A summary of recent developments impacted by Brexit, including employment law impacts, the implications of the Free Trade Agreement for SMEs, cross-border insolvency and the use of the Model Law to combat issues, data flows in a post-Brexit world and an overview of UK legal and regulatory issues for 2021.
Brexit: a sledgehammer to UK workers’ rights or an opportunity for higher standards?
Now that the UK is no longer part of the EU, it can choose, and is permitted to, make changes to its domestic employment law provided such changes will not adversely affect trade or investment with the EU.
In the event of a material impact on trade or investment, both the UK and the EU have the right to take rebalancing measures. Therefore, the UK will still need to be mindful of any new employment measures introduced by the EU.
Despite fears that Brexit would lead to a reduction of rights laid out in the Working Time Regulations 1998 in particular, the government has confirmed that a planned post-Brexit review of workers’ rights will not go ahead. Instead, Business Secretary, Kwasi Kwarteng has stated that the government is considering Brexit to be an opportunity to introduce “higher standards.” For now at least, it appears unlikely that there will be any significant changes to UK employment law arising out of the UK’s exit from the EU.
The Free Trade Agreement: implications for SMEs
The Free Trade Agreement is comprehensive across multiple sectors and there will be no tariffs and quotas imposed on goods travelling between the UK and the EU. Notably, this only refers to the disruption in the movement of goods. The trade deal does not address, other than in a very limited way, the UK’s significant trade in services and businesses will need to quickly take steps to tackle the impacts of the agreement.
Businesses have, however of late, had a tumultuous time with much of their energy being focused on coping with the global pandemic and its impact. The results of a government survey found that while 78% of businesses have taken steps, just 24% believed they are fully ready for post Brexit.
If businesses fail to take all appropriate steps promptly, they are likely to encounter business disruption further down the line and so it is important to tackle these issues now for the benefit of the business, its workforce and customers.
Contact: Alison Loveday
Related item: The Free Trade Agreement – implications for SMEs
Cross-border insolvency: the model law with a focus on the USA
As of 1 January 2021, there is no EU wide mechanism for new insolvency appointments whereby EU member states will be able to automatically recognise UK insolvency proceedings and applicable UK law. Accordingly and going forwards, the UNCITRAL Model Law on Cross-Border Insolvency (Model Law) will likely be relied upon more.
The UK has adopted the Model Law, thus EU member state insolvency office holders can apply for assistance in the UK as regards their local insolvency proceedings. Likewise, the USA has adopted the Model Law into its own domestic legislation. Hence, the Model Law is of relevance as regards cross-border assistance required between the UK and the USA. This means that a US insolvency office holder may continue to apply to the UK for appropriate cross-border assistance as required. Likewise, a UK insolvency office holder has similar scope and opportunity to seek local assistance in the USA.
However, very few EU member states have implemented the Model Law. Hence, UK insolvency office holders potentially have to seek recognition of their domestic appointment in an EU member state under the relevant local laws of that EU member state.
Clearly, this can lead to lack of certainty of outcome for UK insolvency office holders needing local EU assistance and potentially cause delay and increased costs to insolvency estates. This will inevitably have a detrimental impact upon the efficiency, certainty of outcome and cost within which cross-border insolvency work can be undertaken between the UK and European jurisdictions going forward.
Just go with the flow? Data flows in a post-Brexit world
As the UK has now officially left the EU, the EU GDPR no longer has direct application in the UK which has now gained full control over its data protection laws. Any data flowing from the EU/EEA to the UK however will still need to comply with the EU data protection laws until an adequacy finding is reached which will allow the continued free flow of data from the EU/EEA to the UK.
While we all hope that the EU Commission will make an adequacy finding in the UK’s favour, there is the risk that it may not. So, just as businesses prepared themselves for the implementation of GDPR in 2018, it is once again time for SMEs to take stock and put measures in place to avoid any potential interruptions to the free flow of data that many businesses rely on.
Related item: Just go with the flow? Data flows in a post-Brexit world
Insurers and intermediaries: UK legal and regulatory certainties for 2021
After such a challenging 2020, all businesses are craving more certainty in the new year. Whilst 2021 is already producing its own surprises, there is at least some certainty in the legal and regulatory issues likely to affect insurers and intermediaries in the UK.
Here, we summarise key issues insurers and intermediaries should keep clearly on the radar in 2021 such as: the Brexit fallout, pricing and value, further FCA portfolio letters, operational resilience and increased digitisation and long term COVID-19 impacts on vulnerable customers.
Contact: Tobin Ashby