedures in place both to mitigate those risks and to react to any potential issues that arise that arise.

https://www.osborneclarke.com/insights/court-of-appeal-revisits-scope-of-litigation-privilege/

https://www.osborneclarke.com/insights/high-court-finds-that-sfo-can-compel-production-of-documents-held-outside-uk/


Current issues

Increased workload for the CMA in 2019? For the UK Competition and Markets Authority (CMA), the year ahead threatens a heavily increased workload, depending on whether the UK exits the EU under a deal or no deal scenario. Should the latter occur, the CMA will not only have to commence its role as the new UK state aid authority, but will have to address a significantly increased workload of antitrust and merger cases where UK aspects will no longer be considered by the European Commission. In these circumstances, the CMA has warned that its ability to take on new discretionary work will be limited and prioritisation will be key. Practically, this may mean that infringements that would otherwise have been investigated by the CMA are unable to be picked up; this may have an impact on the ability for businesses to seek redress for anti-competitive behaviour.

If the Withdrawal Agreement is ratified, the CMA will have until 2020 to prepare for this increased workload and can be expected to use its extra resources to ramp up enforcement in the meantime.

Institutional changes at the EU Significant change lies ahead for the EU in 2019, not merely as a result of Brexit. With the Parliamentary elections this year, the five year term of the current Juncker Commission ends on 31 October, including that of Competition Commissioner Margrethe Vestager. This could result in a change in focus for the Commission in respect of competition law, depending on the outcome of the elections. An area to watch is whether key areas of interest for the Commission under Vestager – such as competition enforcement in the context of the digital single market – will remain a priority under any new Commissioner.

Competition rules - fit for purpose in the digital age? In both the UK and the EU more widely, competition policy is being scrutinised to assess its suitability for the current and future challenges of emerging technology. In the UK, as part of a wider review of the UK competition regime by the BEIS, the government has appointed an expert panel to examine the effectiveness of competition policy in light of the opportunities and challenges posed by the emerging digital economy: the report is due early this year. The review has the potential to result in both legislative changes and changes to enforcement by the CMA.

Similarly, the European Commission has also commissioned a report focusing on future challenges of key upcoming digital changes, how these will affect markets and consumers and implications for competition policy. The Commission also held a conference on ‘Competition law in the era of digitisation’ on 17 January 2019.

Competition

Katherine KirrageAssociate Director


Simon NeillPartner


03

https://www.osborneclarke.com/insights/have-your-say-how-should-competition-law-apply-to-the-digital-economy/

https://www.osborneclarke.com/insights/shaping-future-competition-law-enforcement-in-digital-markets-furman-review-calls-for-evidence/

http://www.osborneclarke.com/insights/have-your-say-how-should-competition-law-apply-to-the-digital-economy/

http://ec.europa.eu/competition/scp19/



What would be the impact of a no deal Brexit for UK businesses trading with the EU? The draft EU-UK Withdrawal Agreement provides for the European Commission to continue to have jurisdiction for the enforcement of EU competition law for proceedings commenced before the end of the transition period (31 December 2020, unless extended). A no deal Brexit could raise difficult questions as to the extent of the Commission’s jurisdiction in relation to live EU merger or antitrust investigations, to the extent that they relate to the UK. This could affect not only those under investigation, but also other businesses who may be impacted by those proceedings (such as those who may have a potential follow-on damages claim). It would also leave uncertainty for businesses considering a merger transaction, as some mergers that currently meet the EU thresholds may be reviewed by both the CMA and the Commission.

In terms of substantive competition law, the immediate impact of a no deal Brexit will be relatively minor: UK companies will continue to be subject to EU competition law when trading in the EU, and as the domestic UK legislation enacting the European rules will remain in place, UK companies can continue to comply, in effect, with a single set of competition rules.

Brexit does, however, set the stage for future divergence in the rules, which UK businesses operating in the EU will need to follow (whether or not there is a deal).

What would be the impact of a no deal Brexit for non-UK businesses trading with the UK? As set out above, there will be no change in the UK’s domestic competition legislation and therefore businesses can rely on complying with the UK and EU competition rules as currently formulated, although note will need to be taken of any future divergence between the rules.

For non-UK companies trading with the EU, one key area to be aware of is the UK’s enforcement of State aid rules post-Brexit. While the UK has committed, in any event, to enforcing State aid rules, this is the area of competition law which is most likely to be subject to government intervention. Tension between maintaining a competitive playing field in the UK and political desire to support British businesses is likely to arise in the context of any type of Brexit, but particularly in the event of a no deal and will be of key interest to any non-UK companies active in the UK.

What should businesses be doing now to prepare for a no deal Brexit? For most businesses, there will be little that needs to be done from a competition perspective in preparation for ‘no deal’ given the consistency of the rules. Any divergences will take time to emerge – although the CMA’s capacity to take on cases may have an impact on those seeking to challenge anti-competitive behaviour.

The exception will be those companies that are subject to an ongoing investigation or considering a merger transaction. The UK government has advised that in the event of no deal, businesses currently subject to a live EU merger or antitrust investigation should seek advice on the jurisdiction for that investigation. Additionally, businesses considering a merger transaction and unsure whether a parallel notification is required may wish to engage with the CMA and the Commission.


Dates for the diary

Early 2019

UK report on competition in the digital economy due.

31 March 2019

EU report on future challenges of digitalisation for competition policy due.

April 2019

Deadline for BEIS to complete review of UK competition policy.

31 October 2019

End of five year term of Competition Commissioner Margrethe Vestager.


Current issues

Changes to customer-facing documentation in the event of a no deal BrexitIn the event that the UK leaves the EU without a deal on 29 March 2019, lenders will need to ensure that certain amendments are made to the documentation provided to customers both pre-contract and at point of sale, to omit specific EU references. The changes are set out in the Consumer Credit (Amendment) (EU Exit) Regulations 2018.

Whilst the changes are relatively minor in form and do not have any substantive impact on the documentation itself, failing to make the required changes to the Standard European Consumer Credit Information sheet (SECCI) or European Consumer Credit Information sheet (ECCI) could lead to the pre-contract information not being drafted in strict compliance with the Consumer Credit (Disclosure of Information) Regulations 2010 and therefore lead to the credit agreement being enforceable against the customer on an order of the court only.

When do the changes need to be made?

The proposed changes will come into effect on 29 March 2019 in the event of a no deal Brexit. However, in light of the current political uncertainty, HM Treasury has proposed a transitional period to take effect from exit day until 1 September 2019 to provide firms with more time to make the required changes to the pre-contract information.

If a deal is reached prior to 29 March 2019, these changes will not take effect until after the end of any agreed transitional period, currently expected to be from 1 January 2021. For more detail, see here.

FCA publishes Dear CEO letter on financial promotions On 9 January 2019, the Financial Conduct Authority (FCA) published a letter addressed to CEOs of all regulated firms, reminding them of their responsibility to ensure that all financial promotions are clear, fair and not misleading.

This obligation extends to ensuring that those who view the financial promotion understand whether or not the products or services being advertised are regulated by the FCA and/ or the Prudential Regulation Authority (PRA).

Firms should be mindful of their obligations under the FCA Handbook and ensure that where a financial promotion names the FCA, PRA or both as its regulator and refers to products or services which are not regulated, it also makes it clear in the financial promotion which products and services are unregulated.

FCA letter: mortgage prisoners On 9 January 2019, the FCA published a letter sent to HM Treasury outlining its plan to address regulatory barriers to mortgage switching. The letter, by Andrew Bailey, FCA Chief Executive, defines ‘mortgage prisoners’ as customers on a so-called reversion interest rate who would benefit from switching but are unable to do so, despite being up-to-date with payments on their existing mortgage. The letter considers the approach to customers with active lenders, as well as customers of inactive lenders and unregulated firms.

Consumer Finance

Nikki WordenPartner


04

Charlotte HarrisAssociate Director


https://www.osborneclarke.com/insights/changes-lenders-need-make-customer-facing-documentation-29-march-2019-event-no-deal-brexit/

https://www.fca.org.uk/publication/correspondence/dear-ceo-letter-promotions-regulated-unregulated-business.pdf

https://www.fca.org.uk/publication/correspondence/improving-mortgage-switching-options-letter.pdf


The FCA plans to work with firms and trade bodies on the practicalities of re-mortgage options and how these should be communicated to affected customers. The next step is for the FCA to publish a consultation paper setting out proposals to remove regulatory barriers to switching for these customers. This is expected to occur alongside the Final Report of the Mortgage Market Study this spring.

Fairness of variation termsOn 19 December 2019, the FCA published its final guidance (FG18/7) on the fairness of variation terms in financial services consumer contracts under the Consumer Rights Act 2015.

This sets out a list of twelve non-exhaustive factors which the FCA considers to be relevant in determining whether or not a variation term is fair.

Whilst the FCA acknowledges that only a court can determine the fairness of a term, it expects firms to consider the factors set out in the guidance when reviewing existing contracts and drafting new ones. Firms are also reminded of the standalone requirements that terms should be transparent and not unfair.

The FCA has also indicated that it expects overall responsibility for the fairness of a firm’s consumer terms to be set out in the relevant senior manager’s Statements of Responsibilities under the Senior Managers Regime. Firms will need to identify the individual who is best-placed internally to be responsible for this.


What would be the impact of a no deal Brexit for UK businesses trading with the EU? In the event that the UK leaves the EU without a deal on 29 March 2019, the UK will become a ‘third country’ for the purposes of EU law. This means that any UK financial services firms that currently rely on passporting rights to offer their services to customers based in a EU Member State will no longer be able to do so in the absence of any equivalence regimes being agreed between the UK and the Member State(s).

There is no passporting regime for consumer credit except for mortgage lenders and for authorised deposit takers (who can offer credit in other EU countries under their banking passport). As now, therefore, UK consumer finance firms that wish to offer credit in the EU post-Brexit will need to establish a branch or subsidiary in the relevant Member State and obtain the necessary authorisation or licences required for carrying on those regulated activities in that country. Firms currently carrying on payments or other regulated activity under a passport will also need to do the same.

Firms should be mindful of the fact that they may be breaching laws and regulations in the relevant Member State if they continue to operate in the jurisdiction following a no-deal Brexit, in the absence of obtaining any permissions required to provide those services.

What would be the impact of a no deal Brexit for non-UK businesses trading with the UK? The current passporting regime, which enables EEA firms to provide some financial services into the UK on a cross-border services basis based on the permissions they hold in their home state, will fall away on 29 March 2019 in the event of a no deal Brexit.

This means that firms that currently rely on passporting rights under the Banking Consolidation Directive or the Mortgage Credit Directive to offer consumer finance from another Member State into the UK, or vice versa, will need to ensure that they have either:

– set up a branch or a subsidiary in the UK and have obtained the relevant regulatory permissions required to continue to offer their services post-Brexit; or

– registered with the FCA under the temporary permissions regime to enable them to continue to provide regulated business in the UK for a limited period post-Brexit, which is within the scope of their existing permissions.

https://www.fca.org.uk/publication/finalised-guidance/fg18-07.pdf


If an EEA firm wishes to rely on the temporary permissions regime to continue to provide services in the UK in the event of a no-deal Brexit, it will need to ensure that it has notified the FCA using the relevant form available in the FCA’s Connect system by 28 March 2019. There is no fee applicable for notifying the FCA for the regime. Once firms are registered, they will be able to continue to provide their services for a specified period from 29 March 2019 whilst they seek full authorisation from the FCA.

EEA firms that are registered with the FCA under the temporary permissions regime will be required to comply with certain FCA rules and guidance. The FCA is in the process of finalising what rules will apply; however, its proposals are set out in CP18/29: Temporary permissions regime for inbound firms and funds and CP 18/36: Brexit: Proposed changes to the Handbook and Binding Technical Standards – second consultation.

The FCA is proposing to allocate firms that will be solo-regulated by the FCA (for example, just providing consumer credit lending or credit broking) a landing slot in which they will be required to submit their application to the FCA for authorisation in the UK. The FCA will be confirming firms’ landing slots after exit day.

What should businesses be doing now to prepare for a no deal Brexit?

Changes to documentation

In the event of a no deal Brexit, consumer credit firms will be required to make changes to their pre-contract and contractual documentation to remove any references to EU law. This would include the Standard European Consumer Credit Information sheet (SECCI) and the European Consumer Credit Information sheet (ECCI).

These changes (which we discuss in more detail here) are due to come into effect on exit day. HM Treasury has recently proposed a transitional period to enable firms to make these changes, which would run from 29 March 2019 until 1 September 2019.

Consumer credit firms should familiarise themselves with the changes that are required to be made to the customer-facing documentation and should ensure that the relevant systems updates can be made to implement the changes by 1 September 2019 if required.

Providing cross-border services

Firms who are providing credit-related regulated activities cross-border should ensure that they have taken appropriate action to ensure that they are able to continue to provide these services and minimise any impact for customers in the event of a no-deal Brexit.

Dates for the diary

By 28 March 2019

EEA firms who currently rely on passporting rights to provide services in the UK must notify the FCA that they wish to operate under the temporary permissions regime.

By 1 September 2019

Date consumer credit firms are required to make proposed changes to the SECCI and ECCI in the event of a no-deal Brexit.

1 January 2021

Date consumer credit firms are required to make changes to the SECCI and ECCI in the event that the UK leaves the EU with a deal on 29 March 2019.

https://www.fca.org.uk/publications/consultation-papers/cp18-29-temporary-permissions-regime-inbound-firms-and-funds


https://www.fca.org.uk/publication/consultation/cp18-36.pdf

https://www.fca.org.uk/publication/consultation/cp18-36.pdf

https://www.osborneclarke.com/insights/changes-lenders-need-make-customer-facing-documentation-29-march-2019-event-no-deal-brexit/


Current issues

Pre-contractual information needed for connected consumer productsEU law requires companies that sell directly to consumers to provide certain pre-contractual information, to ensure that consumers are treated fairly and understand when they are about to enter into a binding contract which requires them to pay.

This has been reinforced by a German court decision upholding a decision that Amazon Dash buttons breach consumer law requirements to display the required pre-contractual information.

The German ruling is not a binding precedent for the UK courts. However, since there is little UK case law on this matter and it relates to the same underlying EU directive, any UK court would likely find the German decision persuasive.

This judgment sets down an interesting marker for the future. Connected, smart appliances have the potential to bring increasing simplicity and ease – we might never run out of key household products if our sensor-equipped appliances registered that something was running low and automatically reordered for us. However, the judgment is a reminder that convenience cannot trump consumer law, and businesses need to keep their consumer products and offerings under review.

Social Media Influencers: CMA crackdown The Competition and Markets Authority has concluded its long-running investigation into whether social media influencers were clearly disclosing paid-for endorsements.

The result is that formal commitments have been obtained from 16 celebrities to ensure they will now say clearly if they have been paid or received any gifts or loans of products which they endorse.

Any business engaging with influencers needs to ensure that they are compliant with all requirements.

Geo-blocking Regulation The Geo-blocking Regulation has taken effect and will stop most companies from preventing access to national versions of their websites within the EU.

The Regulation took effect from 3 December 2018 and addresses ‘unjustified’ geo-blocking and other forms of discrimination based on customers’ nationality, place of residence or place of establishment.

Underlying all the requirements of the Regulation is the principle of non-discrimination; meaning that, where a customer wishes to access and buy services from a national website, they should be treated in the same way as customers physically based in that Member State.

Consumer Protection

Tom HardingPartner


05

John Davidson-KellyPartner


https://www.osborneclarke.com/insights/german-court-upholds-decision-amazon-dash-button-breaches-consumer-law/

https://www.gov.uk/government/news/celebrities-pledge-to-clean-up-their-act-on-social-media

https://www.osborneclarke.com/insights/geo-blocking-regulation-what-does-it-mean-for-your-business/


New Deal for Consumers: substantial reforms to consumer law, including GDPR level fines As a consequence of scandals such as ‘Dieselgate’, there is a widespread feeling that consumer law is poorly enforced and that the sanctions for breach are inadequate. As a consequence, at both the EU and the UK level, there are proposals to enhance the enforcement powers of regulators under a ‘New Deal for Consumers’ legislative initiative.

The EU has proposed GDPR-style fines of up to 4% of worldwide turnover for any breaches of consumer law which cause ‘mass harm’. At the same time, the UK government’s modernising consumer markets green paper proposes giving the civil courts the power to fine businesses for breaches of consumer law up to a maximum of 10% of a company’s worldwide turnover.

The proposed Directives under the initiative are in draft form and are not expected to be approved by the EU for some time. As a consequence, we would not anticipate enhanced enforcement powers being available to regulators for some time. Similarly, the UK government has not yet finished consulting on its green paper.

Draft Compliance and Enforcement Regulations The draft Compliance and Enforcement Regulations, which are currently awaiting their first reading in the European Parliament, seek to increase enforcement powers for regulators in the EU. Of particular note is the proposal to introduce the concept of a ‘reference person’, which would require anyone selling consumer products governed by harmonised legislation into the EU to have an EU-based authorised representative taking on the compliance responsibilities of a manufacturer. While a seemingly small change, the proposal has proved controversial with SMEs from third countries, who feel it is an additional compliance burden.

The progress of the draft regulations has currently stalled following disquiet from third countries about the proposed regulatory burden. However, if approved they would likely come into force on 1 January 2020.

The proposal to require manufacturers to have a reference person based in the EU is controversial. This would allow EU regulators to more easily enforce against manufacturers based in third countries selling directly into the single market. Additionally, the regulations would result in greater co-operation of enforcement agencies and tougher customs controls on products imported from third countries.

https://www.osborneclarke.com/insights/new-deal-for-consumers-propose-substantial-reforms-to-consumer-law-including-gdpr-level-fines/

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/699937/modernising-consumer-markets-green-paper.pdf



What would be the impact of a no deal Brexit for UK businesses trading with the EU?For online retailers, the main impact would be that they would no longer be able to benefit from the “Country-of-Origin” (COO) principle under the eCommerce Directive.

The eCommerce Directive regulates certain legal aspects of “information society services” across the EEA, which includes online retailers. The Directive was introduced to facilitate eCommerce across EEA countries, and remove barriers to trade. To achieve this, it establishes the COO principle. This is a reciprocal arrangement which provides that any EEA-based information society service should only be subject to certain laws in the EEA state in which it is established.

After the UK leaves the EU, it will no longer be included within the COO regime. This means that UK-based online retailers will need to comply with the laws in each ‘country of destination’ in relation to their online activities.

UK-based businesses will also no longer be obliged to offer access to cross-border alternative dispute resolution (ADR) procedures, nor link to the EU’s online dispute resolution (ODR) platform.

Beyond this, though, the impact in relation to consumer protection regulation is likely to be relatively limited. The existing consumer regime in each EU Member State will remain as it was pre-Brexit, so any compliance requirements placed on a UK business trading with those EU Member States will remain.

Following a no deal Brexit, the UK would not be obliged to implement any new EU consumer protection law, such as that under the European Commission’s ‘New Deal for Consumers’. However, it remains to be seen whether any future trade deal, or domestic political considerations, might lead the UK to remain in regulatory alignment in relation to consumer protection.

What would be the impact of a no deal Brexit for non-UK businesses trading with the UK?Much of the UK’s consumer law is derived from EU legislation. However, upon a no deal Brexit all current EU law in force at that time will become ‘EU retained law’ and will be incorporated into the UK’s statute books. This means that in general upon Brexit, UK consumer law will not change except:

– where specific statutes are implemented in the UK (for example the draft Consumer Protection (Amendment etc.) (EU Exit) Regulations 2018) which amongst other things will revoke the operation in the UK of the EU Online Dispute Resolution Regulation, as discussed above; and

– where there is an EU or EEA dimension to the legislation (eg Portability, Geoblocking) in which case the international element of that legislation will no longer apply to the UK after Brexit.

What should businesses be doing now to prepare for a no deal Brexit? – Understand what impact the loss of the COO regime might have on their business; and

– Be aware of any further legislative developments and the future direction of travel in relation to new EU consumer protection law.

https://www.gov.uk/eu-withdrawal-act-2018-statutory-instruments/consumer-protection-amendment-etc-eu-exit-regulations-2018

https://www.gov.uk/eu-withdrawal-act-2018-statutory-instruments/consumer-protection-amendment-etc-eu-exit-regulations-2018


Current issues

Unpredictable enforcement at the ICO We continue to see an unpredictable approach being adopted by the Information Commissioner’s Office (ICO) to data breaches reported to it post-GDPR. There is no doubt that the ICO has been over-burdened with data breach reports since 25 May 2018. We are aware of certain significant cases and investigations which have been dropped without sanction, and have also seen various ongoing investigations stemming from reported breaches enter a period of extended lull, in part perhaps attributable to capacity issues and the regulator’s need to prioritise.

We suspect a more consistent approach will begin to take shape in the forthcoming six to 12 months as the ICO’s recruitment drive starts to take effect and as it beds into the post-GDPR world, although no doubt Brexit-related planning will continue to take its toll on the ICO’s internal resourcing for a while.

EU political agreement reached for EU Cybersecurity Act On 10 December 2018, the European Parliament, Council and Commission reached political agreement on the proposed new EU Cybersecurity Act. The Act now needs to be formally approved and published in the EU Official Journal, following which it will enter into force.

Our previous summary of the key changes which will be introduced by the Act can be found here. In particular, the creation of a framework for European Cybersecurity Certificates will be of significant relevance and interest to many businesses operating in the EU.

GDPR group litigation risk The GDPR provides that data subjects whose rights have been infringed are entitled to compensation for damage suffered. Further, data subjects may authorise third parties to exercise certain rights (including the right to compensation) on their behalf.

These rights, taken together, led to speculation that the UK would start to see a rise in group litigation following cyber security incidents. Whilst there has not been the sharp uplift predicted by some, we are aware of a growing number of law firms and other organisations attempting to put together claimant groups for the purpose of making claims in relation to well-publicised cyber incidents.

As the case law in this area develops, businesses that have been the victims of cyber security incidents will need to bear in mind the potential risk of follow-on claims (and, accordingly, ensure that, to the greatest extent possible, their incident response work mitigates those risks).

Cyber Security

Ashley HurstPartner


Charlie WedinPartner


06

https://www.osborneclarke.com/insights/regulatory-outlook-cyber-security-july-2018/



What would be the impact of a no deal Brexit for UK businesses trading with the EU? In the event of a cyber incident, UK businesses that trade with the EU will still need to comply with their regulatory obligations under the GDPR and, if applicable, the Network and Information Systems Regulations 2018.

At present, UK businesses (as well as international businesses with an establishment in the UK/EU) are able to take advantage of a ‘one-stop-shop’ regime. Under this regime, in the event of a cyber security incident which needs to be notified to regulatory authorities under the GDPR, they need to notify their ‘lead’ regulator only (for example, the ICO in the UK) and only that lead regulator should carry out investigations or issue fines.

In the event of a no deal Brexit, the UK will no longer be included in this one-stop-shop regime. Businesses domiciled only in the UK (without any EU establishments) will need (in the event of a cross-border breach) to notify the regulator in each relevant EU territory and the business may be subject to both an EU and UK fine. Businesses with establishments in both the UK and the EU will be able to rely on the one-stop-shop regime in the EU, but will still need to deal with the ICO in the UK, and may also, therefore, be subject to fines in both the EU and the UK.

What would be the impact of a no deal Brexit for non-UK businesses trading with the UK? In the event of a cyber incident post-Brexit, non-UK businesses doing business in the UK will need to comply with UK data protection law (which will incorporate the GDPR).

Where the cyber incident is notifiable under the GDPR and impacts UK data subjects, non-UK businesses will (as discussed above) need to notify the ICO, and will no longer be able to rely on the ‘one-stop-shop’ mechanism under the GDPR, which may have allowed them to notify a different, and only one, EU regulator.

What should businesses be doing now to prepare for a no deal Brexit? Most businesses, in order to comply with UK data protection law and GDPR requirements, will already have in place an incident response plan for dealing with data and cyber incidents. These incident plans should be updated to set out clearly which regulators would need to be contacted, post-Brexit, in the event of a notifiable cyber security incident.

Dates for the diary

March 2019

EU Cybersecurity Act – first reading vote in the EU Parliament scheduled.


Current issues

Progress of the e-Privacy Regulation It is looking increasingly unlikely that the e-Privacy Regulation – which will replace the existing e-Privacy Directive and will govern the processing of personal data in connection with electronic communications services – will get over the line before the current term of the European Parliament ends in April 2019.

The Council of Ministers acknowledged – in its progress report from December 2018 – that there is a lack of consensus among EU countries on the wording of the draft e-Privacy Regulation.

The Council has to finalise its approach before the trialogue of the final version of the draft e-Privacy Regulation can commence between the Council, the European Commission and the European Parliament. That trialogue looks unlikely to happen until after European elections in May 2019.

Even once it is adopted, the draft e-Privacy Regulation is not expected to apply until two years after its adoption date, so businesses will – in theory – have plenty of time to implement its requirements.

Whether the e-Privacy Regulation applies in the UK will depend not only on when the Regulation is adopted, and the time period before it then comes into force, but also the duration of any transition period (including any extensions) should the UK-EU Withdrawal Agreement be ratified.

EDPB draft guidelines on the territorial scope of the GDPR On 23 November 2018, the European Data Protection Board (EDPB) published draft guidelines on the territorial scope of the GDPR. The EDPB invited comments on those draft guidelines by 18 January 2019. We expect the final version of the guidelines to be adopted in the next couple of months.

The draft guidance is useful for providing an indication of how the various EEA data protection authorities will assess the application of the GDPR to non-EEA entities. Nonetheless, we expect that non-EEA entities will still need to adopt a relatively cautious approach, and assess – on a case-by-case basis – whether and to what extent the GDPR is likely to apply to them.

For more, see our Insight on the EDPB draft guidelines.

Max Schrems files complaints against streaming services On 18 January 2019, ‘None of your Business’ – Max Schrems’ NGO – filed complaints with the Austrian Data Protection Authority against eight companies running streaming services, claiming that their processes for responding to subject access requests, and the information provided by them in response to such requests, do not comply with the requirements of Article 15 of the GDPR.

The response of the Austrian Data Protection Authority to those complaints will – no doubt – be of interest to most businesses, particularly those who have automated processes for responding to subject access requests.

Data Protection & Privacy

Mark TaylorPartner


07

Will RobertsonPartner


https://data.consilium.europa.eu/doc/document/ST-14491-2018-INIT/en/pdf

https://edpb.europa.eu/our-work-tools/public-consultations/2018/guidelines-32018-territorial-scope-gdpr-article-3_en

https://www.osborneclarke.com/insights/european-data-protection-board-publishes-draft-guidance-territorial-scope-gdpr/

https://noyb.eu/access_streaming/


What to expect from the ICO in 2019

We can expect a number of developments from the Information Commissioner’s Office (ICO) in 2019:

– The ICO is continuing to update and / or replace its codes of practice and guidance documents to reflect the requirements of the GDPR and the Data Protection Act 2018 – businesses are likely to be particularly interested in the updates to the data sharing code of practice, the subject access code of practice and the new direct marketing code of practice.

– In August 2018, the ICO updated its draft Regulatory Action Policy, which sets out the ICO’s approach to taking action under relevant legislation (including the GDPR and the Data Protection Act 2018). The policy has been laid before Parliament for approval.

– In January 2019, the ICO opened a consultation on its draft access to information strategy (‘Openness by design’), which is concerned with the ICO’s approach to tackling non-compliance among public authorities with requests for information under the Freedom of Information Act 2000 or the Environmental Information Regulations 2002. The consultation closes on 8 March 2019.

– In February 2019, the ICO will hold a consultation workshop on the development of its regulatory sandbox: a place where organisations are supported to develop innovative products and services using personal data in different ways.


What would be the impact of a no deal Brexit for UK businesses trading with the EU? Through the EU (Withdrawal) Act 2018, EU data protection law (including the GDPR) existing as at 29 March 2019 will be incorporated onto the UK statute book on that day, so while the EU GDPR will not apply directly in the UK, the UK will have its own version.

The main impact of a no deal Brexit would be on the transfer of personal data between the UK and the EU / EEA (in either direction).

There are unlikely to be any immediate restrictions on the transfer of personal data from the UK to the EEA, because the UK government has confirmed that it will transitionally recognise all EEA states as providing an adequate level of protection for personal data.

There will be restrictions on the transfer of personal data from the EEA to the UK because the UK will be a ‘third country’. It is extremely unlikely that the UK will secure an adequacy decision from the EU before 29 March 2019, which means that businesses must start identifying which transfers will become restricted transfers on exit date and, in respect of those transfers, incorporate the EU’s standard contractual clauses into relevant agreements.

Another significant impact of a no deal Brexit is that the UK would not have continued participation in the ‘One-Stop Shop’ / Lead Supervisory Authority regime. This means that businesses who continue to carry out cross-border processing after the UK has left the EU will need to consider which other supervisory authority will become their lead authority (if any). The ICO considers various scenarios here.

What would be the impact of a no deal Brexit for non-UK businesses trading with the UK? In addition to the impact in relation to cross-border transfers of personal data (discussed above), non-UK businesses trading with the UK will, in certain circumstances, need to comply with the UK’s data protection framework.

The UK government intends to retain the extraterritoriality of the UK’s data protection framework, so that it will apply to non-UK businesses where:

– they have offices, branches or establishments in the UK; or

– they are processing personal data about individuals in the UK in connection with offering them goods and services, or monitoring their behaviour.

In those circumstances, the non-UK business will need to appoint a representative in the UK (unless one of the exceptions applies).

https://ico.org.uk/about-the-ico/ico-and-stakeholder-consultations/call-for-views-openness-by-design-our-draft-access-to-information-strategy/

https://ico.org.uk/about-the-ico/news-and-events/blog-ico-regulatory-sandbox/

https://ico.org.uk/for-organisations/data-protection-and-brexit/data-protection-if-there-s-no-brexit-deal/


What should businesses be doing now to prepare for a no deal Brexit? – Continue with GDPR projects through to completion, as an organisation which is compliant pre-Brexit is likely to be compliant post-Brexit (irrespective of the shape that Brexit takes);

– Map data flows, specifically identifying where data is received into the UK from the EEA, or where data is transferred from the UK to any country outside the UK;

– Continue to monitor the position concerning EEA-UK data transfers post-Brexit and consider updating agreements to include standard contractual clauses to legitimise data transfers (as a matter of regulatory law) until such time that the UK is granted adequacy; and

– Businesses that currently benefit from the Lead Supervisory Authority regime under GDPR will need to carefully consider how the removal of the UK / ICO from this regime will impact them, and whether steps can be taken to mitigate that impact.

We explore the implications of Brexit for data protection in more detail here.

Dates for the diary

Post-May 2019

The e-Privacy Regulation is not expected to be passed into EU law until after the European elections in May 2019.

https://www.osborneclarke.com/insights/data-protection-privacy-brexit-ready-outcome/


Current issues

Employment status Businesses must ensure they are aware of the ‘employment status’ of their workforce and contingent workforce. There are a number of cases before the courts looking at the employment status of so-called ‘independent contractors’ who are now claiming worker status and with it rights to minimum wage, holidays and pension entitlements, amongst other things.

Employers should review their arrangements with contractors carefully to ensure that they are comfortable with the terms of engagement and manage any risk accordingly. This will be of increasing importance given IR35 reforms due to come into force in April 2020 (see below). The government is also looking at introducing legislation to determine employment status and aligning this with tax following the publication of its Good Work Plan at the end of last year.

Increasing transparency Businesses must contend with increasing transparency requirements – both voluntary and mandatory. On 1 January 2019, new statutory regulations came into force implementing a range of corporate governance requirements, including mandatory reporting of the ratios between CEO and average staff pay by large UK listed companies (but in practice this will not be reflected in reports until 1 January 2020 onwards) and reporting on employee engagement for all large companies, with an obligation requiring companies to describe the action that they have taken to constructively inform and consult with employees.

Employers with 250-plus employees must also report on their latest gender pay gap on 4 April 2019 and take the next snapshot of their pay data on 5 April 2019. A consultation has also recently closed on ethnicity pay gap reporting and the government has published a new voluntary framework to assist organisations with 250 or more staff to report on how many of their staff have a health condition or a disability.

Employers with 250 plus employees must also report on their latest gender pay gap on 4 April 2019 and take the next snapshot of their pay data on 5 April 2019. A consultation has also just closed on ethnicity pay gap reporting and the government has recently published a new voluntary framework to assist organisations with 250 or more staff to report on how many of their staff have a health condition or a disability.

#MeToo and non-disclosure agreements The government has recently published a response to a report from the Women and Equalities Select Committee, announcing that it will be consulting on a number of matters including how better to regulate the use of non-disclosure agreements and how best to enforce any new requirements. It will also include consideration of how best to inform workers of their existing rights in relation to non-disclosure agreements.

Employers must review non-disclosure terms used in current employment contracts and settlement agreements to ensure that they are in line with the current guidance on using such provisions.

Employment & Contingent Workforce

Kevin BarrowPartner


Julian HemmingPartner


08

http://www.osborneclarke.com/insights/uk-supreme-court-holds-plumber-engaged-on-self-employed-basis-is-a-worker-what-will-the-comments-on-substitution-rights-mean-for-the-tax-status-of-contract-staff-and-enforcement-of-the-new-ir35/

https://www.osborneclarke.com/insights/extension-of-off-payroll-ir35-rules-to-the-private-sector-in-2020-and-other-current-tax-and-legal-developments-how-can-staffing-companies-prepare/

https://www.osborneclarke.com/insights/largest-upgrade-workplace-rights-government-announces-good-work-plan-take-forward-recommendations-taylor-review/


http://www.osborneclarke.com/insights/corporate-governance-executive-pay-transparency-measures-updated-investor-guidelines/

https://www.osborneclarke.com/insights/equality-pay-risk-refine-report-4-months-go-time-tackle-gender-pay/

https://www.osborneclarke.com/insights/ethnicity-pay-gap-disclosure-on-the-cards-government-issues-consultation-on-new-reporting-obligation/


Holiday pay Calculating holiday pay continues to be a grey area. This year, the Court of Appeal is set to hear an appeal from the Employment Appeal Tribunal on the question of whether ‘regular and settled’ voluntary overtime should be included in holiday pay calculations. This is against the backdrop of a recent CJEU decision which suggests a potentially more restrictive approach.

Increased risk of prosecution of hirers for tax evasion by personal service company contractors and umbrella workers The Criminal Finance Act 2017 (CFA) makes hirers of contingent workers liable for failing to prevent tax evasion in their staffing supply chain, especially where they have outsourced supply of workers to a payroll partner in the UK or overseas.

HMRC has recently made clear that it considers the staffing supply chain to be high risk for these purposes, with many aggressive and offshore tax schemes being used by workers in financial services companies, healthcare and engineering amongst others.

Infringing hirers face prosecution, large fines and serious reputational damage. HMRC action seems likely in 2019/20 in relation to some of the more aggressive schemes.

To avoid prosecution, hirers will need to have carried out regular random spot checks on an audit sample of contingent workers to check how and where they are paid, and get explanations of any apparent non-payment of tax and NICs.

Increased risk of civil liability for hirers relating to tax avoidance schemes The Promoters of Tax Avoidance Schemes (POTAS) legislation came into force in late 2017 and makes hirers liable where they have ‘enabled’ tax avoidance schemes to be used by umbrella workers, personal service company contractors (PSCs) and other contingent workers.

As with the CFA, HMRC action seems likely in 2019/20 in relation to some of the more aggressive schemes that have recently become prevalent in some sectors, and POTAS will be used where there is not enough evidence to justify a CFA prosecution but there is evidence that the hirer has helped workers sign up to a scheme involving artificial or contrived arrangements to minimise tax or PAYE.

Enabling can occur where hirers are involved in allowing the workers to be pushed into a particular umbrella company to keep costs down, as has allegedly often been the approach in parts of the logistics and industrial sectors.

IR35 in the private sector Summer 2019 will see consultation about extending the new public sector IR35 regime to the private sector. This will make staffing companies and in many cases hirers liable for PAYE and NICs in respect of PSCs who fail the so-called IR35 (employment status) tests. Currently, liability where the IR35 test is failed sits with PSCs. This will change from April 2020.

Hirers will need to review usage of PSCs and may, for those PSC contractors whose skills are essential to the business, have to prepare for increased fee rates to offset any decrease in take-home pay. Alternatively, supply arrangements may need to be changed so that the PSCs fall outside the IR35 regime (for example, because they move away from a time-spent basis of charging to a “fixed price for defined deliverable” approach to service supply). This will take time to put in place and many major companies are already putting detailed plans in place to reduce the financial impact of the new legislation which for heavy users of PSCs (such as IT contractors) may end in increased workforce costs in the region of 10-40%.

‘Good work’: likely increased liabilities for temporary agency workers and zero hours workers In December 2018, the government announced its plans to improve the quality of work in the UK. Within the plans are proposals to eradicate certain practices in the use of contingent workers, including zero hours workers and lower paid temps.

Many of these proposals are predominantly bureaucratic but within the detail are proposals to eradicate certain misuses of holiday pay by staffing companies, to give zero hours workers and others additional rights, and to increase the powers of regulators in these areas.

These measures will have a cost impact on many hirers and some may come into force in 2019.

https://www.osborneclarke.com/insights/holiday-pay-should-include-regular-and-settled-voluntary-overtime/

https://www.osborneclarke.com/insights/recent-hmrc-action-against-staffing-companies-and-end-users-the-importance-of-improved-checks-on-pscs-umbrellas-and-other-payment-intermediaries/




What would be the impact of a no deal Brexit for UK businesses trading with the EU? Whilst we wait to see whether an agreement can be reached on the UK’s exit from the EU, the UK government has made it clear that businesses should not see any significant changes to employment rights in the event of a no deal Brexit. Technical amendments have been made to allow existing employment laws to continue to work post-Brexit.

From an employment law perspective, we can expect that at least for the time being, the status quo will largely be preserved – either through the transitional period if the Withdrawal Agreement be approved or, if it is not, via the various statutory instruments the UK has been implementing to enable our existing legislation to continue where it is dependent on EU law.

The exception to this is the rules around European Works Councils (EWC). The position in relation to EWCs differs depending on whether the EWC is currently governed by UK law – in which case the law of an EU27 Member State may need to be designated to govern the EWC post-Brexit – or by the law of an EU27 Member State, in which case the primary issue will be around the status of UK delegates post-Brexit.

Employers will, however, need to understand and prepare for new immigration rules. In December 2018, the government published a policy paper on the rights of EU citizens living in the UK in the event of a no deal Brexit. The EU Settlement Scheme will continue in a no deal scenario in an amended form, meaning that any EU citizen living in the UK by 29 March 2019 will be eligible to apply to this scheme and secure their status in UK law. If a deal is ratified, EU nationals would be given the right to apply for settled status if they were living in the UK by 31 December 2020. After the end of any transition period, subject to any agreement between the UK and the EU to the contrary, any new EU workers arriving in the UK may have to be sponsored through a points-based system.

The government has published this note on workplace rights in the event of a no deal Brexit.

What would be the impact of a no deal Brexit for non-UK businesses trading with the UK? Whilst we are not expecting any significant impact to UK employment law (see above), non-UK businesses trading within the UK will need to keep abreast of any immigration requirements impacting on business travel and longer stays by EU nationals in the UK, or vice-versa, along with the considerations discussed above in relation to EWCs.

What should businesses be doing now to prepare for a no deal Brexit? – Businesses should ensure they understand the rights of EU citizens to work in the UK in the event of a no deal Brexit and prepare for changing workforce numbers/skill base should individuals leave the UK;

– Businesses should ensure that they are up to date on any right-to-work checks legally required;

– On a practical level, businesses should ensure that they have an up-to-date picture of their workforce and understand how these issues will impact their business;

– Businesses may also wish to consider what guidance and/or support they offer to employees who may be affected; and

– Businesses should review any existing European Works Council arrangements.

https://www.gov.uk/government/publications/workplace-rights-if-theres-no-brexit-deal/workplace-rights-if-theres-no-brexit-deal


Dates for the diary

1 January 2019

New regulations came into force implementing a range of corporate governance reporting requirements, including mandatory reporting of the ratios between CEO and average staff pay by large UK listed companies.

11 January 2019

Government consultation on proposed new mandatory ethnicity pay gap reporting requirements closed.

1 April 2019

With effect from 1 April the National Living Wage will increase from £7.83 per hour to £8.21 per hour (for those aged 25 and over) and the National Minimum Wage rates will increase as follows:

– £7.38 per hour to £7.70 per hour for 21 to 24 year olds;

– £5.90 per hour to £6.15 per hour for 18 to 20 year olds;

– £4.20 to £4.35 per hour for 16 to 17 year olds.

The apprentice rate will increase from £3.70 per hour to £3.90 per hour.

1 April 2019

Statutory maternity / paternity / adoption / shared parental pay and maternity allowance increases from £145.18 to £148.68 a week.

4/5 April 2019

The second deadline for gender pay gap reports to be published by private companies with 250 or more employees falls on 4 April 2019. The next trigger date for taking a gender pay snapshot is 5 April 2019.

6 April 2019

We are still awaiting details of the changes to the annual award limits for ET claims which will take effect on 6 April 2019.

From 6 April 2019, new regulations arising from the Good Work Plan will see penalties for aggravated breaches of employment law increase from £5,000 to £20,000.

6 April 2019

From April 2019:

– All payslips must state the number of hours being paid where wages vary according to time worked;

– All workers, as well as employees, will have the right to a written pay statement and the ability to enforce that right before an Employment Tribunal should the employer not comply.

7 April 2019

Statutory sick pay increases from £92.05 to £94.25 per week.

6 April 2020

IR35 reforms in the private sector are expected to come into force.

6 April 2020

Parental bereavement right entitling parents who have lost a child under 18 to 2 weeks paid leave expected to come into force. We are awaiting implementing regulations.

April 2020

A new requirement for employers to pay employer’s Class 1A NICs on all payments above the £30,000 threshold is due to take effect in April 2020.


Current issues

Environment Bill and 25 year environment planOn 19 December 2018, draft provisions of the Environment Bill were presented to Parliament. The Bill is a key piece of post-Brexit legislation which establishes the Office for Environmental Protection, the body that will oversee the implementation of laws and environmental improvement plans (EIPs) after the UK leaves the EU. The draft provisions are accompanied by a list of statutory principles which set overarching standards and will assist in policy making.

On the same day, the Department for Environment, Food and Rural Affairs published a consultation on its framework and metrics that will measure and track changes in the environmental system to monitor the success and progress of its 25 year environment plan. The draft Environment Bill includes provisions to set the 25 year plan on a statutory footing as the first EIP. The draft Environment Bill requires the Secretary of State to obtain data to monitor the progress of the EIP, which will be achieved using these indicators and metrics.

Waste Update On 18 December 2018, the government published its Resources and Waste Strategy for England which sets out how the government proposes to ensure less waste in favour of more recycling, repair and reuse. The key updates are as follows:

– A tax will be introduced for plastic packaging with less than 30% recycled plastic.

– Producer responsibility will be increased and producers will be required to pay the full costs of packaging disposal.

– Recycling collections are to become more consistent.

– The waste electrical and electronic waste directive (WEEE) will be reviewed early this year.

– A deposit return scheme for drinks containers is to be introduced by 2023.

– Food businesses will be required to produce annual reports on food waste.

– Mandatory guarantees and extended warranties may be introduced for products.

– Electronic waste tracking is to become compulsory.

Simultaneously, the government published statutory guidance on how food and drink waste fits within the waste hierarchy. This highlights how it can be prevented and redistributed, explains the difference between ‘best before’ and use by’ dates, and generally seeks to ensure that landfill and sewer waste are a last resort.

Environmental taxes and allowancesThe 2018 Autumn Budget contained announcements on a number of environmental taxes and allowances that will take effect in 2019/20, including the following:

– The government intends to implement a carbon emissions tax to replace the EU Emissions Trading Scheme post-Brexit.

Environment

Matthew GermainPartner


09

https://www.gov.uk/government/publications/draft-environment-principles-and-governance-bill-2018

https://www.gov.uk/government/consultations/25-year-environment-plan-measuring-progress

https://www.gov.uk/government/publications/resources-and-waste-strategy-for-england

https://www.gov.uk/government/publications/food-and-drink-waste-hierarchy-deal-with-surplus-and-waste


– Enhanced capital allowances will end for energy and water technology companies on 31 March 2020 but first year allowances will be extended for companies investing in electric vehicle charging points, with corporation tax allowances available until 31 March 2023.

– The aggregates levy rates will be frozen for the 2019/20 period.

Recent Court of Appeal ruling on trade effluent Owners of premises that connect foul and surface water drainage to the public sewer system should be aware of the recent Court of Appeal ruling on trade effluent.

In Boots UK v Severn Trent Water Ltd, trade effluent had been mixed with surface water before it went to the sewage undertaker. The company was charged for the disposal of the mixed liquid but sought to claim that it should pay only for the trade effluent. The court decided that the entirety of the mixed liquid amounted to trade effluent on the grounds that legislation expressly excludes domestic sewerage but not surface or storm water.

As such, companies should ensure that trade effluent is separately drained to ensure costs are not increased.

Plastics Update The Waste and Resources Action Programme (WRAP) has published its UK Plastics Road Map 2025, which helps businesses to deliver targets set out in its plastics pact – a voluntary industry initiative which includes a target of 30% recycled content across all plastic packaging by 2025. Through the pact, businesses have committed to eliminating problematic or unnecessary single-use packaging, ensuring

100% of plastics packaging is reusable, recyclable or compostable, and ensuring that 70% of plastics packaging is effectively recycled or composted. Whilst this is not mandatory, businesses should consider following the guidance given the recent updates in waste strategy which could see these targets become statutory in the near future.

The Department for Business, Energy and Industrial Strategy has also announced a £60m investment into sustainable packaging. It hopes to work alongside industry to find solutions and bring about the changes.

Finally, the recently published Waste Strategy Report announced that a consultation will take place on increasing the 5p carrier bag charge and on extending the initiative to make it mandatory for all retailers.

Japanese knotweed: impact on the built environment An inquiry into Japanese knotweed’s impact on the built environment has been launched by the House of Commons Science and Technology Committee. The Committee is looking for scientific evidence as to the impact of Japanese knotweed and how this may affect lending decisions and property evaluations. Following written evidence, the Committee will invite experts to hold an oral session early this year.

Given the difficulty of removing knotweed and the large fines that may be imposed when it spreads to neighbouring properties, businesses should keep on top of governmental updates in this area.

https://www.bailii.org/ew/cases/EWCA/Civ/2018/2795.html

http://www.wrap.org.uk/content/the-uk-plastics-pact-roadmap-2025



What would be the impact of a no deal Brexit for UK businesses trading with the EU? Much environmental law that applies in the UK is derived from the EU and/or from international agreements. Following Brexit, the UK’s obligations under international treaties will continue to apply and the body of EU law will be incorporated into UK law (under the EU (Withdrawal) Act 2018), subject to ‘correcting powers’ to remedy ‘defects’ or ‘deficiencies’ arising from the UK’s exit (such as references to EU bodies or procedures).

As a result, substantive environmental law will remain, but there is still uncertainty around how some of the legislation will apply – for example when it refers to standards or guidance that are set by EU environmental bodies. Where this is the case, we do not yet know whether the UK government is likely to maintain, relax or tighten the rules, and in many cases the government has not yet identified a UK body that is ready to take over functions currently carried out by an EU body.

As such, companies should continue to comply with their obligations as though nothing has changed until the government confirms its position. It has published guidance on what will happen in respect of certain environmental obligations in a no-deal Brexit, such as introducing a carbon tax to replace the EU ETS. Should there be no deal, a holding arrangement would also be put in place for the establishment of the Office of Environmental Protection to ensure any breaches of environmental law are still caught.

Dates for the diary

1 March 2019

Environment Agency consultation on revisions to its public participation statement closes.

4 March 2019

Consultation on draft climate change adaptation for Wales closes.

11 March 2019

EU ETS reporting deadline to report 2018 emissions, with deadline to surrender allowances for 2018 following on 15 March 2019

31 March 2019

Radioactive Waste Management consultation on potential sites for a new geological disposal facility to be published.

1 April 2019

Streamlined Energy and Carbon Reporting scheme comes into force, replacing the CRC Energy Efficiency Scheme and introducing new energy consumption and carbon emissions reporting obligations for large businesses.

7 April 2019

Environmental Protection (Miscellaneous Amendments) (England and Wales) Regulations 2018 come into force.

1 October 2019

Compliance deadline under the Medium Combustion Plant Directive for ‘Tranche A’ generators with a thermal input above 5MW, emission level of NOx over 500mg/m3 and which operate for more than 50 hours per year.

https://www.gov.uk/government/collections/how-to-prepare-if-the-uk-leaves-the-eu-with-no-deal#protecting-the-environment


Current issues

No deal technical notice on export control regulation On 19 December 2018, the UK government updated its technical notice on how export controls would be affected if the UK leaves the EU with no deal.

The key impact for the export of dual-use items is that the movement of items from the UK to the EU would require an export licence (in the same way as is currently required for non-EU destinations). To avoid business disruption, the Export Control Joint Unit (ECJU) has published new Open General Export Licence designed specifically for exports to EU countries (as explained in further detail below).

No deal technical notice on sanctions The UK government has also published a technical notice on the UK sanctions regime in the event of a no deal Brexit.

The notice confirms that the UK will continue to implement all UN sanctions in UK domestic law, and will carry over all EU sanctions as at the date of Brexit.

Thereafter, the UK will have a standalone power to implement sanctions under the Sanctions and Anti-Money Laundering Act 2018.

Businesses will therefore need to ensure that as well as complying with UN and EU sanctions, they also comply with any other applicable UK sanctions.

ECJU guidance on the ‘Cryptography Note’ The ECJU has published guidance to assist exporters to make their own assessment on the application of the ‘Cryptography Note’, which works to exempt items from controls provided that certain conditions are met (for example, that the goods can be easily acquired by the general public).

This new guidance is important for both existing exporters of items incorporating cryptographic functionality (who should re-assess their products against the new guidance), and exporters looking to self-assess new dual-use items prior to export.

ECJU reintroduces control list classification advisory service The ECJU has reintroduced a control list classification advisory service.

This service is for the assessment of goods and technology against the UK strategic control export control list.

Its return is good news for companies, which will have recently had to attempt to self-classify their goods for export so as to ensure compliance with the UK export control legislation.

Export Control & Sanctions

Jon RoundSenior Associate


Alex VakilSenior Associate


10

https://www.gov.uk/government/publications/exporting-controlled-goods-if-theres-no-brexit-deal/exporting-controlled-goods-if-theres-no-brexit-deal

https://www.gov.uk/government/collections/open-general-export-licences-ogels

https://www.gov.uk/government/collections/open-general-export-licences-ogels

https://www.gov.uk/government/publications/sanctions-policy-if-theres-no-brexit-deal/sanctions-policy-if-theres-no-brexit-deal

https://www.gov.uk/government/publications/notice-to-exporters-201807-guidance-on-the-cryptography-note/notice-to-exporters-201807-guidance-on-the-cryptography-note

https://www.gov.uk/government/publications/notice-to-exporters-201815-control-list-classification-service-to-return-on-25-june/notice-to-exporters-201815-control-list-classification-service-to-return-on-25-june



What would be the impact of a no deal Brexit for UK businesses trading with the EU? Current regulations on the export of dual-use items would continue to apply (to exports from the UK) in the same way as they do now (to exports from the EU Customs Territory).

However, there would be changes to current licensing requirements (which do not mandate a licence for the majority of intra-EU exports of dual-use items). For example:

– the movement of dual-use items from the UK to the EU would require an export licence from the ECJU (the UK export control regulator); and

– export licences issued by remaining EU Member States would no longer be valid for exporting dual-use items from the UK

Consequently, under a no deal Brexit, UK businesses exporting dual-use items to the EU would need to register for new licences to maintain compliance with dual-use controls.

What would be the impact of a no deal Brexit for non-UK businesses trading with the UK?As of the exit date, the UK would be recognised as a ‘third country’. Exports of dual-use items from the EU to the UK would therefore require a licence to legitimise that export. In addition, licences issued by the ECJU would no longer be valid for exporting dual-use items from EU Member States – either to the UK or to a third country.

In a Communication published on 19 December 2018, the Commission confirmed that it would implement a Regulation to add the UK to the list of countries for which a general authorisation to export dual-use items is valid throughout the EU (referred to as EU001).

What should businesses be doing now to prepare for a no deal Brexit?As part of wider Brexit-readiness activity, businesses should:

– conduct an audit to identify: (i) the extent of their existing (and proposed) UK-EU and EU-UK dual-use exports; and (ii) the country of origin of the licences they intend to continue using post-Brexit;

– for identified UK exports to the EU, be ready to register to use the new Open General Export Licence;

– for identified EU exports to the UK, be prepared to register in a remaining EU Member State for a general authorisation to legitimise the export of dual-use items to the UK;

– for identified exports where an individual, rather than an open, licence is required (for example, because the shipment is a one-off/customer-specific), be prepared to apply for those licences in advance of the withdrawal date from: (i) the UK (for UK-EU exports); or (ii) a remaining EU Member State (for EU-UK exports); and

– for existing licences which they intend to use following the withdrawal date, ensure that those licences will remain valid.

https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX%3A52018DC0890


Current issues

New guidance on low alcohol descriptors Following a public consultation in 2018, guidance concerning the appropriate use of low-alcohol has been issued which sets out how the government expects low-alcohol drinks (those of 1.2% abv or less) to be described in England.

Guidance on food traceability, withdrawals and recalls A consultation on guidance on food traceability, withdrawals and recalls within the UK food industry was launched on 7 January 2019 and closes on 4 February 2019. The purpose of the consultation is to seek views from stakeholders on this newly developed guidance. The guidance will be of interest to food business operators, trade organisations, consumer organisations and food enforcement authorities.

Food Standards Agency response to consultation on Regulating Our Future: amendments to the Food Law Code of Practice (England) anticipatedThe FSA is expected to issue its response to the consultation soon. The purpose of this consultation was to seek views on:

– the process of registration;

– the application of the food hygiene intervention rating scheme;

– recognition of national inspection strategies; and

– co-dependent aspects still in development.

The FSA has, however, indicated that it will only be taking forward amendments relating to the process of registration and the Primary Authority national inspection strategies at this time.

Energy drinks and children The House of Commons Science and Technology Committee has issued a report on energy drinks and children. The report makes a number of recommendations, including that:

– the UK government should consult on whether introducing additional labelling requirements on all products containing caffeine (in milligrams per 100ml) including average values per serving of tea and coffee in coffee shops would help consumers make informed choices;

– the government should introduce, 18 months after Brexit takes effect, additional labelling requirements to ensure that advisory messages are more prominent on energy drinks packaging and not merely in ‘the small print’; and

– the Committee of Advertising Practice should consider whether to explicitly include high-caffeine products within the scope of its advertising approach to high fat, sugar or salt content (HFSS) foods and drinks.

Food Law

Katie VickeryPartner


11

Anna LundySenior Associate


https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/763840/low-alcohol-descriptors-guidance.pdf

https://www.food.gov.uk/sites/default/files/media/document/recalls-consultation-letter-final.pdf

https://www.food.gov.uk/sites/default/files/media/document/consultation-pack-england.pdf

https://publications.parliament.uk/pa/cm201719/cmselect/cmsctech/821/821.pdf



What would be the impact of a no deal Brexit for UK businesses trading with the EU? In the event of a no deal Brexit, the UK food and drink sector will face significant challenges in terms of disruption to the supply chain, insufficient labour (skilled and unskilled), and increased costs and administration when exporting and importing.

The UK government has made assurances that the current standards on food safety, labelling and quality will be maintained. Initially, EU-based provisions will be rolled over with some changes to reflect that the UK is no longer part of the EU. However, the EU has said that it will no longer recognise UK approvals for products if the UK leaves with no deal because legally the UK will be classed as a ‘third country’.

For UK food products being sold in the EU, food manufacturers should consider the following:

Origin labelling

The use of the term ‘EU’ (or the “EC” abbreviation) in origin labelling would no longer be correct for food or ingredients from the UK. Additional consideration will need to be given to blended products originating from more than one EU country.

Addresses on food labelling

Changes may be needed to labelling to ensure an EU address is included. This could be the address of an EU entity within the corporate group who is the ‘Food Business Operator’ or the address of the importer of the product into the EU. Care should be taken to understand the regulatory implications of another entity being the Food Business Operator.

Geographical Indications

While the UK government proposes to establish an independent UK GI scheme, any producers who wish to utilise an EU GI will need to submit an application to the European Commission as a third party producer.

Organic

Organic products certified by a UK control authority will no longer be validly certified as organic for sale in the EU. Steps should be taken to certify those products with an EU control authority.

What would be the impact of a no deal Brexit for non-UK businesses trading with the UK?Like all businesses outside the UK, the food industry will likely see an increase in cost and administration of exporting to the UK due to the potential for lengthy delays at ports and increased checks on products.

Whilst the UK government has said that it will recognise foods produced according to EU laws for a period of time after Brexit, it has also indicated some changes. For example, products sold in the UK will need to be labelled with a UK address of the UK Food Business Operator or an importer based in the UK.

There will be an allowance for food manufacturers to sell through existing stock that has been placed on the market in the UK prior to Brexit day. Where possible, businesses may wish to consider moving additional stock across to the UK in advance of Brexit.

What should businesses be doing now to prepare for a no deal Brexit? We have outlined above some of the immediate considerations that need to be put in place in terms of labelling, business structure and movement of stock.

For those that have not already done so, it would be prudent to review the options for sourcing raw ingredients and, where possible, to stockpile ambient or frozen ingredients. It has, though, been reported that UK warehousing capacity is extremely limited as a result of businesses stockpiling in advance of 29 March 2019.

The UK government has issued high-level practical guidance called the ‘Partnership pack: preparing for changes at the UK border after a ‘no deal’ EU Exit’ in addition to the series of technical notices (four of which are specific to the food sector) it issued in 2018.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/776885/Partnership_pack_Feb_2019.pdf

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/776885/Partnership_pack_Feb_2019.pdf

https://www.gov.uk/government/collections/how-to-prepare-if-the-uk-leaves-the-eu-with-no-deal


Dates for the diary

January 2019

Food Standards Agency response to Consultation on Regulating Our Future – Amendments to the Food Law Code of Practice (England) expected.

4 February 2019

Food Standards Agency Consultation on Guidance on Food Traceability, Withdrawals and Recalls within the UK Food Industry closes.


Current issues

Government responds to Dame Judith Hackitt report Following the Grenfell Tower tragedy, the UK government commissioned an urgent, independent review of building and fire safety regulations. Dame Judith Hackitt (who led the review), published her final report in May 2018.

The report concluded that a number of changes were required to make fire safety regulation fit for purpose in the UK.

The government has now indicated that it will be adopting all recommendations from the report and will be consulting on:

– a joined-up enforcement regime for breaches of fire safety law;

– setting out more clearly and defining the requirements for a ‘safety case’ relating to fire safety risk in buildings;

– defining clear roles of responsibility and accountability for duty holders on fire safety matters; and

– introducing greater enforcement options and penalties.

Whilst the government has agreed with the findings of the report, its proposals are subject to consultation before they can become law. Those with an interest in these developments (such as landlords and developers) should keep a close eye on when these consultations are published and consider any individual or industry responses required.

HSE Statistics published The Health and Safety Executive has published its health and safety statistics for 2017/18.

Headlines include the fact that new cases of work-related ill health cost the economy £9.7billion in 2016/17, and that 30.7 million working days were lost due to work related ill health and non-fatal workplace injuries in 2017/18. While the cost of work-related ill health was significant, it cost the economy around a third less that in 2015/16 when it totalled £14.9 billion. Working days lost, however, remained broadly similar to 2016/17, where 31.2 million days were lost.

Despite the cost to the economy, the statistics also show that the UK continues to have one of the lowest rates of fatal injuries when compared with other large EU economies. Additionally, rates of work-related ill health were also found to be lower than other comparable EU member states, and lower than the EU average.

The lowering rates of ill health and working days lost as a result appear to have brought about a reduction in prosecutions. In 2017/18, the HSE and COPFS (in Scotland) brought a total of 517 prosecutions to verdict, a drop of 95 on the year before. This is the second year in a row which has seen a reduction in HSE prosecutions. However, that followed two years of increases, so it may be too soon to say for certain that the reduction in work-place injuries is causing the reduction in prosecutions.

Health & Safety

Mary LawrencePartner


12

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/741455/Response_to_sc_report_on_Independent_Review_of_Building_Regulations_and_Fire_Safety_Cm9706.pdf

http://www.hse.gov.uk/statistics/index.htm#utm_source=hse.gov.uk&utm_medium=refferal&utm_campaign=annualstats&utm_term=stats&utm_content=home-page-news

https://workplaceinsight.net/workplace-injuries-ill-health-cost-britain-14-9-billion-according-latest-hse-data/


First successful prosecution of a Principal Designer under CDM Regulations deals with fire safety designThe HSE has successfully prosecuted for the first time a ‘Principal Designer’, one of the duty holders under the Construction (Design and Management) Regulations 2015 (CDM).

On 22 May 2018, Paul Humphries Architects Limited were fined £20,000 in Exeter Magistrates Court for failing to consider the risk of fire spread on a timber extension being built onto a residential care home in Exmouth.

The case serves as a useful reminder to both those acting as Principal Designer of their duties as for those acting as a ‘Client’ on a building project that it is imperative to have robust policies and procedures in place to ensure that competent contractors (including Principal Designers) are being appointed under CDM. This case could also give an indication about the focus the HSE will have on considering fire safety risk in building design.

HSE guidance on workplace first aid updated to encompass mental health considerationsThe HSE has updated its guidance on workplace first aid needs assessment to suggest that employers consider whether it is beneficial to have ‘mental health first aiders’.

The updated guidance confirms that the HSE is beginning to take more of an interest in enforcing employers’ obligations to look after the wellbeing of their employees and visitors.

Employers should review their policies to ensure they are taking account of this.

Government rejects call for maximum workplace temperatureFollowing the heatwaves last summer, the Environmental Audit Committee recommended that the government introduce a maximum temperature, above which workers could not be required to work. MPs recommended this was especially important for work that involves significant physical effort.

The government has rejected the proposal, stating that “there is an existing legal obligation on employers…to provide a ‘reasonable’ temperature in the workplace”.

It appears that the application of this obligation in relation to manual labour has not been tested in court. However, if the hot weather returns this summer, employers should nonetheless be mindful of their general duty to protect the health and safety of their employees and contractors.

Government responds to consultation on amendments to Approved Document B Following Dame Judith Hackitt’s interim report (discussed above), the government launched a consultation on amending the controversial ‘Approved Document B’. On 18 December 2018, the government responded to the consultation.

Following its consultation, the government has decided to go further than Dame Judith Hackitt’s recommendations, and has already passed regulations banning the use of combustible materials for certain high rise buildings over 18 metres.

The government has also committed to applying much tighter and more restrictive conditions for buildings to pass the assessments in lieu of tests currently permitted under approved document B. These include providing evidence that relevant testing has been undertaken by Notified Bodies, banning the assessment in lieu of tests used for external cladding and setting out a number of other responses.

http://www.hse.gov.uk/prosecutions/case/case_details.asp?SF=CN&SV=4518658

http://www.hse.gov.uk/firstaid/needs-assessment.htm

https://publications.parliament.uk/pa/cm201719/cmselect/cmenvaud/1671/167102.htm

https://www.gov.uk/government/consultations/approved-document-b-fire-safety-amendments-to-statutory-guidance-on-assessments-in-lieu-of-tests


Dates for the diary

12 February 2019

Government consultation on ‘Good practice on how residents and landlords work together to keep their home and building safe’ closes. This is the only consultation so far issued in response to the full Dame Judith Hackitt report.

31 March 2019

The HSE will publish revised guidance for employers by this date on the assessment and management of work-related mental ill-health.


What would be the impact of a no deal Brexit for UK businesses trading with the EU? Health and safety law, whilst derived from EU directives, is largely implemented and enforced at Member State level within EU countries. Most of the core UK legislation and regulation has also been driven by the UK to the EU.

It is therefore anticipated that UK businesses trading with the EU will remain compliant in the EU by applying UK legislation and standards to their activities. However, as time moves on, it will be important for businesses to ensure that they understand where EU and UK standards diverge as well as local Member State nuances.

Government guidance on the impact of no deal on health and safety can be found here.

What would be the impact of a no deal Brexit for non-UK businesses trading with the UK?As at the date that the UK leaves the EU, health and safety compliance for non-UK businesses will largely remain unaffected. Health and safety duties in the UK will stay the same as pre-Brexit, and will continue to be enforced by the HSE (or other applicable regulators).

The main exception to this will be where businesses import or produce products controlled by the REACH, Biocidal Products, Pesticides or Hazardous Chemicals Regulations. While the current requirements of those regulations will largely continue to apply, the HSE will take over the role of the European Chemicals Agency in enforcing those regulations within the UK.

What should businesses be doing now to prepare for a no deal Brexit? Companies will see little difference to their core health and safety duties following Brexit. However, companies who import or produce certain chemical products will need to register with (and consequently report to) the HSE. Questions remain about how an already stretched regulator will cope taking on this additional responsibility, so businesses may see even slower resolution of issues by the HSE.

The government has produced specific guidance on the impact of a no deal Brexit in relation to chemicals and biocidal products.

https://www.gov.uk/guidance/health-and-safety-executive-information-if-the-uk-leaves-the-eu-without-a-deal?utm_source=ba9d6985-76ed-4c0b-8096-31e33ee79426&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

https://www.gov.uk/government/publications/regulating-chemicals-reach-if-theres-no-brexit-deal/regulating-chemicals-reach-if-theres-no-brexit-deal

https://www.gov.uk/government/publications/regulating-biocidal-products-if-theres-no-brexit-deal?


Current issues

Temporary Permissions Regime for incoming EEA E-money and Payments institutions In December 2018 the Financial Conduct Authority (FCA) released, as part of its plan to deal with a no deal Brexit, its proposals to introduce a Temporary Permissions Regime (TPR) applicable to EEA inbound electronic money and payment institutions (amongst others). These plans have been published in a consultation paper (CP18/29) and feedback received on this consultation will be published in early 2019. So far, the FCA has only said that it will publish final versions of the TPR “shortly before exit day”.

There is also a related second consultation dealing with specific aspects of the FCA’s rules that will apply to firms when they are operating from inside the TPR.

EEA electronic money and payment institutions and registered account information service providers passporting into the UK are able to use the TPR and should read these two consultation papers.

PSD2 Customer Authentication in a no deal Brexit Firms subject to the second Payment Services Directive (PSD2) have been preparing for new European standards for strong customer authentication and for common and secure open standards of communication since early 2018. These detailed, technical standards (or ‘SCA-RTS’ for short) supplement PSD2 by supporting the security and safety of electronic payments. In particular, the detailed European technical requirements necessary to support PSD2 set out two main areas of support: verification and secure communication.

The FCA issued its final policy position on these EU requirements and their UK implementation in December 2018 (PS18/24).

However, the possibility of a no deal Brexit complicates matters for the payments sector because by the time Brexit occurs, on 29 March 2019, only a part of SCA-RTS will be effective in the UK and the balance of the requirements will not be due to come into effect until September 2019, after the UK has left the EU.

Firms preparing to implement SCA-RTS will need to navigate both its numerous requirements as well as the FCA’s approach to Brexit.

Payments

Paul AnningPartner


13

Kate JohnsonPartner


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https://www.fca.org.uk/publications/consultation-papers/cp18-36-brexit-proposed-changes-handbook-and-binding-technical-standards-second-consultation



How would the Temporary Permissions Regime for incoming EEA firms work?At the point that the UK leaves the EU, in a no deal scenario, it will become a ‘third country’ to the EU. This means that any incoming EEA firm will no longer be able to operate in the UK (‘passporting’). To continue as they did before, an incoming EEA firm would need to seek authorisation from the UK regulatory authorities.

In order to mitigate the immediate impact of this, relevant incoming EEA firms passporting into the UK will be able to enter into a TPR that will enable them to continue to operate in the UK after their current passport falls away on 29 March 2019. The regime is intended to provide sufficient time for those firms to seek full UK authorisation.

In order to use this regime, the firm must have submitted a notification to the FCA by the end of the day on 28 March 2019. The TPR will then come into force at 23:00 on 28 March 2019. The FCA’s proposed rules for the TPR were set out in its December 2018 consultation paper CP18/29, followed by a second consultation paper (CP18/36) on certain specific issues.

Incoming EEA PIs, EMIs and RAISPs wishing to continue to provide services in or into the UK should take advantage of the TPR, but should not leave submission of the notifications until the last minute. They should also review the FCA’s CP18/36 in order to identify the changes to conduct and FCA supervision which will take effect on exit day.

For more detail on the TPR, see our separate Insight here.

What would be the impact of a no deal Brexit on UK firms seeking to implement SCA-RTS?Since early 2018, firms subject to the revised PSD2 have been preparing for new European regulatory technical standards SCA-RTS.

If the UK leaves the EU with no deal, the EU (Withdrawal) Act 2018 will trigger a transfer of EU laws as they stand on that day into UK law (becoming ‘retained EU law’). However, as of that day, only paragraphs 3 and 5 of Article 30 of SCA-RTS will be in effect so only those provisions will become UK law.

For the payments sector, this scenario presents a great deal of uncertainty. For example, account servicing payment service providers (ASPSPs), such as banks, have been busy preparing to meet the new requirement to have built testing interfaces for third party providers under open banking by 14 March 2019, the deadline required to meet the specific provisions of SCA-RTS that will already be in effect prior to exit day.

To address this, the FCA has been given powers by regulations made under the EU (Withdrawal) Act 2018 to make a UK version of the SCA-RTS, which will be ‘substantially in the same form’ as the EU SCA-RTS.

The effect of this is that, regardless of the outcome:

– by 14 March 2019 ASPSPs must make documentation available to TPPs specifying the routines, protocols and tools needed by them to allow their software and applications to interoperate with the systems of the ASPSPs.

– from 14 September 2019, all PSPs (unless an exemption applies) will need to ask customers for more information to verify their identity before an electronic payment is made.

The proposals are intended to support an aim of the Payment Services Regulations 2017 to prevent harm caused by payment fraud. Making the UK-RTS will support strong customer authentication by setting out certain security measures, which will help support market integrity, as well as encouraging open banking.

For further detail, see our separate Insight here.

https://www.osborneclarke.com/insights/no-deal-brexit-will-uk-temporary-permissions-regime-financial-services-sector-work/

https://www.osborneclarke.com/insights/brexit-impact-uk-firms-seeking-implement-sca-rts/


Dates for the diary

7 January 2019 to 28 March 2019

The FCA’s notification window for TPR is open. Firms submit notifications (using the required form) via Connect.

14 March 2019

Deadline for ASPSPs with payment accounts accessible online to meet the requirements to make available both technical specifications regarding their access interface(s), and testing facilities for TPPs.

28 March 2019

Deadline by which a firm must submit notification to the FCA that it wishes to enter the TPR. TPR regime to be in operation from 29 March 2019.

April 2019

FCA expects to publish the feedback it receives on CP18/44 and its final policy position on creating a UK set of SCA-RTS.

14 June 2019

Deadline for those seeking exemption from the contingency mechanism requirements to submit an exemption request. If requests are submitted after this date, firms may not be able to comply with their SCA-RTS obligations should the FCA refuse an exemption request.

14 September 2019

Deadline for all payment service providers to comply with SCA-RTS or UK-RTS.

October to December 2019

First landing slot for firms within the TPR to submit applications for full UK authorisation.

Before 28 March 2020

PIs, EMIs and RAISPs must notify the FCA as to how they propose to leave the TPR.

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Current issues

CJEU overturns energy labelling legislation On 8 November 2018, the Court of Justice of the European Union (CJEU) found that the testing regime mandated in Delegated Regulation (EU) No 665/2013 violated the Energy Labelling Directive, in that it failed to provide for tests on vacuum cleaners to be carried out under ‘normal conditions’.

The Delegated Regulations set out that vacuum cleaners were only to be tested when the dust receptacle was empty. Dyson argued that vacuum cleaners are rarely used when the dust receptacle is empty, and that vacuum cleaners which use bags become less efficient as the bag fills. Dyson argued the tests were not, therefore, under ‘normal conditions’, and were giving false results to consumers.

The CJEU accepted Dyson’s arguments and annulled the Delegated Regulations. The Commission will now have to pass new implementing legislation setting out a new testing regime, which is compatible with the provisions of the Energy Labelling Directive.

Medicinal products and medical device regulations post-Brexit The Medicines and Healthcare Products Regulatory Authority (MHRA) has consulted on draft legislation to be put in place in the event of a no deal Brexit.

The draft legislation sets out the role of the MHRA in regulating medicines and medical devices in the absence of the European Medicines Agency (EMA); how manufacturers of those products will be able to bring them to market in the UK; and how clinical trials will be regulated.

While the legislation is currently in draft, if adopted it promises to speed up the process for bringing these products to market, in particular when compared with the current Centralised Procedure for medicines in the EU.

Importantly, it also sets out that any medicinal product or medical device correctly placed on the market before exit day will automatically be granted UK marketing authorisation.

For more, see the MHRA’s guidance note on medicinal products and medical devices in the event of a no deal Brexit.

UK government legalises medicinal cannabis As of 1 November 2018, specialist doctors are now able to prescribe medicinal cannabis products to patients legally.

The UK is well placed to meet the anticipated increase in demand for cannabis-derived medicines. It is already the largest producer of legal cannabis in the world, and the largest legal exporter too.

For now, the government has only given cannabis-derived medicines ‘unlicensed’ status, meaning they do not have full marketing authorisation and therefore can only be supplied where there is no reasonable licensed alternative. However, the results of a series of ongoing trials appear to show numerous potential benefits of medicinal cannabis, and the government may allow for licenced medicinal cannabis in the future.

Product Regulation

Greg McQuade Associate


Katie Vickery Partner


14

https://curia.europa.eu/jcms/upload/docs/application/pdf/2018-11/cp180168en.pdf

https://www.gov.uk/government/publications/further-guidance-note-on-the-regulation-of-medicines-medical-devices-and-clinical-trials-if-theres-no-brexit-deal/further-guidance-note-on-the-regulation-of-medicines-medical-devices-and-clinical-trials-if-theres-no-brexit-deal

http://www.legislation.gov.uk/uksi/2018/1055/made


UK Drone Bill yet to be debated The pre-Christmas incident at Gatwick, where thousands of passengers were left stranded after drones were flown over the runway, highlighted the need for effective regulation of unmanned aerial vehicles.

The Drone (Regulation) Bill was introduced to Parliament as long ago as September 2017, but is yet to receive its second reading. This is currently scheduled for February 2019, although with Brexit very likely to take up all of Parliament’s time through to March, this now seems unlikely.

It is already a criminal offence to fly a Drone within 1km of an airport. The new Bill would enhance Police powers to enforce the current regulatory regime, amongst other things.

Increasing enforcement powers for EU regulatorsCompliance and Enforcement Regulations, which are currently awaiting their first reading in the European Parliament, seek to increase enforcement powers for regulators in the EU. Of particular note is the proposal to introduce the concept of a “reference person”, which would require anyone selling consumer products governed by harmonised legislation into the EU to have an EU-based authorised representative taking on the compliance responsibilities. While a seemingly small change, the proposal has proved controversial with SMEs from third countries, who feel it is an additional compliance burden.


What would be the impact of a no deal Brexit for UK businesses trading with the EU?

Medicinal products and medical devices

EU law requires that marketing authorisation holders of medicines (those who are permitted to manufacture and place medicines on the EU market) are established in the EU. In addition, a number of processes must be carried out, and documents held, within the EU. In particular, these relate to obligations around pharmacovigilance and batch release.

For the manufacturers of medical devices, either the manufacturer will need to be established in the EU, or they will need to appoint an ‘authorised representative’ that is. The EU will no longer recognise certificates obtained from a UK Notified Body. These will either need to be re-obtained from an EU Notified Body or transferred.

Vehicles

In order to sell and register a vehicle in the EU, the manufacturer must hold a European Community type-approval. This must be issued by a Type Authority in an EU Member State. Type-approvals issued by a UK authority will no longer be valid in a no deal scenario, and new type-approval from an EU Member State’s authority would need to be obtained.

Manufacturers of vehicles established outside of the EU will need to appoint a representative in the EU to represent them before the type-approval authority.

Harmonised goods

Goods which are required to meet certain ‘essential safety requirements’ under EU law in order to be sold are known as ‘harmonised goods’. These include machinery, personal protective equipment, toys and other goods.

As with medical products, where the goods are required to be tested by a Notified Body, tests carried out by UK Notified Bodies will no longer be valid, so new tests will need to be carried out by EU-based Notified Bodies. Each type of ‘harmonised’ product is subject to its own rules. Therefore, specific advice should be sought for each type of product to establish whether any individual, additional requirements will need to be met.

https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2017/0353%28COD%29&l=en


Non-harmonised goods

Goods which are subject to individual national requirements, rather than EU wide ‘essential safety requirements’, are known as ‘non-harmonised goods’. Under the current regime, a good lawfully sold in one EU Member State is permitted to be sold in another Member State even if that state’s local requirements are different for that item (subject to some exceptions). This is known as ‘mutual recognition’, and will no longer include the UK in the event of a no deal Brexit.

This means that UK businesses will need to ensure that goods sold into the EU comply with the local rules of the first Member State the goods are sold in. Mutual recognition will allow those goods to be sold in the rest of the EU.

REACH

Companies producing chemicals governed by the Registration, Evaluation, Authorisation and Restriction of Chemicals Regulations (REACH) will continue to be regulated by the European Chemicals Agency (ECHA) in the EU. However, REACH requires companies registered with ECHA to be based in the EEA. Therefore, companies will need to transfer those registrations to an EEA-based entity in the event of a no deal Brexit.

Biocides

Companies wishing to apply for new active substance approvals under the Biocidal Products Regulations in the EU would need to continue to apply to ECHA for approval. Applications currently made to the HSE (the UK’s competent body) which are not completed before exit day will not be valid in the EU. Additionally, a holder’s product authorisations must be established within the EU, so if necessary these should be transferred to an entity established within the EU.

What would be the impact of a no deal Brexit for non-UK businesses trading with the UK?Medicines and medical devices

Any medicines which have been approved via the EU’s centralised procedure prior to the UK exiting the EU will automatically receive UK marketing authorisation (unless the manufacturer chooses otherwise). Marketing authorisation holders (MAHs) will then have a grace period to provide the MHRA with certain technical information to allow the UK marketing authorisation to be maintained.

Subsequent applications for marketing authorisation will need to be made directly to the MHRA. Eventually, all UK MAHs will have to be established within the UK, and the Qualified Person for Pharmacovigilance of the MAH will need to be resident in the UK. The MHRA is granting a transition period until the end of 2020 to allow companies to comply with these changes.

Similarly, the MHRA will recognise medical devices for a time-limited period’ which are already registered on the EU market prior to Brexit day. Following this, applicants will need to be established in the UK, or have a UK ‘sponsor’.

Vehicles

EU type-approvals will become invalid at the date of exit. Therefore, manufacturers will need to ensure they obtain type-approval from the relevant UK body in order to continue selling vehicles on the UK market.

However, existing EU type-approvals (granted before exit date) will be automatically converted to ‘provisional’ UK approvals. The provisional approval will be time-limited, and manufacturers will need to apply for UK approval to convert the provisional into final approval.

Harmonised goods

Harmonised goods placed on the UK market prior to exit date will be able to continue to be sold in the UK. Additionally, goods which meet essential requirements of EU law (and are tested by an EU Notified Body to show this) will be able to continue to be sold after exit date for an unspecified time-limited period. EU conformance marks (such as CE marks) will also continue to be accepted for a time-limited period.

Following the expiration of this period, products will need to be tested by a UK Notified Body, meet UK essential requirements, and carry a UK conformance mark.

The UK will recognise authorised representatives based in the EU for 18 months after Brexit with the exception of ‘responsible persons’ for cosmetic products. To sell cosmetics in the UK following a no deal Brexit, an UK-based responsible person will need to be appointed.

Importers into the UK will have an 18 month transition period before they are required to include their name and address on the product. During the 18 months they will be required to include their details on accompanying documentation.


Non-Harmonised goods

Businesses importing into the UK will need to ensure their goods comply with UK national requirements and standards, as the UK will no longer recognise the standards of EU Member States.

REACH

The new UK regulatory regime will largely preserve REACH, so far as possible. However, there would be no need for countries outside the UK to register under the new UK regime – it would be importers who would be obliged to register using the UK’s new platform. Enforcement would be undertaken by the HSE and the Environment Agency.

Biocides

The UK will adopt the Biocidal Product Regulations with only minor changes as of exit day. The main change will be that an application for active substance or product authorisation made to the HSE will no longer be valid on an EU-wide level. Authorisations which are valid on exit day in the UK (irrespective of where they were granted) will continue to be valid in the UK until they expire. If you are applying for an authorisation in another EU Member State which has not been granted on exit date, this will not become a valid UK authorisation when it is granted.

Classification, Labelling and Packaging Regulation

As with other legislation, the CLP Regulation will be adopted as a UK regime, with minor amendments, on exit day. Therefore, companies importing chemicals into the UK from the EU will need to become competent in relation to the role of an importer under CLP. Additionally, the HSE will gain new powers, being able to put in place new rules on mandatory labelling – effectively taking over the functions of ECHA.

What should businesses be doing now to prepare for a no deal Brexit?In order to prepare for a no deal Brexit, businesses need to consider the following:

– To sell in the EU, which EU entity will take on responsibility for ensuring the product complies with EU law? The name and address of the EU entity should be included on the product label. Specific rules apply to medicines, medical devices, vehicles and cosmetics.

– To sell in the UK, depending on the type of product, do any changes need to be made to the label (for example, to include a UK address)? Does the entity that is placing the product on the UK market appreciate that they are now acting as an importer rather than a distributor (and understand what difference that makes to their role and responsibilities)?

– Do technical and other documents need to be transferred to the EU or UK? Will two sets of documents need to be stored – one in each jurisdiction?

– If documents have been issued by UK Notified Bodies or Type Authorities, do these need to be re-issued by an EU body?


Dates for the diary

8 February 2019

Responses to consultation on legal and regulatory framework for automated vehicles due.

11 February 2019

Consultation on new legislation to impose duty on tobacco for heated tobacco vaporisers closes.

15 February 2019

Drone (Regulation) Bill 2017-2019 to be reintroduced to the House of Commons via its second reading.


Current issues

Court of Appeal declares local authority development agreement ineffective The Court of Appeal, in R (on the application of Faraday Development Ltd) v West Berkshire Council, made the first declaration of ineffectiveness in an English public procurement case. The Court upheld the appeal brought by Faraday Development in its case against West Berkshire Council and declared that the development agreement between the Council and St Modwen for the regeneration of an industrial site near Newbury must be terminated.

The case concerned the Council’s decision to enter into a development agreement without running a competition under public procurement law. The Court of Appeal overturned the High Court’s decision and ruled that the development agreement should have been procured via a competition under the Public Contracts Regulations 2006 (replaced by the Public Contracts Regulations 2015).

This case illustrates the risks to developers and contractors of seeking to keep what are ultimately development agreements (rather than just disposals of land) out of the scope of the public procurement regime.

For more, see our Insight into this important case.

Changes to ‘social value’ requirements for central government procurementsThe Cabinet Office has announced proposals for changes to ‘social value’ requirements for central government procurements to come into force by summer 2019.

In a speech at the Business Services Association Annual Chairman’s Dinner on 19 November 2018, Cabinet Office Minister, David Lidlington CBE MP, emphasised the importance of using government procurement to ‘prioritise social value’ in new ways and outlined the government’s proposed approach to social value.

The government will provide departments with a framework of policy areas and specific measures to include in procurements, designed to open access for small businesses and social enterprises. The new model is also designed to provide a standard framework for key social outcomes and metrics to be evaluated in tenders and a first tranche of priority policies, including:

– removing barriers to government contracts for small businesses and social enterprises;

– improving skills and employment opportunities for the disadvantaged; and

– increasing equality and diversity in the workforce.

Regulated Procurement

Catherine WolfendenPartner


15

http://www.osborneclarke.com/insights/court-of-appeal-declares-local-authority-development-agreement-ineffective/

https://www.gov.uk/government/news/new-social-value-contracts-to-revolutionise-government-procurement


Mr Liddington used the example of a department letting a contract for a facilities management service, which could specify that opportunities needed to be provided for ex-offenders or young people Not in Education, Employment or Training (NEET) or specify in the letting of a logistics contract that the successful bidder would need to focus on tackling the environmental impact by showing that it will reduce carbon emissions and air pollution in the delivery of the contract.

Court adopts more flexible approach towards limitation period in regulated procurement disputes Claims arising out of breaches of public procurement law must be brought within 30 days of the date on which the economic operator knew or ought to have known that grounds for issuing the claim had arisen. This limitation period can be extended up to three months by the Court where there is a ‘good reason’ for doing so.

The Court’s position on what amounts to a ‘good reason’ is becoming less predictable. Previously, the Court had indicated that it would only be appropriate to extend the deadline in ‘exceptional circumstances’ where a claimant was unable to issue within a 30 day period for reasons of illness or detention of members of the bidding team. Recently, the Court held that there only needs to be ‘good reason’, not exceptional circumstances, to allow the extension.

This means that, in some cases, the risk of challenge needs to be considered up to three months from the date of actual or constructive knowledge of the alleged breach of public procurement law.

Trends in recent applications to lift automatic suspensionThere has been a flurry of decisions in applications to lift automatic suspensions over the last six months (including Eircom, DHL, Bombardier and Lancashire Care NHS FT), that has introduced some notable trends.

– The question of whether an application to lift the automatic suspension will be granted or denied is becoming less predictable, and is more likely to depend on the view of the judge on the day.

– Damages, which are usually found to be an adequate remedy for a claimant, have been found to be an inadequate remedy for both claimants and defendants in a number of cases.

– More cases are being decided on the balance of convenience by considering the public interest.

New standard selection questions on approach to payment From 1 September 2019, all central government departments, their executive agencies and non-departmental public bodies must include new standard selection questions on approach to payment for any procurements above £5m per annum.

The new questions should be included in section 6.2 of the standard selection questionnaire. The government has issued guidance on how the new questions should be assessed.

CJEU ruling requiring contracting authorities to disclose the quantity and value of call-off contracts under a framework agreement The Court of Justice of the European Union (CJEU) has given a preliminary ruling that contracting authorities must state the quantity and value of contracts that can be called off from a framework agreement. This rule applies to the original signatories to the framework agreement, and any ‘secondary’ contracting authorities who are not direct parties to the framework agreement but are named within the procurement documents as being entities that can call off contracts.

https://www.bailii.org/ew/cases/EWHC/TCC/2012/2121.html


https://judiciaryni.uk/sites/judiciary/files/decisions/Eircom%20UK%20LTD%20v%20Department%20for%20Finance%20and%20British%20Telecommunications%20PLC.pdf


https://www.bailii.org/ew/cases/EWHC/Comm/2018/2926.html

https://www.gov.uk/government/publications/procurement-policy-note-0418-taking-account-of-a-suppliers-approach-to-payment-in-the-procurement-of-major-contracts

http://curia.europa.eu/juris/document/document.jsf;jsessionid=FF5C982821FCBA26F98080FC890F1C2A?text=&docid=209348&pageIndex=0&doclang=en&mode=req&dir=&occ=first&part=1&cid=2852177



What would be the impact of a no deal Brexit for UK businesses trading with the EU?For the purposes of the EU Procurement Directives (covering public; utilities; concessions; and defence) as implemented in each of the Member States, and for procurements run by the EU institutions, UK businesses will become Economic Operators from a third country. They will therefore not have the same rights in EU procurement competitions as those Economic Operators established in a Member State.

If the UK has acceded to the WTO Government Procurement Agreement (GPA) by 29 March 2019, suppliers will be in a better position. The current EU Procurement Directives that apply in each Member State implement the GPA commitments that the EU has made. In this situation where the contract being procured falls within the Schedule of the GPA, UK Economic Operators should be treated no less favourably than an Economic Operator established in the EU. The contracts covered by GPA procurement rules (Schedule 1) are slightly more limited based on current GPA coverage. In particular: the rules do not cover below threshold procurements or defence procurements; the rules covering the utilities sector are more limited; concessions are excluded; and there are no express rules on modifying contracts.

If the UK is not an independent signatory to the WTO GPA on exit day, there will be no right of access for UK suppliers to EU Member State procurement competitions.

The EU’s position currently on public procurement procedures that have been launched (where a call for competition has been made) is that the relevant provisions of national law applicable at the moment of launching should continue to be carried out and that the non-discrimination principle should be complied with in regard to bidders from the UK.

What would be the impact of a no deal Brexit for non-UK businesses trading with the UK?On 13 December 2018, the Cabinet Office laid a draft Statutory Instrument (The Public Procurement (Amendment etc.) (EU Exit) Regulations 2019), which will come into force on exit day. The aim of this SI is for the procurement regulations (public; utilities; and concessions) to reflect the UK’s status as a third country at the same time as ensuring that they continue to facilitate a functioning UK internal market and comply with the requirements of the GPA, which the UK intends to join in its own right after exit.

Key amendments include:

– the provision for contracting opportunities to be advertised in a new e-notification service, rather than in the Official Journal of the European Union (OJEU), removing the need for Contracting Authorities to have recourse to E-Certis, the EU’s online database for eligibility criteria and documentary evidence; and

– giving the Minister for the Cabinet Office powers to disapply some of the international provisions that currently apply where a contracting authority has a right to refuse to award a contract to a bidder that does not comply with international social, environmental and labour laws.

The Defence and Security Public Contracts Regulations 2011 (DSPCR) are being amended by a separate SI (the Defence and Security Public Contracts Regulations (Amendment) (EU Exit) Regulations 2019). The Ministry of Defence has produced the explanatory memorandum. The SI inserts the text of Article 346 TFEU into Regulation 6 to ensure that the DSPCR can still be disapplied to the extent necessary to protect the UK’s essential security interests. Other amendments to the DSPCR reflect those made to the other procurement regulations.

As Economic Operators established in the UK will have the same status as all other suppliers based in a third country with which the EU does not have any agreement providing for the opening of the EU procurement market, a number of other consequences for these Economic Operators flow, including potentially being prevented from bidding for defence and security contracts in certain Member States, or having tenders for utilities contracts rejected where the value of goods from third countries without reciprocal arrangements exceeds 50%.

For more detail, see here.

http://www.legislation.gov.uk/ukdsi/2019/9780111176788/contents

http://www.legislation.gov.uk/ukdsi/2019/9780111176788/contents

http://www.legislation.gov.uk/ukdsi/2019/9780111176764



http://www.legislation.gov.uk/ukdsi/2019/9780111176764/pdfs/ukdsiem_9780111176764_en.pdf

https://www.osborneclarke.com/insights/no-deal-brexit-uk-government-sets-changes-regulated-procurement-regime/


What should businesses be doing now to prepare for a no deal Brexit?The UK’s Contracting Authorities will be preparing to use the new e-notification service rather than the OJEU. We understand that the new service is currently being tested, but there is no further guidance on how suppliers will be able to register or what the format of the new forms on the system will be. Businesses should continue to monitor the Crown Commercial website for more information on when the service will go live and how to access it.

Some existing e-notification providers will have automatic access to the new UK e-notification service, but not all. Contracting authorities which use separate e-notification platforms instead of the European Tenders Electronic Daily (TED) are therefore advised to check to ensure that their notices continue to be properly advertised.

Suppliers wanting to access UK contracts in the public sector will need to use the new UK e-notification service instead of TED. However, these suppliers can continue to use the relevant domestic portals, such as MoD Defence Contracts Online, Contracts Finder, Sell2Wakes, eTendersNI, and Public Contracts Scotland. Once the new e-notification system is live, suppliers should look to re-instigate any CPV code notifications which it had set up with TED to ensure that opportunities are not missed.

Businesses established outside of the UK who wish to continue to have the same access and remedy rights to UK public sector contracts should consider setting up a subsidiary in the UK.

Similarly, UK businesses who wish to continue to access the public sector contracting opportunities in other Member States and to contract to the EU institutions as they do now, should look to establish a presence in a Member State.

Dates for the diary

By summer 2019

The Cabinet Office’s new measures to make central government contracts a ‘force for good’ are expected to come into force.

1 September 2019

From 1 September 2019, all central government departments, their executive agencies and non-departmental public bodies must include new selection questions on approach to payment for any procurements above £5m per annum.

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