Food Update - July 2008
FOOD UPDATE - July 2008
Welcome to our latest update for the food industry. You will find a snapshot of some of the key legal developments facing businesses in the food sector.
For those of you that employ temporary labour, agreement has finally been reached on legislation covering the rights of agency workers. We are interested to hear from you on the average length of time you employ agency workers and whether the 12 week period agreed is reasonable.
And with major food retailer M&S launching ‘Plan A’ - what impact are environmental concerns having on your business? The FSA are encouraging food manufacturers to find natural alternatives to artificial additives and colourings and our property round-up considers ‘Green Leases’.
Finally, if you are considering selling your business the chancellor has some good news in the form of ‘Entrepreneurs’ Relief’.
For articles on all these topics and more, read on and if you would like to discuss any of the issues raised please contact us.
Realising the fruits of your labour
Is this the end of artificial colourings?
Keep your insurers informed!
Green leases
Parking nightmares
Agency workers status finally resolved
Realising the fruits of your labour
Entrepreneurs’ Relief - good news if you are considering selling your business.
In response to lobbying, the Government has introduced the new “Entrepreneurs’ Relief”, which allows the first £1m of lifetime gains on the disposal of a business to be taxed at 10% (a saving of up to £80,000). Gains over £1m suffer CGT at 18%.
An individual may use Entrepreneurs’ Relief more than once, up to a cumulative lifetime total of £1m of capital gains. Conditions must be satisfied. Briefly, it applies to individuals making capital gains on the sale of:
1. Whole/part of a business carried on by them (alone or in partnership) for at least one year prior to sale; or
2. Assets used in their business (as a sole trader or in partnership) where the business has ceased (provided the assets were used in the business at the time of cessation and are sold within 3 years of cessation); or
3. Shares or securities in their personal trading company - the individual must be a director or employee of the company and must own at least 5% of the ordinary share capital and voting rights of the company for at least one year prior to sale. No relief is available for investment companies.
So, Entrepreneurs’ Relief can be very useful for owners of small and mediumsized businesses and employees who get shares (if they reach the 5% hurdle).
This is an overview and specific advice should always be taken. To find out more please contact Bob Neal on 0115 901 5599 or e-mail: bob.neal@freethcartwright.co.uk.
Food additives - Is this the end of artificial colourings?
FSA call for voluntary phasing out
Last month the European Food Safety Authority (EFSA) issued its opinion on a recent study into the effects of artificial colourings and the preservative sodium benzoate on children’s behaviour.
This study had suggested a link between the additives tested and hyperactive children. The additives tested were:
Sunset yellow (E110)
colouring found in squashes
Carmoisine (E122)
red colouring in jellies
Allura red (E129)
orange/red food colouring
Tartrazine (E102)
colouring used in lollies and fizzy drinks
Ponceau 4R (E124)
red colouring
Quinoline yellow
These colourings are all found in many products such as sweets, confectionery, processed food and takeaways.
The EFSA’s assessment showed that although the study provided limited evidence that the mixture of additives tested had a small effect on the activity and attention of some children, the effects were not consistent for the two age groups and for the two mixtures used in this study. Due to the inconsistencies and other uncertainties and the inability to attribute the behavioural effect to any additive in particular, the study did not provide any basis for altering the acceptable daily intake for the additives concerned.
However at the April Board Meeting of the Food Standards Agency, Board Members explained that as EU legislation would take many years to come into force, they would like to see a voluntary “phasing out” of these colours as soon as possible.
Adding that as there were no nutritional benefits from the additives, there would be no cost or risk to the child in removing them from their diet.
For more information please contact Lisa Gilligan on 0116 248 2596 or e-mail lisa.gilligan@freethcartwright.co.uk.
A recent case serves as a useful reminder of the ongoing requirement to disclose material changes in the use, occupation and operation of your business premises to your (or your landlord’s) insurers. It was a condition of a property owner’s insurance policy that he notify the insurers of any material changes in the facts stated in his proposal form. The owner knew that the sprinkler system had stopped working (it had in fact been switched off by the occupying tenant and the water supply had been disconnected due to the tenant’s failure to pay its bills) but didn’t inform the insurers, who refused to pay out after a serious fire at the property.
How green is your Valley? Green leases
Sustainability and energy reduction are likely to be the main points of focus for the property market in the future. We will probably hear the phrase ‘green lease’ more and more frequently - so what is a green lease?
The concept is new and there isn’t an industry definition yet, but a green lease can basically be described as one which regulates a building’s operation, use, maintenance and management with the objective of reducing that building’s carbon footprint.
As a commercial occupier, you may already have your own corporate social responsibility policy or ‘green’ requirements when it comes to business premises. Developers are likely to respond and landlords will demand greener buildings let out on greener terms.
Practical, operational effects might be:
• Tenants paying reduced rent if the landlord fails to maintain a specified energy rating for a building
• Tenants reducing outgoings by having utilities separately metered in multi-occupied buildings
• Landlords modifying and maintaining plant and equipment to ensure energy efficiency
• Tenants’ alterations to be carbon-neutral or energy saving, including fitting out with recycled or recyclable materials
• Tenants encouraged not to partition premises in such a way as to cause air conditioning systems to use more energy or be less efficient
• Green improvements carried out by tenants to be disregarded on rent review
The market for green leases is untested. It remains to be seen whether green obligations will take off and whether landlords will reward tenants for low carbon behaviour.
If your premises are on an industrial estate, you’re probably all too aware of parking issues, particularly if you or your neighbours operate a business round the clock. There is always a high demand for spaces, especially first thing in the morning. Spaces fill up early, leaving no room for staff and visitors arriving during the day, people have to park on the access roads and congestion ensues.
Landlords or managing agents can often impose regulations and a lease will usually require any rules to be reasonable. The Court of Appeal has recently held that a scheme introduced on an industrial estate (primarily banning overnight parking) was not unreasonable even though the impact and cost adversely affected some tenants and not others.
The flexible labour market - agency workers status finally resolved
The Government, TUC and CBI have at long last managed to reach an agreement on legislation in respect of the rights of agency workers. This will have a significant impact on the food sector in view of the high proportion of workers in the sector employed through agencies.
The area has been controversial because of its impact on the availability of a flexible workforce to meet peaks and troughs of labour demands. The Government was committed to working to introduce legislation to implement an EC agency workers’ directive and indeed there was a private member’s bill covering much the same ground whilst the Government was consulting the TUC and CBI.
Under the agreement now reached agency workers will be entitled to equal treatment with comparable permanent workers but only after 12 weeks of employment. Importantly “equal treatment” will be defined as “at least the basic working and employment conditions that would apply to the workers concerned if they had been recruited directly by that undertaking to occupy the same job”. Crucially, employers will not have to make the same pension and sick pay provision for their agency workers as they do for permanent staff.
The government sees the agreement as an effective balance between what John Hutton described as “our twin objectives of flexibility for British employers and fairness for workers”. He believes that the arrangement will avoid putting jobs at risk whilst leaving in place a valuable route into employment.
The CBI acknowledge that the solution is not perfect but is “the least worst option”. They calculate that by only giving rights to workers after a 12 week qualifying period will mean that half of all agency assignments will be unaffected and since occupational benefits are excluded the burden on employers will not be as heavy as had been feared.
Additionally, they believe this will allow the EU agreement to retain the working time hours opt-out.
The Government has undertaken to review the agreement in the light of experience “at an appropriate time” without committing themselves to when that time will be! We have not been able to discover whether the CBI’s claim that half of all agency assignments are less than 12 weeks applies specifically to the food sector but we would be interested to hear of reaction from those in the sector, particularly on the actual effect in the light of experience.
To discuss this development please contact Joanne Kay, from our Employment Team on 0115 936 9383 or e-mail joanne.kay@freethcartwright.co.uk.
For an informal chat, please speak to one of our specialists (details below):
Karl Jansen, Cumberland Court, 80 Mount Street, Nottingham NG1 6HH
Tel: 0845 634 9780
Fax: 0845 634 9803
karl.jansen@freethcartwright.co.uk
Mike Copestake, Floor 2, West Point, Cardinal Square, 10 Nottingham Road, Derby DE1 3QT
Tel: 0845 634 9791
Fax: 0845 634 9804
mike.copestake@freethcartwright.co.uk
David West, One Colton Square, Leicester, LE1 1QH
Tel: 0845 634 9798
Fax: 0845 634 9805
david.west@freethcartwright.co.uk
This update is only a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist advice should be sought from a member of the Freeth Cartwright Food Team in relation to any queries that may arise.