Brexit

The EU’s and UK Government’s agreement to a second delay to exit, now taking us to 31st January 2020, may remove the immediate possibility of a “no-deal” exit, and give businesses some additional breathing space to get better prepared for life outside the European Union. But for many, the continued uncertainty over the timing for and over the eventual form of the relationship that will exist between the UK and the remaining EU member states makes Brexit planning still difficult for businesses.  Added to this is the prospect of a general election on 12 December which could in theory change everything – or nothing.

Whatever is the eventual outcome, unless the decision to leave the EU itself is reversed, businesses will need to prepare for a different trading environment post Brexit.  The current deal negotiated by Boris Johnson, and in particular the nature of the future relationship as framed by the political declaration, will mean a more distant relationship with the EU, outside the Single Market and Customs Union, bringing us in effect closer to a “hard Brexit” situation.

 

At this stage it is worth a reminder that the results of the referendum didn’t change the law in itself, and this will be the position until exit: European law and European courts still have primacy over UK laws and courts, so we are still bound by their decisions and remain a full member of the EU.  We have recently elected members to the European Parliament, and are still obliged to contribute to the budget as well as entitled to benefit from grants and funding.  We still benefit from, and are subject to, the four “fundamental” freedoms – including most notably the free movement of people, which gives EU citizens the right to travel to, live and work in any other EU country.

 

There have however been a number of developments since the referendum in June 2016:

  • The UK served notice under Article 50 of the Treaty of the European Union of the UK’s intention to leave the EU on 29 March 2019 (subsequently extended until 31 October 2019 and now 31 January 2020).
  • There was a deal negotiated by Theresa May outlining the process by which the UK would separate from the EU (the “Withdrawal Agreement”) and a political declaration for how the future trade relationship may work, although these were ultimately rejected by the House of Commons. 
  • There was also the publication of the European Union (Withdrawal) Act 2018 in July 2018, which will repeal the European Communities Act 1972 and incorporate existing EU laws directly into UK law where necessary to ensure continuity of our legal system post exit. Although much of English contract law would remain largely unaffected by Brexit, EU law is so interwoven with the UK legal system generally, and particularly in areas such as employment law, financial services, health and safety for example, that the repeal of the European Communities Act 1972 on exit day without further provision would leave large areas of law unworkable.  Since then the Government has passed numerous pieces of legislation aimed at preparing the UK for exiting the EU.

 

Whilst the situation still remains fluid, even if an eventual deal is reached that includes transition arrangements to apply from 31 January (or a later extension date – which is not beyond the realms of possibility), which would take the immediate heat off businesses by retaining the status quo in most regards, in the medium to longer term our trading arrangements with the EU are set to change.

In the sections below, we look at what may happen from the legal perspective in key areas, focussing on the effects of an exit without continued access to the Single Market and Customs Union (which will be similar to those of a termed “hard Brexit”), and what businesses can do to minimise any risks.

Contractual agreements

Data protection

Employment

Intellectual property

Supply chain