UK: Brexit: How Will Your Business Be Affected?

Last Updated: 24 June 2016
Article by John Macmillan

Today a majority of British voters voted to leave the European Union. David Cameron, Prime Minister has announced that he will step down in October. It is too soon to say what the full consequences will be. It is also too soon to say what the UK's post-Brexit relationship will be with the EU now we have decided to leave and what the impact is on Scotland's constitutional future.

It is natural that you will have questions about what the future may hold for your business. We will be providing regular updates on what it will mean for your business but in the meantime we have prepared a short fact sheet outlining some of the areas which could be affected and what the consequences could be.

Employment Law

Discrimination rights (including those for agency workers), TUPE, collective redundancy consultation, working time entitlement and minimum paid annual leave are just a few of the employment protections, alongside wider protections of human rights which derive from EU legislation and are embedded into UK law. Aside from being a lengthy negotiation process, repealing or limiting the effect of EU employment protections would be a controversial move unlikely to win favour with the voting public.

The free movement of workers is a long held EU principle allowing people to work in other EU member countries without a visa. Brexit could strip UK workers of their right to live and work in another EU member state and EU workers of their right to live and work in the UK. This mutuality could persuade the UK government to agree an amnesty allowing migrant EU and UK workers to remain for a period of time post BREXIT.

The EU is the UK's biggest export market and so it is likely the UK will seek to agree a trade agreement. A condition of agreement may be the acceptance of EU employment regulation (EEA states currently operate under this arrangement) which would leave the UK bound by EU regulation without a say in the decision making process.

Pensions

UK pension provision is directly and indirectly affected by a host of EU laws and requirements.  They deal with matters as diverse as equal treatment and non-discrimination matters, to funding requirements and financial reporting.

It is too early to say with any certainty what Brexit will bring.  At a national level from a legal perspective, the UK already has detailed protections in relation to pension provision and pension rights, and many employers go beyond any minimum requirements that stem from EU law.  It is unlikely that significant change will be required in the short term, and any implications will likely be greater for businesses that form part of multinational groups with EU parent or subsidiary companies.  Away from purely legal matters, the effect of the Brexit on interest rates, pension fund values and their buying power in the longer term remains to be seen.

Intellectual Property

All EU IP rights could cease to apply in the UK. You may need to make an application to the UKIPO to ensure your IP rights are protected as national rights. This will become clear in the coming months.  However National IP rights such as trademarks registrations, patents and registered designs granted by the UKIPO should not be affected. It is very unclear whether UK rights holders of EU IP rights would need to reapply for national rights or whether these would be automatically granted to holders of the EU rights.

Unitary EU IP rights, eg EU Trade Marks and Community Designs, would not continue in the UK. This could cause issues with existing IP licences, security over IP rights, and judgments and interdict in IP proceedings.

The European Patent System is not governed by an EU institution meaning that a Brexit would not necessarily affect the UK's participation in the system.

Depending on what the new relationship becomes, current trademark exhaustion rules would mean that trademarks and design rights could be used to restrict imports from the UK into the EU.

The new unitary patent system would be affected by Brexit. The new system is limited to EU member states, (although the UK must also ratify the agreement for the new system to come into effect). A Brexit would require the existing agreement to be re-written, and the new unitary patent rights to be extended to the UK as a non-EU jurisdiction.

Data Protection

Data protection law in the UK primarily derives from the EU's 1995 Data Protection Directive although this is now enshrined in the UK Data Protection Act 1998. This will be replaced by GDPR in May 2018. It is unclear yet what will happen. It may be that the UK retain the DPA, before considering whether to implement the principles of the GDPR into national legislation.

The EU data protection rules restricts the transfer of personal data to countries outside the EEA. Britain will now be considered a non – EU destination and will have to be approved as providing adequate protection for personal data by the European Commission. This suggests that the UK would introduce a GDPR type legal regime.

Financial Services Regulation

Most current legislation derives from EU Law. The government will need to decide whether to keep the existing laws or replace them with its own different rules.

Many Financial firms in the UK benefit from a single EU regulatory framework making it easier for companies to operate in other EU member countries. Today's result may mean a restricted EU market access for UK institutions.

The City of London is viewed as the bridge into Europe by many international firms and financial institutions, and the London Stock Exchange considered one of the top International platforms in the world – it is hard to say what the repercussion of Brexit will be yet, but they could be far-reaching.

Competition Law

Anti-competitive agreements and the abuse of dominance will see little change as EU rules largely reflect the UK's current laws. In addition EU rules will still apply to any UK company trading in Europe.

Parallel civil investigations by both the UK and the EU are a strong likelihood for example of suspected international cartels, although cooperation through the European Competition Network seems likely. Previously one or the other would have carried out an investigation. Similarly with merger control separate reviews might be required by both the European Commission and the CMA.

EU State aid and public procurement could cease to apply in the UK meaning it would be more straightforward for the UK government to intervene in business. However, there would still be obligations under GATT / WTO rules and other international treaties.

Environmental Law

Since the UK joined the EU they have implemented a series of EU directives on environmental issues. The EU has imposed stringent targets on member states on matters ranging from water quality to birds. Large parts of our law on waste derives from EU legislation which affects recycling and land fill waste. With our departure there will be uncertainty in terms of environmental policy and legislation. There is the potential for repeal or significant amendment of many of the UK's environmental laws.

However we will still remain bound to international environmental agreements.

How we can help you

At MacRoberts, we have teams of experts to advise on the potential legal implications of the UK's exit from the EU. We can advise your business on the issues arising across the full range of sectors and legal disciplines, including:

  • Charities & Third Sector
  • Construction
  • Education
  • Energy & Natural Resources
  • Financial Services
  • Food & Drink
  • Healthcare
  • Hospitality & Leisure
  • Individuals & Family
  • Infrastructure & Projects
  • Manufacturing
  • Public Sector
  • Real Estate
  • Retail
  • Technology, Media & Telecoms
  • Transport

If you have any questions in relation to Brexit and its possible implications for your business please contact a member of our team.

© MacRoberts 2016

Disclaimer

The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.

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