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7 min read

How will UK business legislation change post-Brexit?

“Taking back control of our laws” was a key Leave campaign battle cry. But what is this likely to mean for UK SMEs when the Brexit transition ends?

The current Brexit situation

The UK left the European Union (EU) on 31 January 2020. This marked the start of an 11-month transition period that will last until 1 January 2021, while the UK and EU try to negotiate a new comprehensive trade agreement.

As explained on government website, GOV.UK: “Current rules on trade, travel, and business for the UK and EU will continue to apply during the transition period. New rules will take effect on 1 January 2021.”

In February 2020, the UK government published a policy paper, setting out its approach to negotiating a future relationship with the EU. In this, it unequivocally states: “The Government will not negotiate any arrangement in which the UK does not have control of its own laws and political life. That means that we will not agree to any obligations for our laws to be aligned with the EU’s or for the EU’s institutions to have any jurisdiction in the UK.”

What will the UK government do about EU legislation?

The European Union (Withdrawal) Act 2018 “cuts off the source of European Union law in the UK by repealing the European Communities Act 1972 and removing the competence of European Union institutions to legislate for the UK.”

While the Act’s introduction ends the supremacy of EU law over legislation passed by the UK Parliament, it establishes a “mechanism to retain, for the time being, the corpus of EU law which presently applies to the UK.”

The entire body of EU legislation will be copied over into “the UK’s post-exit statute book”. EU-derived rights and legislation the government intends to retain and preserve in UK law post Brexit is called “retained EU law”, but the Act gives the government the right to amend this legislation.  

So, how will legislation affecting small UK businesses change at the end of the Brexit transition period and what is likely to broadly stay the same?

European Union flag flying outside Brussels Bourse

What will happen to GDPR when the UK leaves the EU?

The GDPR is the EU General Data Protection Regulation. When introduced in May 2018, it was described as the most important change in data privacy regulation in 20 years.

The aim was to better protect EU citizens from privacy and data breaches, because the previous EU regulation (Directive 95/46/EC) was 20 years old, created when the world was very different to the data-driven place in which we now live.

The GDPR will no longer apply directly in the UK come the end of the Brexit transition period. But UK businesses will still need to comply with the GDPR’s requirements, as the Data Protection Act 2018 enacts these in UK law.

The Information Commissioner’s Office website brings together guidance and resources relating to data protection and Brexit.

What about European Union trade mark protection?

If the UK leaves the EU without agreement, existing European Union trade marks (EUTMs) will only apply within remaining EU Member States. They won’t provide protection in the UK, because the EU regulation that defines the EUTM will no longer have effect in the UK.

The government has said it will provide UK holders of EUTMs with a comparable UK trade mark ahead of the end of the Brexit transition period on 1 January 2021. These will be considered as if they had been applied for and registered under UK law, and will be recorded on the UK register, according to the government.

And, as explained on government website GOV.UK: “At the end of the transition period, registered Community designs (RCDs) and unregistered Community designs (UCDs) will no longer be valid in the UK. These rights will be immediately and automatically replaced by UK rights. If you own an existing right, you do not need to do anything at this stage.”

The government has published guidance on Changes to EU and international designs and trade mark protection from 1 January 2021.

What about CE marking?

CE marks appears on a wide range of products traded on the single market in the European Economic Area. They indicate that the manufacturer has made sure that its product meets EU safety, health or environmental requirements or complies with EU legislation.

According to GOV.UK: “You can use the CE marking if you’re placing certain goods on the UK or EU market until 1 January 2021.” It is not clear at this point what will happen after this date.

In March 2019, the government published guidance called Placing manufactured goods on the EU market after Brexit, which it has since withdrawn, because “it told you how to prepare for a no-deal Brexit” (which is still a possibility). The government says it will update its page on CE marking, “if anything changes”.

CE marjs on a pencil

What about the UKCA mark?

According to the British Standards Institution (BSI): “The UKCA (UK Conformity Assessed) mark will be the new UK product marking that will be used for certain products being placed on the UK market if the UK leaves the European Union without a Brexit deal.”

However, it cautions: “It will not be recognised on the EU market. Products that require CE marking will still need a CE marking to be sold in the EU.”

Will Working Time Directive requirements end in the UK?

According to the government: “In most cases there will be no changes to workplace rights when the UK leaves the EU.” As explained on GOV.UK, by law (ie the Working Time Directive or under working-time regulations), UK employees do not have to work more than 48 hours a week on average (normally averaged over 17 weeks), unless they opt out.

The Working Time Directive also gives workers the right to at least four weeks’ paid holidays each year (pro rata for part-time workers), as well as rest breaks and rest periods of at least 11 hours in any 24. It also restricts excessive night work and gives workers the right to a day off after a week’s work.

The Directive was introduced to combat excessive working hours, cited by some to be a major cause of stress, depression and illness. Reportedly, some senior government figures have called for the removal of the provisions of the Working Time Directive come the end of the Brexit transition period.

Top view of mixed race business team sitting at the table at loft office and working. Woman manager brings the document

Which businesses are the most likely to be affected by legislation following Brexit?

The simple answer is that all businesses are likely to be affected by post-Brexit legislation. 

In this article, we’ve looked at some of the key EU-influenced legislation. However, according to Thomson Reuters: “a total of 52,741 laws have been introduced in the UK as a result of EU legislation since 1990.”

That’s a lot of laws that are likely to impact your business if they all disappeared tomorrow. The government’s plan, though, is to create a new category of legislation to provide continuity:

Retained EU law would give continuity to businesses, individuals and public bodies because the law regulating many areas of the UK economy would remain in place even in a no-deal scenario.

The UK government may choose to deviate from the EU in the future and drop these laws. This a major point of discussion in the trade negotiations. The less regulatory alignment, the less scope for frictionless trade. 

The businesses who will be most affected are those whose typical operations are dependent on regulatory alignment – e.g EU-UK trade, workforce regulation, patents, copyright and health and safety standards.

Even, if you think you won’t be directly affected too much, consider your supply chain and how this might impact on their operations.  

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