Flexible working – Is this the future?

What is flexible working?

Flexible working includes homeworking; part-time working; job share; staggered hours; annual hours; compressed hours (working the same number of hours over a shorter period; and phased retirement. This is not an exhaustive list.

Who can apply for flexible working?

Any employee, whatever their gender, can apply for flexible working provided they have at least 26 weeks’ continuous service.

How should an employee apply for flexible working?

An employee cannot make more than one application to the same employer in 12 months.  The application should be in writing and because it must contain certain information, it is useful to use the government’s application form to be found at: https://www.gov.uk/government/publications/the-right-to-request-flexible-working-form

How should an employer deal with an application for flexible working?

An employer must deal with the application ‘in a reasonable manner’ and notify the employee of the decision within 3 months of the application or any permitted appeal unless a longer period is agreed.  There is an Acas Code of Practice on handling requests in a reasonable manner and there are specified permitted grounds for refusal of an application. However, even if an employer refuses an application on one of the specified grounds, employers should be aware that a refusal may give rise to a discrimination claim if, for example, it unjustifiably refuses a woman’s request to change her hours for childcare reasons.

What should an employer do if its employees have been working from home during the COVID-19 pandemic and now wants to make homeworking (or working partly from home and partly from the employer’s premises) a more permanent arrangement for its employees?

This is likely to constitute a variation of the contract of employment, for which the employees’ consent should be sought.  Employers will need to decide at the start what they would do if any of the employees do not agree to the change as this could make a difference to the procedure they should follow.  The employees’ contracts of employment should be updated (and possibly the employer’s staff handbook) setting out the revised terms resulting from the homeworking arrangements. Such revised terms should include not only a change in place of work but also, for example, confirmation from the employee that they are not in breach of any mortgage or tenancy agreement by working at home and that they will comply with all health and safety and data protection instructions.

Should you require any help or advice arising from any of these issues, please call or send me an email

Covid-19 vaccine – Is this the light at the end of the tunnel for employers?

As the roll-out of mass Covid-19 vaccination gets under way, it has become clear that some employees are reluctant to be vaccinated.  We answer some key questions that employers, who are keen to get staff back in the workplace (whether or not with a combination of ongoing home-working), may be asking:

Can an employer require employees to get the Covid-19 vaccine?

In short, no. The government has not legislated for the vaccine to be mandatory, so on balance it would be risky for employers to insist on vaccination, even in workplaces where there is close contact with vulnerable people, such as in hospitals and care homes. If employers were to try to force their employees to be vaccinated, it could give rise to objections on the grounds of it being an unnecessary invasion of the employee’s entitlement to individual liberty and human rights and may also have criminal implications. Forcing an employee to receive a vaccine injection under duress, could constitute an unlawful injury. A vaccination requires an individual’s informed and voluntary consent.

Can an employer discipline or dismiss an employee who refuses to have a Covid-19 vaccine?

The Acas guidance suggests that a refusal to be vaccinated could, in some situations, result in a disciplinary procedure but this would depend on whether vaccination was necessary for an employee to do their job. The example given by Acas is if staff travel to other countries for work and need vaccinations to enter a country. In most cases, however, disciplining an employee, who refuses to be vaccinated could result in the employee resigning and claiming constructive dismissal. In this situation, as well as any dismissal by the employer of an employee, who did not want to get the Covid-19 vaccine, could give rise to a potentially successful unfair dismissal claim since it is likely that an employment tribunal would find in favour of the employee rather than find it fair to impose what is effectively a medical procedure on employees.

Whereas ordinary unfair dismissal claims require the employee to have a minimum of two years’ continuous employment, there is no qualifying period of employment for an employee to bring a discrimination claim in respect of a protected characteristic under the Equality Act 2010.  For example, the employee may have a health condition that amounts to a disability, such as a serious allergy that prevents them from being vaccinated or they may be pregnant. Alternatively, the employee may be refusing to have a vaccination on religious grounds as it is understood that some vaccines use pig gelatine, which could be problematic for some religions and other philosophical beliefs, such as those held by vegans. It may also be possible that an ardent anti-vaxxer could argue that their stance was protected as a philosophical belief if it is genuinely held and worthy of respect in a democratic society. 

If employees cannot be forced to have the Covid-19 vaccine, how best can they be encouraged?

An employer has an implied duty to take reasonable care of the health and safety of its employees and to take reasonable steps to provide a safe workplace and a safe system of work. If an employee does not want to be vaccinated, the employer should listen to their concerns and be sensitive towards the individual situation.  Employers may find it useful to talk with their staff about the benefits of being vaccinated to encourage voluntary vaccination within their workforce – particularly since evidence suggests that the success of the vaccination in eradicating the spread of the virus will depend on the extent of the take-up.  For health advice about the vaccines, see https://www.nhs.uk/conditions/coronavirus-covid-19/coronavirus-vaccination/coronavirus-vaccine/

Can those employees, who will not or cannot be vaccinated, be prevented from attending the work-place?

It is understandable that employers will want to avoid the risk of Covid-19 returning to the workplace and continuing to spread amongst those who have not had the vaccination. Accordingly, an employer may decide on health and safety grounds not to permit employees, who have not been vaccinated, to attend the workplace. Such a course of action could potentially give rise to age discrimination claims on the basis that younger employees are unlikely to receive the vaccine until the last phase of immunisation or disability claims if the vaccination is not suitable for an employee due to a medical condition. An unlawful deduction from wages claim might also arise if unvaccinated employees’ pay is affected because they are not permitted to attend work. In view of these issues, employers should consider other alternatives such as working from home and/or regular testing of unvaccinated employees.

Can an employer make an offer of employment conditional upon having had a Covid-19 vaccination?

Potentially yes but the risks of discrimination claims as outlined above could still apply and since most employers anticipate low levels of recruitment for the foreseeable future, it would do little to secure widespread protection.

Do Covid-19 vaccination records need to be kept by an employer in accordance with GDPR and privacy laws?

In order to keep Covid-19 in the workplace under control, employers might want to keep a record of those who have and have not been vaccinated. This will constitute sensitive personal information and the records should comply with GDPR and privacy laws.

For further advice please get in touch with one of our North London Employment solicitors by email or call us on 020 8349 0321.

What are Commercial Property landlords’ rights around recouping rent arrears?

The Coronavirus pandemic has hit many sectors such as hospitality, beauty, and retail with savage force.  Throughout 2020, attention has been focused mainly on the plight of tenants who have seen their customer footfall and/or turnover plummet.  However, many landlords are also struggling to cover their own financial commitments due to tenants being unable to pay rent.  Our North London commercial property solicitors regularly advise landlords who are treading a fine line between collecting rent to cover their liabilities and at the same time supporting tenants’ businesses to ensure investment properties remain occupied once the pandemic ends. 

If you and your team are preparing a strategy for collecting rent on the March quarter day, below are some answers to questions our commercial property solicitors are being asked by clients.

What are my legal rights regarding collecting rent from my commercial property tenants?

At present, commercial landlords are restricted regarding the legal actions they can take against a tenant who cannot or will not pay rent.  Until 31 March 2021 landlords cannot evict commercial tenants for rent arrears or use the Commercial Rent Arrears Recovery (CRAR) procedure unless an amount of 366 days’ rent is owing.  These restrictions have been in place since March 2020; however, when extending the restrictions in December 2020, the government made it clear that no further extensions would be announced:

Secretary of State for Housing Rt Hon Robert Jenrick MP said:

“I am extending protections from the threat of eviction for businesses unable to pay their rent until March 2021, taking the length of these measures to one year. This will help them recover from the impact of the pandemic and plan for the future.

“This support is for the businesses struggling the most during the pandemic, such as those in hospitality – however, those that are able to pay their rent should do so.

“We are witnessing a profound adjustment in commercial property. It is critical that landlords and tenants across the country use the coming months to reach agreements on rent wherever possible and enable viable businesses to continue to operate.”

Restrictions on insolvency measures including statutory demands and winding up petitions have also been extended until the end of March.

If I cannot evict a commercial tenant or take legal action for payment of rent arrears, what are my options?

In June 2020, the government published a code of practice for commercial landlords and tenants.  The voluntary Code is designed to “support businesses to come together to negotiate affordable rental agreements. It builds upon the discussions already taking place by giving those tenants and landlords affected by the crisis the tools to come to a mutually beneficial agreement; ensuring that best practice becomes common practice.”

The Code asks both landlords and tenants to be flexible, act in good faith, and support the long-term viability of businesses and the jobs they provide.  For example, tenants who are seeking concessions must be transparent as to why such concessions are required and provide relevant financial information to the landlord if requested.  In turn, landlords should provide concessions where they can, considering their own fiduciary duties and financial commitments.  If a landlord refuses to allow requested concessions, they/it should give reasons for doing so. 

In another example of mutual support, landlords can elect to reduce service charges during lockdowns when a premise is not occupied.  And in return, tenants can agree to pay additional service costs to fund Coronavirus-related health and safety requirements that landlords are required to comply with. 

Specialist Landlord and Tenant Solicitors in North London

Both landlords and tenants are being asked to ‘share the pain’ during the pandemic and co-operation will be needed for many months to come.  A commercial property solicitor can advise you on your rights as a landlord under the existing commercial lease agreement.  They can also assist you with re-negotiating terms per the principles of the government’s Code of Practice.

For further advice please get in touch with one of our North London Commercial property solicitors by email or on 020 8349 0321.

A Fine Balance – Coronavirus Lockdown Number Three

Although it was an inevitable consequence of a virulent new strain and the coming of winter, Coronavirus lockdown number three is taking its toll on an exhausted population. Despite the vaccine being rolled out at a galloping pace, being stuck at home during the dank, dreary days of mid-winter is filling few people with joy if the comments on internet forums and newspaper op-eds are to be believed.

However, much of the government’s mixed messaging that is causing frustration and confusion is the result of a much stronger and more positive strategy than was present during the March lockdown. Back in those scary days of early 2020, everyone, including scientists, healthcare workers, and politicians had little idea of what they were dealing with. So when a national lockdown was announced, the country (and indeed most of the world) simply shut up shop. Although initial estimates of a 14% drop in national output proved overly pessimistic, the actual figure of around £190 billion (a drop in GDP of 9.5%) was catastrophic for many industries and businesses.

Ten months on we have a better understanding of not only the virus, but how to keep as much of the economy running as possible whilst facilitating the extreme social distancing required. Schools have more children of key workers attending because not only has the definition of key worker been expanded, but fewer businesses are furloughing staff. The property market, construction, manufacturing – industries that ground to a halt in March, April, and May 2020 are continuing to operate. Furthermore, as always happens in a crisis, people quickly adapt and hunt out opportunities. Many small businesses have taken advantage of their agility and moved online and/or sought new markets abroad, resulting in some being busier now than they were pre-pandemic.

In light of the current dynamic situation, below are some factors which employers need to be aware of regarding the Job Retention Scheme and health and safety compliance, including pitfalls to watch out for.

Coronavirus Job Retention Scheme (the Furlough Scheme) and government-backed loans

In December 2020, the Chancellor, Rishi Sunak announced that the Furlough Scheme, in which the government pays 80% of a furloughed employee’s wages, will continue to the end of April 2021. Businesses will also be given until the end of March to access the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, and the Coronavirus Large Business Interruption Loan Scheme.

Watch out for – furlough fraud

Alongside the extension of the Furlough Scheme a parallel project is being run by HMRC to claw back funds that should not have been claimed during the first lockdown. Make sure you follow the rules of the scheme diligently, the most important being that furloughed employees must not work. To mitigate your risk of an HMRC investigation, ensure that you keep up to date records of who is receiving furlough payments and the funds distributed. The other area of concern is the rampant furlough fraud being committed by organised criminal gangs. Protect your business from being unwittingly caught up in such fraud by having documented new customer and supplier due diligence policies and procedures in place and communicated to all staff. In addition, rigorously monitor your business accounts/investments for any unusual activity.

Manging Coronavirus risks in the workplace

If your employees cannot work from home you must conduct a Coronavirus health and safety risk assessment at your premises/s and implement policies and procedures to ensure your staff and the public are protected. Not doing so could result in your organisation and its directors facing a regulatory investigation, personal injury or employment law claims, and even prosecution.

Acas advice regarding keeping your workplace safe is regularly updated. At a minimum, all employers should have regard to eight priority actions designed to protect employees and customers:

  • Complete a Coronavirus risk assessment and share it with all staff.
  • Encourage staff to wash their hands regularly, provide hand sanitisers, and clean surfaces frequently.
  • Help with social distancing by putting a one-way walk system in place for staff and customers.
  • Ensure that face coverings are worn by anyone visiting your workplace (unless they are medically exempt).
  • Keep your workplace well ventilated. The HSE has provided excellent guidance on this.
  • If applicable to your business, follow the legal requirement to keep a record of staff and customers attending your workplace and ensure that your method of data collection is compliant with the NHS track and trace system.
  • Consider the mental health of you and your employees. Public Health England has produced useful guides on steps to improve mental health during this turbulent time.
  • If an employee is required to self-isolate they must do so. Under the Health Protection (Coronavirus, Restrictions) (Self-Isolation) (England) Regulations 2020, employers have a legal obligation to ensure staff they know have tested positive for Covid-19 or have been in close contact with somebody who has, do not come to work. Failure to comply with this law can result in a £1,000 fine for the first offence, rising to £10,000 for repeated offences. Workers must also inform employers if they are required to self-isolate.

Watch out for – breaching your duty of care to homeworkers

All employers have a duty of care to protect the health, safety, and wellbeing of their employees and visitors to their workplace. This includes homeworkers. Ensure that you have homeworking staff conduct a risk assessment relating to their workstation setup. HSE has provided a useful checklist for this. Also, keep in regular contact with homeworkers to make sure they are not feeling isolated and stressed. Out of sight, out of mind could result in a future Employment Tribunal claim so check in regularly and give all employees a point of contact who they can call if they need support.

The government’s aggressive rollout of the vaccination programme provides hope that this will be the last big lockdown we have to battle through. For employers, navigating the ever-changing laws and guidance is a challenge in itself. Our team is here to support you and provide bespoke advice for your business. The cliché “it is always darkest before dawn” has been regularly bandied about over the past few weeks, but in this case, it is likely to be true.

To make an appointment to discuss any aspect of employment law please email or phone our helpdesk on (0)20 8349 0321.

The Impact of Coronavirus and The New Restrictions on UK Property Sector

Following the latest set of restrictions in November in the UK, the housing market will remain open. However, the outlook for house prices is looking increasingly uncertain. In this post, we look at how the Coronavirus epidemic is impacting the market from the perspective of homebuyers and sellers, as well as those in the real estate business.

Why has the property market been doing so well since the first lockdown?

The swift actions taken by the government earlier this year, in the forms of mortgage payment holidays and the furlough scheme, meant; that despite the recession, the property market has been able to keep moving forwards. This is why when we would usually expect to see a dip in house prices during a recession (being driven by people who are forced to sell as they can no longer afford it due to job loss, for instance); we have instead experienced a market that is being driven by people who are motivated to move, and who can afford to do so. In previous recessions, where no government support was offered, this resulted in people being forced into a financially challenging situation where they needed to move home.

When the housing market was forced to close down earlier this year, property website Zoopla reported that an estimated 375k property sales worth approximately £82 billion were placed on hold. When the market re-opened after the first lockdown, the property market was flooded on a large scale.

Buyers were typically looking for country locations and more space, and due to new home working arrangements, they were able to look for properties more rurally and not necessarily be tied into needing a property near a place of work. At this point, it seemed quite clear that it was a sellers’ market.  Add to this, the news of the stamp duty holiday which saw the nil-band raised from £125k to £500k, and it’s easy to see why, by August, house sales hit a record milestone; with Rightmove reporting that a 10-year high had been achieved with the number of properties selling within 7-days of being listed. 

UK House Price Outlook

Although it’s now expected there will not be any immediate drops in UK house prices, the economic impact of the secondary lockdown could have implications that surface further down the line. In October, it was widely reported that annual house price growth had reached a five-year high of 5.8%. However, there seems to be a growing consensus that this growth will not continue and that we should expect to see only minor price falls in the market next year.

The forecasts for UK house prices have varied a lot throughout the Coronavirus epidemic.

Deutsche Bank predicted drops as high as 23pts, while Zoopla and Savills remained more optimistic after the surge and predicts the year will end more positive, up 4% overall.

Ultimately, both the buying power and mortgage availability are all determined by the state of the economy.  For those looking at borrowing money for a mortgage, forecasts suggest that the Bank of England will not look to raise the base rate any time soon.

After the furlough support scheme comes to an end, followed swiftly by the end of the stamp duty holiday in March, all eyes will be on the state of the economy and its recovery. As this period is also thought to be the time when unemployment levels in the UK will peak, the potential for price falls will depend on how serious the damage to the economy is, and indeed, how much time it takes for unemployment levels to fall. If unemployment levels become too high, this could have a direct impact on property prices, and more people could be forced to sell their properties. Any further restrictions on lending could also reduce the prospects for first-time buyers as well.

The Impact of a Second Lockdown on UK Property Businesses

As we’ve already mentioned, the UK property markets are open for business. While Wales did face a two-week circuit breaker close down during the final part of October and early November, they are now fully operational once more.

Overall, the property market is showing great levels of resilience during lockdown number two. Property valuations are up by 38% over the same period, and as expected, viewings have fallen by around 15%. Interestingly, property exchanges have risen by approximately 11%, reaching another all-time high.

Although some estate agency owners feel sellers and buyers are potentially delaying decisions until after lockdown two is complete, there are others who report they’ve seen an increase in their property business revenues compared to the same period last year.

Outside of the control of UK property is the looming potential for a no-deal Brexit and the race to find a vaccine or treatment for COVID-19. Both of these events will impact the property market in one way or another. However, for now, those in the business of trying to forecast what will happen in the market seem to confer that following a busy summer period and the release of pent-up demand following the easing of the first set of lockdown restrictions in the UK, there is enough momentum to keep the market moving forwards.

If you have any questions about your contractual obligations or would like help with any property issue, our commercial property solicitors at North London firm OGR Stock Denton can give you the guidance needed to know exactly where you stand.

Coronavirus and Force Majeure

In this post, we review how specific Force Majeure provisions in business contracts could be engaged within the context of the COVID-19 epidemic under English law and consider safeguarding steps that can be taken in light of the evolving COVID-19 situation.

A Force Majeure event specifically relates to an event that is outside the reasonable control of an entity and is such an event that prohibits or prevents the entity from performing its contractual obligations.

What to do if you have a Force Majeure provision in your contract

If a party wishes to try and claim relief for a Force Majeure event, then the terms of the contract, specifically the Force Majeure provision, will need to be considered. Any party that is affected by a Force Majeure event will usually be relieved from their obligations to perform a service or obligation, and to the extent, they are affected, they may be entitled to receive compensation. While each event will need to be considered in relation to any contractual terms, there are some common features of Force Majeure provisions that we will expand on below.

What type of event constitutes Force Majeure?

Usually, the test of whether or not an event constitutes Force Majeure will come down to whether or not the following points can be satisfied or not.

  • The affected entity must be able to demonstrate they have taken all possible reasonable steps to mitigate or avoid the event or its potential consequences.
  • The event must be deemed to be beyond any reasonable control of the affected entity.
  • The affected entity’s ability to undertake its contractual obligations must have been impeded, prevented, or hindered by the event.

In the case of a valid Force Majeure event, the consequences for all parties will usually depend on the contractual obligations, along with the points expressly outlined by the Force Majeure provision in the contract. In some cases, this will allow a time extension for the purpose of carrying out any obligations or a suspension of contractual performance for the duration of the event. If the Force Majeure event is extended over a long period of time, there may also be such provisions that entitle the parties to undertake a termination of the contract.

What to do if you DO NOT have a Force Majeure provision in your contract?

If you do not have a provision in your contract for Force Majeure, but find yourself in a situation where either yourself or a contractor is unable to fulfil obligations due to such an event, then this section aims to offer some initial guidance.

The Doctrine of Frustration is something that parties can potentially rely upon in the absence of a provision for Force Majeure in an English Law Contract. It will typically be applicable if:

  • The circumstance or event takes place following the contract formation and was not foreseen by either party
  • The ‘event’ is no fault of either entity
  • It is either commercial or physically impossible to fulfil the contract, or where the obligation would need to radically be transformed compared to the initially outlined obligation.

The end-result under the Doctrine of Frustration being that contract will automatically come to an end, and each party will be relieved of their obligations to perform any future work under the contract. The threshold for proving frustration is higher than many Force Majeure provisions, and this is typically due to the fact that it must be proved that any impacted obligations are fundamental to the contract.

There could also be a ‘change in law’ provision in a contract that specifically addresses situations that involve a change in law and whereby such changes make it impossible for the party to carry out any contractual obligations. If this occurs, then parties may incur costs associated with the reimbursement for any affected parties, and in certain situations, there will also be a right to terminate the contract.

Practical Steps for Clients

To help your business prepare for different scenarios that could occur, review the following steps, and try to be as proactive as you can.

  • Review any contracts to see whether or not there is a Force Majeure Provision
  • Review your insurance coverage documents to determine whether or not your insurance will cover any such losses; this could be either a Business Interruption or Force Majeure Insurance policy.
  • Review your financial documentation to consider whether or not there are any notice periods that will need to be complied with relative to any perceived claims for Force Majeure.

If a clause for Force Majeure is present:

  • Review the Force Majeure definition to try and determine if there is are any express events that include a pandemic or epidemic such as COVID-19. If not, try and ascertain whether or not the generic language is adequate enough to reasonably include COVID-19 as a potential Force Majeure event.
  • Consider which elements of the contract you will not be able to perform as a direct or indirect result of COVID-19.
  • Think about any steps your company will take to try and reduce or avoid the effects of COVID-19 on your staff and your business. This is key as you will need to demonstrate that you have taken all and any reasonable steps while following the government guidance.
  • Review the potential consequences for a successful Force Majeure claim

Getting legal advice about Force Majeure claims as early as possible in the process is key.

Force Majeure under PRC Law

 There are many businesses in the UK and, indeed, the rest of the world who deal with goods imported from China. As such, understanding how Force Majeure events are regulated under the People’s Republic of China (PRC) is relevant.

As expected, the best place to start is with the contract and any relevant provisions that are made for Force Majeure events. As COVID-19 is a relatively new ‘event’, it’s possible but unlikely that any specific clauses will relate to COVID-19; however, there is the potential for a pandemic or disease-related clause to be present. In addition to pandemic, plagues, and disease clauses, work stoppages or actions by governments and authorities could also cover this type of event.

Where there are no such provisions, the consideration of whether or not an event could be considered to be a Force Majeure event will rely on any relevant PRC laws or regulations; for instance, the General Principals of Civil Law and the PRC Contract law. In both instances, a Force Majeure event is defined as something that ‘objectively unforeseeable, insurmountable, and unavoidable. This means that any party who is prevented from fulfilling a contractual obligation due to a Force Majeure event could be either fully or partially exempted from their subsequent liabilities, proportional to the given circumstances only. Additionally, it is down to the invoking party of the defence to prove the impact of the Force Majeure event.

There are some high courts; for instance, the High People’s Court in the provinces of Guangxi, Zhejiang, and Shanghai have already taken steps to release guidance documents that directly relate to COVID-19. These confirm that the present-day epidemic could be a Force Majeure event. In addition, the China Council for the Promotion of International Trade has already started to provide Force Majeure certificates to companies in China who are experiencing challenging times with their overseas partners as a direct result of the COVID-19 epidemic.

Regardless of the jurisdiction, Force Majeure’s applicability should always be decided on an individual case-by-case basis.

Drafting Contracts During COVID-19

As a final consideration, going forward, and in any future contracts, it would be wise to address the implications of the COVID-19 epidemic. Some of the key points to include could be defining a ‘triggering event’ to either include to exclude events such as public health crisis, epidemic, state of emergency, etc. It would also be pertinent to review whether disruptions to labour and/or supply chains should be addressed in advance and form part of the contract.

To help mitigate any potential losses or problems, our Company and Commercial team at OGR Stock Denton can help you with any contractual preparations.

If you have any questions about your contractual obligations or would like help with a potential claim for Force Majeure, our dispute resolution solicitors at North London firm OGR Stock Denton  can give you the guidance needed to know exactly where you stand.

If you’d like to know more about the enforceability of Commercial Contracts during the COVID-19 epidemic, our linked article provides more information on this topic

Import and export business update – Preparing for January 1st, 2020

Whether you import goods to the UK or export from the UK to the EU, this post contains key updates you need to be aware of, and for many, take action on before the end of the year.

After the post-Brexit transition period comes to an end, there are specific changes that EU businesses not currently established in the UK will need to make when moving goods or offering services.

While the primary focus in this post is for overseas businesses who trade with the UK market, there is still pertinent data that UK-EU importers and exporters can benefit from knowing before the changes take effect on January 1st, 2020.

This update offers some practical steps you can take to make sure your business is ready

UK – EU Trade Agreement

As discussions are still ongoing, it is uncertain whether a trade agreement with the EU will be reached before January 1st, 2021. Regardless of whether or not a deal is in place, there will be changes to the following:

  • How businesses provide services within the EU Market
  • The way goods are exported and imported
  • The hiring process for those looking to hire people from the EU

While the government has already launched a major campaign to help businesses prepare for the forthcoming changes, there are still many who need to take immediate action to ensure their business can keep moving.

In the next section of this post will break down the specifics relating to exports, imports, and customs as they stand at present. These changes apply to importers and exporters who work in the EU trading with the UK, and those in the UK trading with the EU.

Customs Information

You will essentially be using the same export and import processes used for non-EU countries without a trading agreement with the EU or UK. In summary, when moving goods across the border, this will mean:

  • The carriers will need specific information to move your goods between territories
  • Import and export declarations are needed to enter or remove goods into or from the UK or EU customs territory

If you already have a UK trading partner, it will typically be the trading partner who makes the UK declaration. Still, the specifics of what you need to do will ultimately depend on the arrangements you have in place with any customs representatives, carriers, or trading partners. If you do not have any of these provisions in place, then you need to get a UK representative to act on your behalf to deal with customs for you.

For a more comprehensive overview of the specifics for those looking to buy or move goods from the UK after Brexit, the government has produced a PDF that can be accessed here.

Other customs-related resources that could be useful to you are linked below:

VAT Information

There will be changes to VAT IT systems and import VAT on parcels you need to be aware of. For organizations selling to UK buyers, you may also need to notify customers of any changes to charges before January 1st, 2021.

If you sell to UK buyers and are based outside of the UK, you will need to pay Import VAT.

  • For goods worth £135 or less, you are responsible for the Import VAT
  • For goods over the £135 threshold, the buyer will need to pay the Customs Duty, Import VAT, and if applicable, any Excise Duty

Aside from the above, key changes are being made to VAT IT systems.

  • A new digital service for the checking of UK VAT numbers will be introduced
  • There will be changes to how you claim VAT refunds for UK business expenses
  • If you sell digital services, there are key changes* to how you pay VAT on services you provide to customers in the UK.

Service-based Businesses

If you operate a service-based business, you will need to check how these services are now going to be regulated and how professional qualifications gained in the European Economic Area and Switzerland will be recognised in the UK after January 1st, 2021.

This is particularly important if any of the below apply to your business.

  • If you send your employees to the UK to do business on your behalf
  • If you are planning to merge with a UK-based business
  • If you have subsidiaries or branches in the UK
  • If your employees provide services within or as part of a regulated profession
  • If you operate within a service sector in the UK

If you employ UK nationals that need a professional qualification to practice in the EU, then you must ensure their qualification is still recognised by the relevant EU regulator.

For further reading and the most up to date guidance on the relevant recognition of professional qualifications, please refer to this section of the government website.

Selling Manufactured Goods

If you manufacture goods that are sent to the UK market, there are going to be key regulatory changes* to approvals, testing, and labelling that come into force on January 1st, 2021. Knowing which rules apply to you depends on the type of goods you manufacture.

*At present, these changes only apply to placing goods into the Scottish, Welsh, or English markets. For Northern Ireland, the guidance will likely be different. If you plan to place manufactured goods in the Northern Irish market from the EU, further guidance can be found here. If goods are coming from the GB region, further guidance can be found here.

 The legislative framework is comprehensive, and for some, rather difficult to follow in terms of knowing which regulatory framework is applicable to your business. If this is something you need clarity on, our company and commercial team here at OGR Stock Denton can help.

Changes to CE Markings

This is another major consideration for those selling manufactured goods to the UK market. As part of the preparations needed, you should also check whether or not you need to make changes to your conformity assessment or markings before or after January 1st, 2021.

Before this date, a Pi mark, wheel marking, or CE mark have always been used to place goods onto the UK market. Going forward, the UKCA mark is going to be the conformity assessment marking for most of the goods that today use the CE Mark.

Although for certain products, the CE mark is going to be accepted in the UK until January 1st, 2022, it is vital that your business readies itself as soon as possible to use UKCA markings. I can also confirm that at this point, it will be possible to use both the UKCA and CE marking, as long as you are completely compliant with both EU and UK regulations.

According to the latest government guidance, those businesses that need to use the UKCA mark immediately from January 1st, 2021, include those where all of the following applies:

  • If you are covered under legislation that requires UKCA marking
  • If a conformity assessment has been undertaken by an official body in the UK, and you have not transferred your CA files from the UK body to the EU equivalent prior to January 1st, 2021.
  • If you require a mandatory conformity assessment by a third-party

Understanding Your Changing Legal Responsibilities

For manufacturers, your legal obligations will largely remain unchanged from January 1st, 2021. However, your regulatory requirements, VAT, and customs processes will most likely be affected and require some key changes in order to remain compliant.

For UK suppliers and distributors, it is essential to confirm whether it will be your supplier or your business that will become an ‘importer’ from January 1st, 2021. If it is your business who will be bringing goods from outside of the UK and placing them into the GB market (the rules for NI are going to be slightly different), then you will become an ‘importer’. Here’s a quick summary of how your legal responsibilities could change, along with some of the practical steps you may need to take.

  • Ensure the right conformity assessment procedures have been undertaken and that all conformity markings are compliant under the new legislation.
  • Making sure that all labels for goods include your company name and address – it is possible to provide this information on accompanying documentation until December 31st, 2022.
  • Make sure your business has a system to store all conformity declarations for a period of ten years.
  • Ensure the manufacturer has produced the correct technical documentation for their goods and that all labelling is fully compliant.

Although we are already well into the final quarter of the year, I do expect there to be more changes. While I intend to keep you updated in the form of further posts, you can also sign-up to receive emails directly from the government site here.

If you would like to get guidance on whether or not your goods will be affected and confirm the steps you need to take in order to become compliant with the new regulations, please contact one of our commercial solicitors today for further advice. 

Self-Employment Income Support Scheme (SEISS) extended

The Chancellor has confirmed the extension of the Self-Employment Income Support Scheme (SEISS), with the announcement of a second and final grant to support the income of self-employed individuals during the Coronavirus outbreak.

The first and current round of grants under the scheme allows self-employed individuals to claim a taxable grant worth 80 per cent of three months’ average monthly trading profits, capped at a total of £7,500 and paid in a single instalment.

It has seen 2.3 million claims to date, collectively worth £6.8 billion.

Applications for this round of grants will close on 13 July 2020. However, the Chancellor has now announced that self-employed individuals will be able to claim a second grant in August. This will be worth 70 per cent of three months’ average trading profits and will be capped at £6,570 in total, also paid in a single instalment.

Individuals do not need to have claimed the first grant to be able to claim the second.

Unlike the Coronavirus Job Retention Scheme (CJRS) for employees, self-employed individuals may continue working, begin a new trade or take on new employment while in receipt of a grant.

The full criteria for qualification for the scheme remain unchanged. Applicants must:

  • Be self-employed or a member of a partnership;
  • Have lost trading/partnership trading profits due to COVID-19;
  • File a tax return for 2018-19 as self-employed or a member of a trading partnership;
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID-19) and intend to continue to trade in the tax year 2020 to 2021; and
  • Have trading profits of less than £50,000 and more than half of their total income come from self-employment. This can be with reference to at least one of the following conditions:
    • Trading profits and total income in 2018-19
    • Average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.

The scheme is not available to people working through their own limited companies.

Further details about how to apply for the second and final grant will be announced on 12 June 2020.