Brexit and Employment Law – Everything British Businesses Need to Know

Brexit and Employment Law – Everything British Businesses Need to Know

Brexit and Employment Law – Everything British Businesses Need to Know

Now that Brexit has taken place, talk has resumed on its impacts on businesses in the UK.

We all know that customs processes will be a little different and potentially prices on some goods will change.

However there has also been a great deal of speculation about British employment law and what will change now that the country has left the European Union.

Here we’ll run through how UK laws align with EU directives and what repercussions, if any, you should keep an eye out for as a British business.

What Parts of UK Employment Law Come from the European Union?

The first thing to clarify is that much of the UK law is indeed British. Therefore they won’t change at all now that the country has left the EU, although it is correct that there is now more significant potential for some legislation to change.

Most of the speculation is based on the fact that many British laws are derived from EU law, and hence, won’t those laws now change dramatically?

Our short answer is no, not in most cases!

The Transition Period ended on 31st December 2020. As at that point in time, the UK converted existing EU regulations into domestic law.

In any case, there are equivalents for much of the EU legislation already in place. For example, the EU Equality Directives were brought into UK law by the Equality Act 2010.

So, although Britain isn’t part of the EU any longer, and accordingly doesn’t have to comply with the EU rules, we already have legislation to implement the requisite provisions.

Therefore, we’d like to clarify that areas of law we’re all familiar with in terms of employment will not change unless the government decides to make any reforms, which at this stage feels unlikely.

There are some specific exceptions, such as European Works Councils, but general rights and obligations continue as they were.

How Does Brexit Affect Cross-Border Employment?

Figures from the Office for National Statistics, published in February 2020 show that there were nearly two and a half million EU nationals working in the UK. There were a further 3.37 million workers who originate from outside of Europe.

Those figures demonstrate that a fair number of employers are now concerned about whether they need to do things differently to retain those workforce team members.

The UK government has confirmed that, for now, the rights of EU citizens already working in Britain will not change. There is no requirement to dismiss staff, or implement any new contracts or pay rates as they remain entitled to work here as before Brexit.

Here is how the forthcoming reforms will work:

  • EU nationals now have six months to apply under the EU Settlement Scheme.
  • Employers can still take on European staff and need to check their Right to Work in the UK in the same way, until 30th June 2021.
  • You cannot select a candidate for a role based on their citizenship and therefore must not discriminate against any EU/EEA or Swiss applicants.
  • Candidates applying for a role from the EU can use their passport or national ID card to evidence their identity.
  • Other international applicants can produce an immigration document to prove their right to work in the UK.

Should you have staff from EU countries that have not already done so, they may need support to apply to the EU Settlement Scheme before the 30th June cut off.

There are a few rules around eligibility for the scheme, in that:

  • They need to have started living in the UK before 31st December 2020.
  • UK residents originally from the EU must apply even if they already hold permanent residence.
  • Children must be applied for separately from their parents or guardians.

People living and working in the UK don’t need to apply to the scheme if they already have indefinite leave to enter the UK, remain in the UK, hold dual citizenship, or are an Irish citizen.

Workers who have a British job but don’t live in the country do not need to apply. They are called ‘Frontier Workers’ and there is a separate permit available.

Is UK Employment Law Likely to Change in the Future?

Potentially. But given the current pandemic crisis and the last-minute nature of the departure agreement from the EU, it seems very unlikely that the government will implement any widespread reforms in the near future.

Discrimination law is the most probable area of reform. The UK already had discrimination laws far in advance of joining the EU, although this was updated when the Equality Act came into force in 2010.

There is a chance that the newly autonomous British government may introduce changes such as:

  • Capping the maximum discrimination award amount.
  • Banning zero-hours contracts.
  • Increasing the capacity of trade unions.
  • Changing rules for TUPE transfers.
  • Reviewing the rights of agency workers.
  • Amending laws around holiday pay.

However, these are speculations and proposals, some of which were announced by The Labour Party and would not be considered were they not to win the next election.

Any changes to employment law would also take a considerable amount of time to introduce.

Theoretically, the Supreme Court has the power to overturn British laws created in line with EU directives. Such changes would still be subject to substantial debate and would be highly unlikely to be implemented any time soon.

For now, we continue as we were. With consideration given to EU citizens working in the UK who need to apply through the settlement scheme to continue doing so.

The most significant potential for change is around UK laws influenced by the European Court of Justice decisions. The Withdrawal Act 2018 allows the British court system to change rules and disregard initiatives agreed upon after 31st December 2020 – but not before.

If you are concerned about any aspect of employment law, how Brexit might impact your workforce, or what protections you can put in place for your staff, please contact The Law Firm Group.

Our Workplace Law teams are specialists in employment law and can offer professional advice about the best options to safeguard your business.

Call or email us to talk about it. 0300 303 3805

The Corporate Insolvency and Governance Act 2020 Explained – and What it Means for UK Business Owners

The Corporate Insolvency and Governance Act 2020 Explained – and What it Means for UK Business Owners

The Corporate Insolvency and Governance Act 2020 Explained – and What it Means for UK Business Owners

Alongside many of the economic stimulus measures and financial reprieves announced during the Coronavirus pandemic, the UK government has also introduced temporary measures relating to corporate insolvency.

The rules about winding up businesses are set out in The Corporate Insolvency and Governance Act 2020, which came into force in June.

In September, as it became clear that regular trading was not about to resume any time soon, the government extended the Act’s measures.

While the original Act was due to end in December 2020, it has now been extended further. Some of the rules are in place until March, and some until April 2021.

The Law Firm Group receives regular enquiries from struggling businesses that have been severely impacted by lockdowns and the pandemic crisis. As such, it is no surprise that insolvency proceedings and redundancies have been on the rise – and these measures are intended to support companies dealing with these unique pressures.

Here we’ll look a little closer at the Act, what it means, and what you as a UK business owner need to know.

How Long Have Wrongful Trading Liabilities Been Suspended For?

Wrongful trading is a serious scenario, and one of the common situations is where a director knows a business to be insolvent, and yet allows it to continue trading.

The issue here is that by failing to declare insolvency, the company is likely to take out credit it does not intend to repay, increasing potential losses suffered by creditors, and the directors fail to fulfil their fiduciary duty towards the shareholders.

However, in light of the tremendously difficult business climate caused by the pandemic, the government decided to suspend wrongful trading measures.

  • Initially, these measures came until effect until 30th September 2020.
  • While the measures have not been extended as such, a new suspension has been introduced from 26th November 2020 until 30th April 2021.

This does not mean that a company should continue trading under any circumstances. Directors could still be subject to legal scrutiny if they willfully allow reckless trading, and know they have no opportunity to recover a profitable position.

What it is intended to do is avoid unnecessary pressures, with UK businesses dealing with multiple issues:

  • Rent arrears and VAT deferrals.
  • The challenge of forecasting trading in such an uncertain environment.
  • Difficulty in securing affordable lending.
  • Time delays in receipt of discretionary grant funding.
  • Uncertainty about the end of the furlough scheme and recalling staff.
  • Concerns about potential breaches of financial covenants.

In short, provided they have done everything possible to uphold their statutory duties, a director will not be investigated on the grounds of wrongful trading during this suspension period.

You should note that the usual investigations in an insolvency scenario remain, as well repercussions for fraudulent trading.

Additionally, the suspension is NOT retrospective and therefore does not offer any exemptions from the Insolvency Act 1986 for actions taking place between 1st October and 25th November 2020.

What Other Changes Have Been Introduced That Impact Company Trading?

The focus of the suspension to wrongful trading is intended to help business owners focus all of their time, resources and efforts on continuing to trade.

If a business would be temporarily considered insolvent due to trading restrictions, and yet has the opportunity to resume regular business when lockdowns cease, and therefore bring their liabilities up to date, there is less chance of employee redundancies and business closures.

Alongside this, there is a range of other short-term rules:

  • Companies registered at Companies House have extensions to filing deadlines. These are offered automatically and do not have to be applied for. There have also been several extensions to payment deadlines and filing dates against corporate liabilities.
  • Businesses may hold virtual meetings, such as AGMs, to allow voting and decision-making to continue, when a physical meeting is not permitted, or advisable under safety guidelines. This measure was extended to 30th December 2020 and since extended further to 31st March 2021.
  • Creditors may not petition the winding-up of a business under statutory measures during this exemption period. They can only raise such a petition if they have reason to believe that the company has not been affected financially by Coronavirus, or would be unable to pay their debts even if the virus had not had any effect.
  • Exemptions to wrongful trading mean that businesses can continue their operations until March 2021. This moratorium period is intended to give them time to resolve financial issues without the threat of creditors’ enforcement action.
  • Landlords of privately rented commercial premises are prohibited from repossessing properties. This measure also runs until March 2021, and so a company cannot be evicted in this period per The Business Tenancies Regulations 2020.

While this package of measures is welcome news for many British businesses, it remains crucial to take action and consider a recovery strategy if you are facing potential insolvency.

There are several grant schemes and funding options, depending on your business’s size and sector. You can also access help with covering employee costs to retain staff and avoid redundancy scenarios that might be resolved when trading can resume.

Suppose you are concerned about your trading position. In that case, it’s also still important to consider your risk exposure as a director or business owner, and whether you can take steps to mitigate any exposure.

For example:

  • Convening board meetings to discuss whether ongoing trading is financially viable. Ensure all such discussions are minuted and recorded.
  • Make concerted efforts to draw up meaningful financial forecasts, even where so many factors may yet be uncertain.
  • Keep in contact with creditors and discuss repayment plans or schedules to reduce the debt amount.
  • Plan for contingencies, should insolvency become an unfortunate reality.

As a full spectrum legal practice, The Law Firm Group can provide professional support with your insolvency strategy or plan to resume profitable trading.

Our teams specialise in every facet of company law, from restructuring to maximise your business’s value for sale, to capitalising on any market opportunities that might restore your position.

We also offer solicitors with experience in commercial property, should you be facing a challenge around privately leased premises, and independent legal guidance through commercial borrowing processes.

If you’re unsure what support would be beneficial, but know that your business would benefit from an expert listening ear, do get in touch. We’ll work through your key challenges and business risks to draw up a future-proof strategy for recovery.

Call or email us to talk about it. 0300 303 3805

Guide to GDPR Compliant Client Data Storage for SMEs

Guide to GDPR Compliant Client Data Storage for SMEs

Guide to GDPR Compliant Client Data Storage for SMEs

The GDPR (General Data Protection Regulation) came into force in May 2018, as the new European framework.

In the nearly three years since UK businesses have adapted to GDPR and data protection compliance is now a core part of business trading.

As we embark on a new trading year, still in the throes of the Coronavirus pandemic and with Brexit now a done deal, what does that mean for the GDPR – and what do British businesses need to know about safeguarding their customers’ data?

This article will summarise how UK data protection laws will change post-Brexit and what you need to do to remain compliant with the relevant legislation.

Does GDPR Still Apply to British Businesses After Brexit?

The answer is – yes, and no!

If UK companies want to trade with the EU or sell their products or services to European customers, then yes, GDPR is still essential.

The regulation is extraterritorial, which means that GDPR has an impact outside of the EU jurisdiction. For example, any company that trades internationally will need to be GDPR compliant to avoid potentially disastrous fines.

On the other hand, smaller businesses that trade exclusively within Britain’s confines will still need to think about data protection.

Relevant UK laws include:

  • The Data Protection Act 2018 (DPA).
  • The UK General Data Protection Regulation (GDPR).

Primarily, not a lot will change, since the DPA already covers all of the EU GDPR legislation requirements to bring it into UK law.

There isn’t a great deal of difference between the EU and UK GDPR either.

The Data Protection, Privacy and Electronic Communications (Amendments etc.) (EU Exit) Regulations 2019 set out amendments to the 2018 DPA, and merge it with European GDPR to create a data protection ruling that dictates how the UK manages data protection outside of Europe.

In a nutshell, if you have GDPR processes already in place, they remain relevant and crucial if any of your trading activities involve processing personal data.

What Do I Need to Do To Stay EU GDPR Compliant?

If you wish to continue selling your goods to European customers, you’ll need to revisit your GDPR systems to ensure you remain compliant. This applies to any transactions or activities from 1st January 2021.

The required steps include:

  • Appointing a representative in the EU. They act as a local representative and a contact for the authorities.
  • Identify the lead supervisory authority in the EU who will oversee your compliance.
  • Revisit your contracts and documentation where data transfers are mentioned. It’s important to note that, as a country outside of the EU, the UK is a ‘third country’.
  • Update your organisational policies and procedures to reflect these new points of contact, data controllers and systems.

While this might sound like a lot of work, it is vital to clarify whether you require ongoing European data protection safeguards.

The penalties for non-compliance can be exceptionally steep. As a third country business, if you trade with the EU or sell products to European customers and fail to meet GDPR requirements, you could be fined the greater of 4% of your annual turnover, or €20 million.

If you have any concerns about GDPR, whether you need to change any of your practises, or what it means for your business, do get in touch with The Law Firm Group.

Our business law teams will be more than happy to have a confidential discussion and recommend the best courses of action.

Can I Still Keep a Paper Filing System and be DPA Compliant?

A challenge for many smaller businesses is that, where filing systems are managed manually with paper-based records, they need to establish whether that client data storage falls under the scope of data protection.

The classification of a ‘relevant filing system’ is important, since it determines what regulatory procedures and compliance guidelines apply.

Under the DPA 2018, a relevant filing system is defined as:

  • Sets of information not held electronically.
  • Data that is structured in a way that is readily accessible and relatable to the individuals.

Therefore, it isn’t necessarily clear-cut. The best way to determine whether you are required to implement changes in adherence with the relevant data protection laws is to consult an experienced legal professional. We can consult with you, assess the systems you have in place, and make recommendations tailored to your business.

In general, the rule of thumb decided on in previous court cases, via the European Courts, Court of Appeal and Information Commissioner’s Office have made case-by-case decisions, based on the ‘temp test’.

This test uses the scenario of a temporary worker. Suppose such a temp could find information about an individual customer from a paper filing system without having any prior knowledge about the documentation or the storage mechanism, then yes. In that case, data protection applies, and the records are a relevant filing system.

Should they need instructions about terminology or how client records are kept from a more senior member of staff, then the personal data is not readily accessible, or structured so that a person without prior knowledge would be able to access it.

What Do I Need to Do To Comply With the Data Protection Regulation 2018?

If you have been through a GDPR compliance exercise, risk assessed the business activities and analysed how you access, process, store and disseminate customer data; you are probably already compliant.

However, it is never a bad thing to revisit your data protection processes. The UK’s departure from the EU and the knock-on impact on the relevant legislation is as good a time as any to ensure you have the right processes in place.

You can revisit the DPA 2018 guidelines and GDPR rules via the guide published by the Information Commissioner’s Office (ICO).

The Data Protection Act covers seven core areas:

  • Accuracy of data you store or record.
  • Limitations on how much data is stored.
  • Identifying limited purposes for which data may be kept.
  • Security of records and client data.
  • Accountability for your systems and the safety of data.
  • Minimising the data that is crucial to collect.
  • The legality, parity and transparency applied to data processing.

In short, you can only collect and store data that is crucial to delivering the service to your customer. Businesses must only keep data for a defined purpose and must allow their clients access to the information held about them, including the opportunity to delete all such records.

For any help with assessing the robustness of your data protection strategies, or identifying whether amendments are required to remain compliant with EU laws past Brexit, do get in touch with The Law Firm Group!

Call or email us to talk about it. 0300 303 3805

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