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Exploring the legal effects of Brexit for French companies

31 March 2017

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Whilst the exit process provided by article 50 of the EU Treaty was triggered by the British Government on 29 March, following the approval of the two Chambers of the British Parliament to do so, the Prime Minister Theresa May, confirmed in her first speech of 2017 that a ‘hard’ Brexit is expected. The negotiations with the European Union (EU) regarding their future relationship are likely to be firm. The stakes are high for the EU: maintaining freedom of movement for EU workers on British soil. On the other side of the negotiation table, the UK, through the voice of Theresa May, was clear: the UK intends to stop its membership of the European Single Market. However, the country wishes to defend special access to a free market with EU member States and it is likely to be the same with their financial European passport which enables companies operating in the United Kingdom to sell their financial products within the EU. Nevertheless, the effective exit from the EU will not happen before 2019 at the earliest. Meanwhile, the possible fall of Sterling combined, in some cases, with Governmental assurances of post-Brexit guarantees may offer a favourable context for investors coming from the Euro Zone. A good example has been the recent case of the Nissan group, who concerned about the future of its car factory in Sunderland, has been given a confidential set of guarantees to maintain its competitiveness in the event of additional customs duties. 

Practical Information – Legal effects of Brexit

Employment law

British employers and their employees from Continental Europe are legitimately wondering about their future careers in the UK as a result of Brexit. Depending on their nationality and the number of years worked, studied or lived in full financial autonomy in the UK, your employees may be eligible to apply for Permanent Residence or British citizenship, or if not, for a Registration Certificate. In any event, we advise assisting employees with their application by providing all relevant documents (payslips, business trips receipts, work certificates) and information that could support it. For more information see our article on immigration FAQs following Brexit.

Intellectual Property

Protection of your French trade mark on the British territory will be impacted by Brexit if you chose a Europe-wide protection via the EU trade mark (formerly ‘Community trade mark’); which currently offers unified protection within all EU member states. Following the withdrawal of the UK from the EU, the EU trade marks jurisdiction will possibly be reduced, since it will exclude the UK. Even though it is likely that an agreement will be signed to minimise the loss of protection, we advise you to file an application to register your trade mark with the Intellectual Property Office (IPO) if you have registered a EU trade mark only, so as to maintain your control on British territory for 10 years (renewable) after Brexit. Similarly, we advise owners of Registered Community Designs to file an application for a UK national registration so as to maintain their protection within the UK after Brexit. For more information see our article on IP following Brexit.

Commercial contracts

It is advisable to adapt the wording of your commercial contracts to take account of events in the future, at least for long-term contracts (eg: outsourcing agreements) and essentially for those whose provisions are intrinsically connected to EU territorial, legal or economic concepts. As far as existing contracts are concerned, it might be difficult for you to re-negotiate terms. As a party to the contract, you should check whether contractual tools have been provided in the contract itself and whether they could be applied to your case, such as a Material Adverse Change Clause which enables a party to terminate the contract before the termination date if a significant unfavourable event happens, or a clause allowing re-negotiation in case of a change in the law applicable to the contract. It is possible that the English contract law doctrine of frustration could be invoked, but this needs to be reviewed with expert advice on a case by case basis. Regarding any future contracts, it would be prudent to include one of the clauses mentioned above to take account of the legal consequences of Brexit. For more information see our articles on the impact on company law and regulation.

Data protection

Despite Brexit, the UK will not be able to avoid the application of the new General Data Protection Regulation (GDPR) which will come into force on 25 May 2018. The new European legislation aims to reinforce and unify the rules applicable in the EU to personal data processing as well as to adapt them to modern times. Individuals will be granted new enforceable rights allowing them to consent to, access, amend and challenge the processing of their personal data, in addition a number of new obligations have been introduced for those who process data to guarantee the safety, security and transparency of that data (e.g. encryption, application of an approved code of conduct or of a certification mechanism depending on each case). It is important to stress that even after the UK leaves the EU, companies trading in the UK will still be concerned by this legislation if they sell goods and/or services to EU residents or ‘monitor’ their behaviour. For more information see our article on the implications of Brexit on Data Protection.
 

Quarterly Focus: Employment law

The updates in British employment law likely to impact French companies trading in the UK

Reporting gender pay gaps

In order to eradicate discrimination against women in the workplace, the British Government has decided to force employers with 250 or more employees to publish on their website, on a yearly basis, the pay gaps (salary and bonuses) existing in their company between their male and female employees. The publication of the Regulations has already been delayed and is expected to come into force on 6 April 2017. As a result, employers falling within the scope of the Regulations will have to publish their first data in April 2018 based on figures from 2017. For more information on gender pay gap reporting see our latest advice and video.

Fighting Modern Slavery

As part of the international fight against slavery and human trafficking, the Modern Slavery Act adopted last year encourages companies to be more transparent regarding their suppliers in order to render supply chains free from any slavery. Section 54 of that Act makes it compulsory for companies selling goods and services in the UK, including French companies operating within the UK, and with a yearly turnover of more than £36m, to publish in a visible way on their website the steps they have taken or intend to put in place to ensure that slavery and human trafficking does not happen at their suppliers. As far as group companies are concerned, the threshold to be considered will be the global turnover of all their subsidiaries, even those registered abroad. English companies, who meet the relevant criteria, will have to fulfil that obligation every financial year. Companies with a financial year end of 31 December 2016, will need to publish their first statement before 30 June 2017. The enforcement by the Secretary of State by way of an injunction, the sanction for non-compliance with this duty will be mainly reputational. Therefore, we strongly advise French subsidiary companies to which the Modern Slavery Act applies, to collect the required data as soon as possible in order to avoid any damage to their reputation. Click here to learn more about the Modern Slavery Act

Extending the scope of the worker status 

Even though Uber declared that they would appeal the decision, the Employment Tribunal concluded that Uber drivers are ‘workers’ and not self-employed. Before that decision was published, Uber drivers had the status of self-employment available to them, which was less favourable in terms of benefits. In practice, giving the thousands of Uber drivers that new status will affect the extent of their legal rights, e.g. entitlement to paid annual leave, national living wage and rest breaks. Although this decision by the Employment Tribunal is linked to Uber’s business model, it is nevertheless an important one which, if confirmed, will constitute a landmark case. If you currently contract with people who are independent contractors/ freelance to carry out specific projects for your company, please be aware that you might be fall within the scope of the Uber case.

 

Training and events

11Oct

Public sector exits consultation – Browne Jacobson response to HM Treasury forum Microsoft Teams

In response to HM Treasury’s consultation on Administrative Control Process for Public Sector Exits, Browne Jacobson are hosting a virtual forum to gather your views and feedback on the proposals.

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11Oct

Autumn Regional HR Forums - Birmingham Microsoft Teams

We are pleased to invite you to join us at one of our next Regional HR Forum. The forums are aimed at those who lead the HR function in schools and academies across the nation.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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