So, after months of campaigning, the UK has decided to make a Brexit from the EU and it’s time to start considering and dealing with the consequences.
There is bound to be some turbulence but, as a firm, we are working on the basis that all we can do is keep calm and carry on. Knowing our clients as we do, we are sure you will be working on a similar basis. It is difficult to predict exactly how the future will look but we thought we'd try and help by sharing some brief thoughts on where we are (and will be) legally.
At least 2 years without change
The quick answer is that legal change will not come quickly. Once the UK Government triggers the UK’s withdrawal from the EU, we will enter the 2 year period during which the UK will remain subject to EU laws in the same way as it is now.
Post-exit - how the law could change
After exit, the position becomes a little more complicated. The main difference is that the UK government will no longer be bound to follow EU laws.
There are two primary types of EU law - (1) EU directives, which must be implemented in each member state via national legislation (usually by regulations or Acts of Parliament in the UK); and (2) EU regulations, which are directly binding on each member state without the need for further, national implementation.
Directives - EU directives implemented in the UK by regulations or Acts (a few key examples include the Data Protection Act 1998, Commercial Agents Regulations, Working Time Regulations, and various consumer regulations) will remain in effect - they are UK legislation. The UK Government will (theoretically) be free to repeal or vary this legislation but we can't see why any Government would choose to do so in the short to medium term. Also, the Government may be practically restricted in its ability to change such laws if the UK joins the European Economic Area or agrees a free trade agreement, as continuing to trade on such a basis typically requires compliance with a vast body of EU law.
Regulations - There could be a legislative gap caused by EU regulations, which do not require implementation by the UK Government, ceaseing to apply when we leave. Although it isn’t known how this will be handled, the Government may well implement these regulations as a job lot to avoid a legislative black hole. The Government will then be able to pick and choose which to keep, amend or ditch. A good example of this will be the new data protection regulation (the GDPR). This is due to come into effect from May 2018 and, assuming the UK leaves after that date, the GDPR will apply from May 2018 until we leave and will then cease to have effect. So the Government will have to decide what to do (i.e. whether to implement it in full, in part, or do nothing and fall back on the current Data Protection Act 1998 but risk falling out of line with the data protection standards upheld by the EU).
But will there really be a major change?
The reality is that whichever Government is in power on or after exit, we will continue trading with the EU. And to do so, the UK will need to continue complying with a lot of EU laws. This will either be on the basis we have agreed to comply with certain laws as part of an EEA-like deal or just on a practical basis because we are trading there (for example, in the same way US companies have to).
So once we’ve left, we won’t be bound to implement or follow EU laws but it will make sense for the UK’s laws to remain broadly in line with the EU’s as this will make cross-border trading easier and more attractive. In addition, if we’re trading in the EU, we will need to comply with EU law in any event when we do business there. It would not make sense for any Government to spend its time in power butchering the body of EU derived law which has been put into place and which, for the most part, works well.
However, there will be scope for changes to the law for businesses who are not trading in the EU. And the business community will be able to lobby Westminster direct for such changes. It will be interesting to see what changes companies and trade bodies ask for and whether or not we end up with a two-tier approach to legislation.
What do you do now?
Don’t panic. The law will be the same for the foreseeable future and whilst there will undoubtedly be changes post-exit, they are likely to be gradual rather than drastic. As always, it will be important to monitor your compliance with the law (both UK and EU) and check that your legal documents (e.g. commercial contracts) and practices (e.g. data protection processes and procedures) are appropriate.
We will continue help with this process and will keep you up-to-date on developments.
We are also planning some Brexit related blogs which will look at some of the issues above in some more detail.
Please call us if you have any questions.