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Beyond Brexit: Five legal issues UK food firms need to protect against in 2017

Post a commentBy Peter Cusick , 16-Dec-2016
Last updated on 16-Dec-2016 at 11:11 GMT2016-12-16T11:11:36Z

Watch your back: Cusick predicts a rise in international disputes between food exporters and their customers as firmks seek new global markets. © iStock/Adrej_k
Watch your back: Cusick predicts a rise in international disputes between food exporters and their customers as firmks seek new global markets. © iStock/Adrej_k

The year ahead will present UK food companies with a range of major legal challenges over and above the fallout from Brexit, according to leading food industry lawyer Peter Cusick.

“Whilst the impact of Brexit on food prices and labour supply is grabbing many of the headlines, there are several looming issues that could catch-out unprepared food businesses in the year ahead,” said Cusick, joint head of the food and drink team at specialist law firm Roythornes. 

Here are five major issues food firms need to watch out for:

EU ignorance

Peter Cusick

Many small food businesses may be tempted to ignore EU regulation in the mistaken belief that the rules no longer apply once Article 50 is triggered.

This would be a grave error.  Just because we are planning to leave the EU, doesn’t mean that food companies can ignore the regulations.

Most EU regulation has been adopted as UK law and is likely to stay in force even when the UK finally leaves the EU. Food firms need to make sure they are complying especially in areas such as labelling.

Nutrition labelling

A clear example of the need to comply with EU rules is the new nutritional labelling regulations that come into force on 13 December.

The new rules cover mandatory nutrition declarations for the majority of pre­packed foods. The rules mean that companies making any health or nutritional claims on pack must be sure they are correct.

One of the areas where businesses may fall foul of the legislation is where they reformulate with a new, possibly cheaper ingredient. Many retailers are trying to work with suppliers to ensure they comply and there is also support from Trading Standards.

However, with the cost of a full laboratory analysis at around £1,500 (€1,783), there is a clear danger that many smaller firms will run the risk and hope they won’t get caught.

Gender Pay Gap reporting

Large numbers of food and drink businesses could unknowingly become subject to new Gender Pay Gap reporting regulations.

The new regulations, currently being finalised, will require companies employing over 250 staff to produce an annual report that sets out the details of the difference in male and female average hourly pay.

© iStock/BartekSzewczyk

Crucially it is not yet clear if the rules, due to come into effect next spring, will affect food companies that use large numbers of casual or zero hours workers and which therefore may fall into the 250 plus category.

As well as any differences in hourly pay, affected companies will have to report on the number of men and women in each of four pay bands which cover the range of pay rates across the whole workforce. Plus, details of bonus payments and what proportion of men and women receive them.

Food Fraud

Increasing input charges will put pressure on food producers to cut costs and deliver value. In these circumstances, less scrupulous manufacturers will be tempted to cut corners in areas such as food hygiene, product testing, pest control and supply chain compliance.

There will also be opportunities for an increase in food fraud as criminals try and infiltrate the food supply chain, offering lower cost alternatives to established suppliers. Companies with extended international supply chains may be particularly vulnerable.

A review by the Food Standards Agency (FSA) has already identified that The National Food Crime Unit (NFCU) should be given more powers and resources to investigate food crime. The review, which began in August, recommended the NFCU be made into an “arms-­length body” of the FSA, with the power to make day­-to-­day law enforcement decisions.

Export disputes

Food firms looking to find new global markets for their goods need to make sure they don’t get ripped-off.

The government signalled its intent to boost UK food and drink exports in October with the announcement of the new International Action Plan for Food and Drink which is designed to boost the sector’s exports by £2.9 billion (€3.4bn).

However, it’s one thing to find an export market and another thing entirely to get paid for your goods. There is likely to be a growing number of international disputes between food exporters and their customers. International litigation is extremely costly, so companies seeking overseas markets need to protect themselves by seeking sound contractual advice, otherwise they risk serious financial losses.

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