You may be thinking…Brexit has already happened and so it has, but the real issues arise upon the ending of the transition period on 31st December 2020. Here are some actions you should be taking in advance of the end of the year, regardless of the outcome of the ongoing deal negotiations.
- Get specific about whether you are dealing with the UK or GB.
When you are reviewing actions you must take, be conscious of the technical difference between Great Britain (GB) and the United Kingdom (UK). To give the UK its full title, it is the United Kingdom of Great Britain and Northern Ireland. Don’t assume the terms are being used interchangeably for the sake of interesting prose. Any rules, regulations or guidance referring to just GB will not apply in Northern Ireland where alternatives are in place in order to maintain compliance with the “Good Friday Agreement” and the “Withdrawal Agreement” (except where it is made clear, that these agreements are not being complied with). A specific example is below at 13.
Action: Get clear on what rules, regulations and guidance applies in which part of the UK. Be conscious that Northern Ireland may be different from the rest of the UK.
- Transfers of Personal Data
The good news is that the Government (at least for the short term) has confirmed that UK citizen’s data being processed in the EEA (the EU plus Norway, Lichtenstein and Iceland) under the UK GDPR will be considered adequate because it is being processed in compliance with the (EU) GDPR. Additionally, any UK personal data being processed in countries where the EU has already issued an adequacy decision (such as Canada) will be similarly considered adequate.
EU citizen’s data being processed in the UK is more problematic. It is hoped that any deal will include at least a temporary adequacy decision for the UK. But there are some hurdles to overcome including a recent legal decision that is making the situation more unclear.
Action: Be clear on whether any EU citizen data is processed in the UK. Consider options for dealing with this after 31 Dec 2020. It may be necessary to arrange to process this data in the EEA or stop processing that data altogether, which may mean letting down customers.
- EU citizens working in the UK and the EU Settlement Scheme
It is thought that there are over 3 million EU citizens currently residing in the UK. EU citizens and their family members residing in the UK by 31 December 2020 are eligible for the right to remain in the UK under the EU settlement scheme, provided they apply by the deadline of 30 June 2021.
Under the scheme individuals can apply for either Pre-Settled Status if they have been in the UK for less than 5 years, or for Settled Status if they have been in the UK for at least five continuous years. Applications under the scheme can be made now via a mobile app and allow the applicant to stay in the country for five years, or indefinitely, respectively.
EEA and Swiss citizens who have been in the UK for a continuous period of five years may also be eligible to apply for Permanent Residence, but these applications must be made to the Home Office.
Action: Ensure your EU citizen employees are aware of their obligations to register under the EU settlement scheme and keep you updated on their status.
- Employing EU citizens after 1 Jan 2021
Once the transition period ends employers will need to be in the possession of a sponsorship licence in order to employ migrant workers under the points-based system. This will enable employers to assign a Certificate of Sponsorship (CoS) to lawfully employ a migrant. There are different types of licence and CoSs depending on the type of worker to be employed.
Employers will need to meet certain eligibility criteria in order to successfully obtain a licence, and officials may visit businesses as part of the application process. Fees will be applicable at various stages of the application process, with smaller businesses and charities having to pay smaller fees.
All sponsors must adhere to five core duties, and failure to adhere to these duties may result in suspension or revocation of the sponsorship licence.
You can apply for a sponsorship licence online right now, and it is expected that applications will take around 8 weeks to process. Therefore we recommend applying as soon as possible if you envisage hiring EU nationals in 2021.
Action: If you are likely to be employing EU citizens soon after 31st December 2020, you will need to apply to be a sponsor now, as the process takes time to get registered.
- UK staff travelling to the EU
UK staff travelling to the EU for short business trips will not need any special visas. However, they will need at least 6 months before their passports expire in order to enter EU countries and may not stay in the EU for more than 90 days in each 180 day period. Staff carrying goods as either commercial samples, goods for display at exhibitions and sales events or as their professional tools may be at risk of “exporting” these items unless they take specific steps. If exported, there may be tariffs to pay on the items entering a country and again upon the return to the UK. The Government has suggested using an ATA Carnet as a method of avoiding this.
Action: Advise staff about travel requirements to EU countries and the need for vigilance in relation to passports due to expire in the next 12 months. Apply for a Carnet, where relevant.
- Intellectual Property registrations before and after 1 Jan 2021
Intellectual property rights registered at the EU level before the end of the transition period will have an equivalent right in the UK created for the owner, automatically. Applications for an EU right that are not completed before the end of the transition period will be extended a 9 month window to apply for a UK right. For new applications from 1st January 2021, an applicant will need to apply separately for a UK right and an EU right. Where EU rights are unregistered and arise automatically, the UK shall honour these rights for the relevant period.
Action: Check which EU registered rights are in place and check that the equivalent rights are created by the UK’s Intellectual Property Office (IPO) on 1st January 2021. Where rights holders are used to applying to the EUIPO, they will need to “double-up” and apply both to
- .eu domain names
Only EU citizens or organisations established in the EU can have an .eu domain name. UK citizens and UK firms, companies, charities and other undertakings will not be allowed to be the registered owner of these domains from 1st January 2021. This may be highly problematic if a party does not have an alternative domain for their website or emails.
Action: transfer ownership of the domain name to a related establishment in the EU, such as a subsidiary. Where no such subsidiary or alternative exists, a new domain will need to be found and technical updates tested and deployed.
- Road Hauliers
The position for hauliers is not yet finalised and the Government has said that further guidance is coming. The holding position is that additional registrations and licences will be needed. Documents circulated very recently suggest that additional documents will be required for transit through Kent.
Action: Keep a watchful eye on the Government’s Transition pages. Engage with one of the road haulage associations for detailed up to date guidance. Register for documents at the earliest opportunity and prepare drivers with all the documents they could possibly need.
- Product certification and labelling
The Government is introducing a new product certification label called UKCA; UK Conformity Assessed to replace the CE label from 1st January 2021. Confusingly, the label is for goods going onto the market in GB (see point 1!) Goods placed on the market in Northern Ireland will need the CE mark. There is a transition period of a further year for most products where the CE mark will remain acceptable (to deal with stocks, for example) although some must be UKCA marked from 1st January 2021.
Action: Prepare for new labelling requirements. This may involve updating packaging designs and product leaflets. Consider where products are going to be placed on the market and which (perhaps both) label is required.
- Ecommerce businesses compliance with local laws
UK established ecommerce businesses falling within the scope of the Ecommerce Directive (this would include all online shops or digitally rendered services) will need to comply with all local laws in the countries they operate in from 1st January 2021, rather than simply complying with the laws of the UK. Previously, the Ecommerce Directive allowed them to comply with the laws in their country of establishment without further compliance requirements. This could mean 26 different legal regimes that need to be assessed and complied with including terms of business, service delivery methods and advertising and marketing practices. Alternatively, business transacted in the EU could be performed through a subsidiary established in the EU. In this case, the business will need to comply with the local laws of the country of the subsidiary. This could have subsequent corporate structure and tax implications.
Action: Consider the most cost effective way to resolve this issue. Either restructure (bearing in mind you will need to comply in your company of establishment), or alternatively investigate local rules and regulations in relation to the business and amend relevant policies and practices and documentation.
- Import and Export arrangements
Businesses transacting with businesses based anywhere in the world will need to reconsider the applicable tariff and documentation regime in relation to that country. There is still hope of an arrangement with the EU about classes of goods and services and which tariffs will apply. Trade with the EU, regardless of the terms of a deal, will need an EORI number. In the absence of “a deal,” the EU will treat the UK like any other country without a trade arrangement with the EU and the majority* of the rest of the world will no longer apply its trade deal with the EU to goods and services moving to and from the UK. *The UK has completed some post-Brexit trade deals already and there will be specific terms to apply in relation to these countries after the transition period ends.
Where tariffs apply to the import or export of goods and services, counterparties need to be clear who is liable for the tariffs and who shall be responsible for compliance with import and export documentation systems. This is a matter to be addressed in the contract between the parties.
Action: Check which countries you import from/export to. Establish whether a trade deal will apply. Where it does not, understand how the “World Trade Organisation” rules will affect your trade including the tariffs that will apply. Review commercial contracts to establish who will complete documentation requirements and who will pay for tariffs. Ensure that you are registered for an EORI number in good time.
- Liability for delays at the border
The new arrangements are likely to produce delays at the border. Businesses should consider how these delays will affect them and understand the onward risk to their customer contracts. Delays at the border have been well “trailed” and businesses have had time to prepare. As such, the Courts are unlikely to support claims that contracts are frustrated or subject to a force majeure episode, unless the circumstances produce highly unexpected results. Businesses can amend their supplier and customer contracts to expressly address potential delays and liability thereto.
Action: Review supplier and customer contracts in relation to delays at the border. Insert express clauses agreeing how such delays will be managed, including who shall be liable, what will trigger liability and dispute resolution methods.
- Energy efficiency labelling rules
This is a specific example of the point raised at 1. However, products that require an energy efficiency label (such as washing machines) shall have different specifications in GB than Northern Ireland.
Action: Check where your goods will enter the market and which labelling regime applies.