September 23, 2019
Brexit is, as we all know, unpredictable; with this in mind, we have put together this guide for your business to prepare for an uncertain outcome.
Do you have employees that are from mainland Europe? If so, reviewing their employment terms and right to work post-Brexit is vital. We recommend that you collect current HR data from your employees and review their Right to Work documents. You will also need to consider, and take advice on if necessary, any immigration issues.
The cost of moving goods in and out of the UK is already taking a toll on business, and this situation will continue post-Brexit. As the market responds to Brexit (and any other political influences), exchange rates will undoubtedly move. Also, the UK’s trading relationship with other countries remains unclear, meaning potential tariffs and restrictions are already causing concern. Reviewing your contracts now will help you prepare for these potential issues going forward. For example, pricing clauses may need amending to reflect the changes in tariffs and/or exchange rates.
Although the UK government has already implemented the General Data Protection Regulation, there is still the possibility that the UK will be considered a “third country”. The European Commission may, therefore, have to make an “adequacy” decision in relation to the UK. This could cause problems for UK businesses that process data on behalf of EU counterparts. There are steps that can be taken in relation to contracts with EU businesses which can potentially reduce these risks. We recommend that you review any relevant contacts as soon as possible.
Franchise networks that are solely based in the UK should not, until they wish to expand into the EU, be directly impacted by any legal changes post-Brexit. However, there may be a number of sectors within the franchising industry that could be affected indirectly. These include food, healthcare and also hospitality, which often employ staff from the EU.
The UK’s product liability and safety regime is largely based on EU law. The impact of Brexit on this regime is currently unclear, but could potentially be significant. For example, the acceptance of EU products into the UK. In the event of a no-deal Brexit, UK distributors of EU goods may find themselves with sole liability to consumers for any defects as the automatic right of consumers to pursue the manufacturer may well no longer exist. This will have to be dealt with by putting back to back contracts in place with EU manufacturers. Parliament has said that currently a ‘CE’ mark is used to demonstrate compliance with regulatory standards, but if there is a no-deal, the UK bodies which assess products will no longer be recognised (although, for a period, manufacturers can continue to use the ‘CE’ mark). The government has stated that it will eventually reclassify these UK bodies as approved in the UK, and a new ‘UKCA’ mark will be introduced.
Brexit should have a limited impact on contract law, but to tackle uncertainty during this process, businesses should consider adding flexibility into their contract terms to mitigate risks. Amongst other things, definitions should be looked at, for example ‘territory’.
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