Brexit Transition Update
With the passing of the European Union (Withdrawal Agreement) Bill into law on 23 January 2020, the UK will now depart the EU on 31 January and enter an 11 month transition period while negotiations over the future relationship of the EU and UK proceed. During the transition period, EU law will continue to apply in the UK, as will rulings of the Court of Justice of the European Union, and the UK will be required to follow the same rules as an EU member state. In this newsletter, we look at the impact and influence of Brexit in our key subject areas.
English law of contract is essentially national. As it relates to commercial contracts, it will therefore not be affected during the transition period by the UK’s exit from the EU. This means that it will be unnecessary to update or make any changes to our commercial agreement templates to accommodate the UK’s exit or the transition period. It is unlikely that the English law of contract will be affected by Brexit or amended as of the end of the transition period, but that might depend on the outcome of the UK’s negotiations with the EU. As and when the position becomes clear, we will review and make any necessary amendments to our templates.
The Government has published its own information on Brexit which you should review as part of their overall preparations relating to Brexit.
We also recommend that you review your existing commercial contracts and consider your plans for future contracts, to see what (if any) impact any aspect of Brexit might have. For example, you might incur greater expense in order to perform a contract due to new or increased (import or export) tariffs or customs checks applying to trading between the UK and the EU, currency exchange rates fluctuating, or any restrictions on the free movement of people. In each case, this could affect the overall costs of buying or selling goods, products, or materials. Aspects of Brexit might make it more difficult or even impossible to perform a contract; performing it might be commercially unattractive; or it might produce a different outcome from that required or expected by one or both parties. The implications and commercial realities for you of Brexit will be specific to your business, your particular circumstances, and the nature and terms of the contracts concerned.
Where you decide that Brexit might have an adverse effect on any existing contract, you should consider whether to terminate it if in the circumstances the contract permits it, or whether to seek to renegotiate it. Alternatively, you might see whether there is a provision in the contract covering the situation, e.g. a material changes clause which covers Brexit and its effects. You might also see whether a force majeure clause in the contract covers any effects arising from Brexit, although this is unlikely in the case of most force majeure clauses. As to new contracts that you enter into during the transition period, whilst adding a Brexit clause to the contract will not solve all Brexit-related problems, you could consider including a clause to safeguard your business against uncertainty, e.g. one which allows for rapid termination of the contract or which provides for some financial adjustment (such as a price change) or change on the occurrence of a Brexit-related change in the law or some other Brexit-related change in circumstances.
Current consumer protection law in the UK is derived from EU law. In fact, in the form of the Consumer Rights Act 2015, it actually surpasses the standards of protection established in the basic EU provisions. For the duration of the transitional period, EU law continues to apply in the UK, and it is possible that there will continue to be considerable regulatory alignment in this area under the terms of our future relationship with the EU, although there may also be some divergence.
Even in the event that no deal is reached at the end of the transition period, UK businesses selling to UK consumers should not, for the most part, expect a great deal to change. Those selling to EU-based consumers, however, must keep in mind the potential for regulatory divergence and keep up to date with developments in EU consumer law.
At present, we do not expect our documents in this area to change as a result of Brexit; however, we will continue to monitor the situation and advise you of any changes.
Data protection is currently governed in the UK primarily by the GDPR and the Data Protection Act 2018. As an EU regulation, the GDPR will continue to apply for the duration of the transitional period . Ultimately, the GDPR will be written into UK law with certain limited changes to make it UK-relevant.
Restrictions on moving personal data across borders will also change in the future. For the moment, the UK remains subject to EU law and EU rules . Moreover, even in the event of a no-deal Brexit at the end of the transition, organisations should still be able move personal data from the UK to EEA countries unimpeded. In such a scenario at the end of the transition period, the UK would become a “third country” and those moving personal data from the EEA into the UK may need to take additional measures such as relying on the EU Commission’s standard contractual clauses, at least until the EU Commission makes an adequacy decision on the UK’s data protection framework.
Further arrangements that may become necessary include the appointment of a European Representative if your business offers goods or services to individuals in the EU or EEA or monitors the behaviour of individuals in the EU or EEA (and doesn’t have a branch, office, or other establishment in the EU or EEA). Finally, the UK’s departure from the EU will also ultimately signal the end of the ICO’s status as part of the so-called “one-stop-shop”.
For the time being, however, during the transition period, the ICO has confirmed that “it will be business as usual for data protection”. The GDPR continues to apply and all existing guidance remains applicable. The ICO remains the “lead supervisory authority”, and no representatives need to be appointed.
Many references to the GDPR in our document templates already include non-specific references to successor legislation that may be enacted in the future. During the transition, we will be working to ensure that the wording of all data protection references is adjusted in this way.
Our data protection documents themselves will be kept under review throughout the transition period; however, for the time being, no significant changes will be required to documentation or to your data protection compliance.
Copyright protection is generally harmonised by international treaties. Within the EU, it is also governed by a body of EU legislation. UK copyright law is substantially derived from EU law and thus includes a number of EU references, particularly those concerning cross-border enforcement within the EU. In the future, therefore, UK law will be amended to remove or correct references to the EU and will aim to preserve the effect of UK copyright law where possible.
UK and EU copyright works will continue to be protected in both the UK and the EU thanks to international treaties (e.g. TRIPS and the Berne Convention). As such treaties are independent of the UK’s relationship with the EU, they are not specifically addressed in the Withdrawal Agreement.
EU trade marks and Community designs (both registered and unregistered) currently apply in all EU member states. This will continue to apply in the UK during the transition period. The UK remains a part of the EU unregistered Community design system during the transition period. Unregistered Community designs arising before the end of the transition will also continue to be protected in the UK for the remainder of their three-year term.
As for European patents, the current European patent system is not a part of the EU and will therefore be unaffected by Brexit, regardless of any transitional arrangements.
Database rights currently bestowed by EU law will also continue to apply in the UK until the end of the transition period. Moreover, any database rights existing in the EU and the UK at the end of the transition period will continue to be recognised in both territories for the remainder of their term.
We do not anticipate that our IP templates will change during the transition period, nor afterward, even in the event of a no-deal end to the transition. As with all areas in our portfolio, however, we will continue to monitor developments
As noted above, during the Brexit transition period, whilst the UK will formally cease to be an EU member state, it will still be subject to EU law and the rulings of the Court of Justice of the European Union. UK company law will not be affected during the transition period.
The key legislation governing and regulating English and Welsh companies is the Companies Act 2006. This includes the types of companies that can be incorporated, their liability, the role of Companies House, directors’ duties, and the rules on accounts and audit. Whilst some parts of the Companies Act 2006 are derived from EU Directives such as shareholder rights, most of English company law is not derived from EU legislation. The Companies Act 2006 will, therefore, continue in force as at present and the legal status of UK incorporated companies will remain unchanged. In addition, UK companies, for the duration of the transition period, will also not be considered third country entities. As such it will not be necessary to update or make any changes to our corporate templates to accommodate the UK’s exit from the EU on 31 January 2020.
The extent of any future divergence from EU law or changes that may affect UK incorporated companies following the transition period will depend on the outcome of the UK’s negotiations with the EU. This of course is not something that anyone can predict with any certainty.
The Government has published their own information on Brexit which you should review as part of their overall preparations for Brexit.
In respect of Brexit and employment, one of the key considerations is the future of EU nationals living and working in the UK. EU, EEA, and Swiss citizens and their families can apply to the EU Settlement Scheme in order to continue living in the UK after 30 June 2021. The scheme is open now and is free of charge. If an application is successful, settled or pre-settled status will be granted. Irish citizens and individuals with indefinite leave to remain are able to stay in the UK without making an application under the EU Settlement Scheme.
Under the European Union (Withdrawal) Act 2018, all EU employment law will be converted (as it was before Brexit) into UK law. The Employment Rights (Amendment) (EU Exit) Regulations 2019 will make some small technical changes and introduce new provisions intended to preserve UK-located European Works Councils but employment law will otherwise remain the same for the time being. Further down the line, the UK government may take the opportunity to dismantle EU-derived employment laws, post-Brexit. However, it’s worth pointing out that some aspects of UK employment law - such as equality legislation - go further than EU minimum requirements. This means even if the UK government does decide to repeal some EU-derived employment rights, there are still likely to be areas of employment law where the UK goes further than the EU.
Health & Safety
The duty to protect the health and safety of people affected by your work will not change with Brexit and you should continue to manage risk in your business in a proportionate way. The HSE has made minor amendments to regulations to remove EU references but legal requirements will remain the same as they are now. Health and safety standards will be maintained.
We are continuing to monitor developments and their impact on our Health and Safety document portfolio, and we will send out updates as and when necessary.
During the transition period, as explained above, the UK will remain in the single market and the UK will continue to follow the EU’s rules. The purpose of the transition period is to allow the UK and EU to negotiate the terms of their future relationship.
Currently, no changes are needed to our property document templates. Our templates in the Property folder can be used as they are from Exit Day, during the transition period, and after the transition period (unless we notify you further that updates or amendments are necessary). This is because there has been minimal intervention from the EU on the laws which govern property ownership and transactions in England and Wales.
One area of law that has flowed from EU Law and has now become part of English Law is energy efficiency. Whilst this area of law may be subject to review following our departure, it is unlikely that existing legislation will be repealed without a similar regime being put in place due to the UK’s commitment to reduce greenhouse gas emissions.
We continue to monitor developments and will send out further updates when necessary.
The 11 months which follow promise to deliver a wealth of news and commentary on Brexit and, if the lead-up to this stage is anything to go by, no small amount of sensationalism and scare stories.
At present, the government appears to be resolute in its intention not to extend the transition period. The EU, on the other hand, has made it quite clear that it does not think it will be possible to conclude all necessary negotiations and agreements within such a short time. A no-deal Brexit has, therefore, perhaps been delayed rather than avoided, and it will be very important to ensure that you keep abreast of the latest developments. For our part here at Simply-Docs, we will do the same and will be keeping you informed of key developments and changes that impact the various templates and guidance notes throughout our portfolio over the coming year.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.