Home: Issue 2 2011 › Lead Story › Huge responsibility
Huge responsibility
05/09/2011 | Channel: Information Technology, Hotels - Restaurants, Retail, Manufacturer, Catering, Equipment, Human Resources
With rules and regulations continuing to come in thick and fast, Sarah Whibley summarises some recent and pending legal developments and their possible impact on food sector businesses
One legal issue that ought to have the attention of every company boss concerns a geological consultancy that has the dubious honour of being the first company to be found guilty of corporate manslaughter. The company was fined £385,000 in February 2011.
An employee taking soil samples in a deep pit was killed when the walls collapsed, suffocating him. It was held that the company ignored well-recognised industry guidance regarding entry into excavations. Whatever size business you are, this case demonstrates the importance of having robust health and safety practices for which everyone within the business takes responsibility.
Of more particular relevance to the food sector is the Grocery Suppliers Code of Practice (GSCOP). This was introduced by the previous Government in February last year with the aim of curbing abuses by the supermarkets in their relationships with suppliers.
It contains some welcome measures including: written terms; payments within a reasonable time; no over-ordering of promotionally priced goods; no requirement by retailers for suppliers to contribute to marketing costs, unless agreed as part of the supply agreement; and a ban on retrospective variations of supply agreements (unless such variations are envisaged from the outset).
While the new Conservative administration has signalled its support for GSCOP, the adjudicator to be appointed to enforce the code will not now be in place until 2014, which does not give a lot of comfort to those in the industry. Meantime, suppliers would be well advised to stand up to retailers and demand clear written terms that are GSCOP-compliant.
Possibly less welcome is the pending introduction of the Bribery Act 2010. Originally scheduled to be introduced from 1 April its implementation has been delayed while the Government grapples with drawing up guidelines to help business comply with the new legislation.
The new act consolidates previous law, providing for general offences of bribing another person and being bribed. It will be possible for an individual or a business to commit these offences, and in the latter case, both the business and directors or managers might be liable for prosecution.
Most alarming is the second new offence of failure by a commercial organisation to prevent a bribe being paid to obtain or retain business. Companies will have the heavy burden placed upon them of proving that they have implemented adequate procedures to prevent bribery occurring within or outside of the UK.
An individual convicted of a bribery offence could face a jail sentence of up to ten years or a fine, possibly both. A commercial organisation could expect a fine, potentially unlimited.
So, if you have an agent or employee working for you overseas, think hard about how you are going to monitor their behaviour and make sure that you have taken all reasonable steps to ensure that they have not offered or been offered a little inducement to ease a business deal.
Food sector companies doing business overseas should also be paying attention to new internationally recognised terms governing the sale, movement and delivery of goods.
The new Incoterms 2010 rules reflect the changes that have taken place in international trade since the last version of the rules was published in 2000. Incoterms are commonly accepted trading standards that are widely used across the world and to some extent within the UK domestic market.
Each one determines when risk and title passes to the buyer and they are therefore important in terms of who is responsible for the goods at various stages of the journey from the supplier to the customer.
The revisions have resulted in some significant changes. Most notably, four Incoterms rules have been abolished and two new ones created.
Businesses in the food sector that are importing or exporting products – or moving large shipments around the country – should familiarise themselves with the new Incoterms and incorporate them correctly into their terms and conditions. Failure to do so could leave them exposed to some potentially heavy and unexpected costs – or at the very least a dispute about who is responsible for such costs.
Three further items of legislation – which apply to all businesses but are likely to be of particular significance to the food sector – should also be on a company’s radar.
Two relate to employment. As of October last year the qualifying age to receive the main rate of the National Minimum Wage (currently £5.93 per hour) dropped from 22 to 21. The rate applies even if an employee has agreed to be paid less.
That said, there are lower rates for younger workers (£4.92 for those aged 18 to 20 and £3.64 for 16 and 17 year olds). October’s changes also saw the introduction of a new apprenticeship rate, currently £2.50.
Less straightforward are the new agency worker regulations, which come into force on 1 October 2011. These regulations give wide-ranging protection to temporary workers supplied by agencies, and introduce the concept of equal treatment to that of full-time employees. Workers must be offered the same pay and holiday entitlement as full-time employees. There will be a 12-week qualifying period and large fines will be imposed on those designing arrangements to try and circumvent this period.
Finally
Watch out for the Competition Act 1998 (Land Agreements Exclusion Revocation) Order 2010, which took effect on 6 April this year.
This affects any land agreements (e.g. leases, development agreements) a food sector business may have if they contain covenants that restrict what an occupier can do on that land or that prevent a landlord from carrying out certain acts (e.g. selling a neighbouring property to a competitor).
The new rules are retrospective, meaning they apply to land agreements already in existence. These should, therefore, be examined to ensure that they do not breach Competition Law.
So, plenty of new challenges for the sector, and advice should be sought to protect your business in the best possible way.
Sarah Whibley is head of the food and drink sector team at Kent-based Vertex Law LLP and can be contacted at :sarah.whibley@vertexlaw.co.uk or on 01732 224000.
An employee taking soil samples in a deep pit was killed when the walls collapsed, suffocating him. It was held that the company ignored well-recognised industry guidance regarding entry into excavations. Whatever size business you are, this case demonstrates the importance of having robust health and safety practices for which everyone within the business takes responsibility.
Of more particular relevance to the food sector is the Grocery Suppliers Code of Practice (GSCOP). This was introduced by the previous Government in February last year with the aim of curbing abuses by the supermarkets in their relationships with suppliers.
It contains some welcome measures including: written terms; payments within a reasonable time; no over-ordering of promotionally priced goods; no requirement by retailers for suppliers to contribute to marketing costs, unless agreed as part of the supply agreement; and a ban on retrospective variations of supply agreements (unless such variations are envisaged from the outset).
While the new Conservative administration has signalled its support for GSCOP, the adjudicator to be appointed to enforce the code will not now be in place until 2014, which does not give a lot of comfort to those in the industry. Meantime, suppliers would be well advised to stand up to retailers and demand clear written terms that are GSCOP-compliant.
Possibly less welcome is the pending introduction of the Bribery Act 2010. Originally scheduled to be introduced from 1 April its implementation has been delayed while the Government grapples with drawing up guidelines to help business comply with the new legislation.
The new act consolidates previous law, providing for general offences of bribing another person and being bribed. It will be possible for an individual or a business to commit these offences, and in the latter case, both the business and directors or managers might be liable for prosecution.
Most alarming is the second new offence of failure by a commercial organisation to prevent a bribe being paid to obtain or retain business. Companies will have the heavy burden placed upon them of proving that they have implemented adequate procedures to prevent bribery occurring within or outside of the UK.
An individual convicted of a bribery offence could face a jail sentence of up to ten years or a fine, possibly both. A commercial organisation could expect a fine, potentially unlimited.
So, if you have an agent or employee working for you overseas, think hard about how you are going to monitor their behaviour and make sure that you have taken all reasonable steps to ensure that they have not offered or been offered a little inducement to ease a business deal.
Food sector companies doing business overseas should also be paying attention to new internationally recognised terms governing the sale, movement and delivery of goods.
The new Incoterms 2010 rules reflect the changes that have taken place in international trade since the last version of the rules was published in 2000. Incoterms are commonly accepted trading standards that are widely used across the world and to some extent within the UK domestic market.
Each one determines when risk and title passes to the buyer and they are therefore important in terms of who is responsible for the goods at various stages of the journey from the supplier to the customer.
The revisions have resulted in some significant changes. Most notably, four Incoterms rules have been abolished and two new ones created.
Businesses in the food sector that are importing or exporting products – or moving large shipments around the country – should familiarise themselves with the new Incoterms and incorporate them correctly into their terms and conditions. Failure to do so could leave them exposed to some potentially heavy and unexpected costs – or at the very least a dispute about who is responsible for such costs.
Three further items of legislation – which apply to all businesses but are likely to be of particular significance to the food sector – should also be on a company’s radar.
Two relate to employment. As of October last year the qualifying age to receive the main rate of the National Minimum Wage (currently £5.93 per hour) dropped from 22 to 21. The rate applies even if an employee has agreed to be paid less.
That said, there are lower rates for younger workers (£4.92 for those aged 18 to 20 and £3.64 for 16 and 17 year olds). October’s changes also saw the introduction of a new apprenticeship rate, currently £2.50.
Less straightforward are the new agency worker regulations, which come into force on 1 October 2011. These regulations give wide-ranging protection to temporary workers supplied by agencies, and introduce the concept of equal treatment to that of full-time employees. Workers must be offered the same pay and holiday entitlement as full-time employees. There will be a 12-week qualifying period and large fines will be imposed on those designing arrangements to try and circumvent this period.
Finally
Watch out for the Competition Act 1998 (Land Agreements Exclusion Revocation) Order 2010, which took effect on 6 April this year.
This affects any land agreements (e.g. leases, development agreements) a food sector business may have if they contain covenants that restrict what an occupier can do on that land or that prevent a landlord from carrying out certain acts (e.g. selling a neighbouring property to a competitor).
The new rules are retrospective, meaning they apply to land agreements already in existence. These should, therefore, be examined to ensure that they do not breach Competition Law.
So, plenty of new challenges for the sector, and advice should be sought to protect your business in the best possible way.
Sarah Whibley is head of the food and drink sector team at Kent-based Vertex Law LLP and can be contacted at :sarah.whibley@vertexlaw.co.uk or on 01732 224000.