After all the mince pies and leftover sandwiches are consumed, you've hit the Boxing Day sales hard and it's back to work, you're going to have to start properly prepping for the new year - which is just days away.
In our never-ending quest to keep Scotland's business leaders up to date and educated, Insider asked the policy wonks at some of the nation's top law firms to lay out what might be the most pertinent regulatory and policy changes coming in 2023.
So at least you can say something clever-sounding in the first staff meeting back after Christmas...
Industrial action
The latter half of 2022 has seen strikes bring significant disruption across various sectors, including transport, health, education and the postal service – as well as several large companies.
This has prompted the UK Government to consider measures to mitigate the impact of strikes, which will have implications for employers in Scotland and across the UK.
In July, the government increased the maximum damages that courts can award against a trade union when strike action has been found to be unlawful. It also introduced new laws allowing employers to hire agency workers to replace striking staff, reducing the impact of industrial action on some employers.
However, the new laws regarding use of agency workers are being challenged by the unions and the High Court has now granted permission for a judicial review, which is likely to be heard in the spring.
Furthermore, a new bill has been introduced to parliament, which includes a requirement for minimum service levels to be maintained in certain transport services during strikes.
David Morgan, a partner in the employment team at Burness Paull, pointed out that earlier this month, the prime minister also said that he was working on 'tough' new laws to protect people from strike disruption.
“The new statutory code of practice on dismissal and re-engagement - known as ‘fire and rehire’ - is pending too and will be relevant to businesses seeking to change terms and conditions of employment.
“However, workplace tensions are not just impacting those businesses with recognised trade unions,“ Morgan said. “With inflation reaching a 40-year high, many workers are expecting their employers to respond to the cost-of-living crisis by increasing salaries and choosing to leave or becoming disengaged if their expectations are not met.“
The trilogy of legal risks for employers in the current economic climate includes threatened industrial action, campaigns for trade union recognition, and class action 'inducement claims' against those employers who implement pay deals outside of collective bargaining.
“Perhaps more damaging than these legal remedies, we are seeing an increase in 'leverage' tactics being employed by trade unions, including active corporate campaigning against an employer’s key stakeholders - not only their employees, but also customers, boards, suppliers and funders - which are designed to cause damage to the business’s reputation - often using social media - in order to apply pressure.“
Morgan added: “There is little sign that ongoing pay disputes are close to being resolved and it seems further industrial unrest will arise in the new year.
“With the current recession, and considering that many businesses are understaffed, we expect that, rather than redundancies, employers may have to consider restructuring or changes to terms and conditions - likely salary reductions or reduced benefits - next year in order to reduce costs, whilst retaining required staffing levels, to remain viable.
“In that event, employers will need to tread to carefully and follow consultation requirements to avoid employment tribunal claims.“
Deposit Return Scheme
The Scottish Government's Deposit Return Scheme (DRS) introduces mandatory compliance obligations for producers, importers, retailers and wholesalers of all drinks sold in Scotland in single-use containers. The DRS applies not only to businesses trading from Scotland, but also those trading from elsewhere in the UK that supply to the Scottish market.
The Deposit and Return Scheme for Scotland Regulations 2020 cover all alcoholic and non-alcoholic drinks products packaged in a single-use container made from PET plastic, glass, steel or aluminium sized containers between 50ml and three litres and that are first marketed or offered for sale to consumers in Scotland. The DRS therefore covers everything from a fizzy drink can to a bottle of whisky.
At the moment, the key dates to be aware of are:
- 1 January 2023 - producers will be able to register with SEPA.
- 1 March 2023 – all registrations must be received before this cut-off date.
- 16 August 2023 - the DRS will go live.
However, some further amendments to the DRS are likely to be brought forward. On 15 December, Minister for Green Skills, Circular Economy and Biodiversity Lorna Slater provided an update to the Net Zero, Energy and Transport Committee reducing producer fees for glass, PET plastic and metal containers respectively and reducing the day one payments for producers using UK-wide barcodes.
Initially only the largest grocery supermarkets will be obliged to provide a take-back service; all other businesses will be exempt. This obligation on those supermarkets will be phased in, with a date set for take-back to be available to the general public in 2025.
Zero Waste Scotland has also updated the Return Point Exemption application forms and online guidance to make it easier for retailers to apply for an exemption and to streamline the process for hospitality providers.
A final decision by The Treasury on the VAT treatment of DRS deposits is also still awaited.
Caroline Colliston, DWF's executive partner in Scotland, said: "The DRS and its go live date of 16 August 2023 presents one of the biggest challenges to be faced by drinks producers, wholesalers, hospitality and retailers in Scotland in the coming year.
"The significant costs and logistics impact alongside uncertainty caused by an ever evolving set of guidance and application of the rules is deepening the impact.
"Consumers may also face a restricted range of products on offer from some producers until the deposit return scheme logistics settle down," she continued, adding: "The potential unintended consequences to those in the waste sector due to the award of a single contract to a single provider of backhaul services will also present economic challenges in that sector and ultimately its customer base.
"All in all, from a DRS perspective, 2023 is looking like it could be a game of spin the bottle with the players not quite sure where the bottle will land and what their obligations will look like."
Alcohol promotion
The Scottish Government is also currently consulting on proposed changes to the advertising and promotion of alcohol.
These proposals include the end or significant restriction of alcohol promotion in both traditional print and online media, TV and radio advertising and sports sponsorship.
As well as affecting media revenue streams, this could have a significant impact on sports teams at all levels that rely on sponsorship income.
Retailers could be also forced to renovate their shop premises to re-merchandise alcohol in specific areas. As a result, licensing authorities could face a large volume of applications to change licence layout plans.
“The consultation runs until March, meaning the earliest a Bill might appear is the autumn session of the Scottish Parliament,” noted Andrew Hunter, partner and head of licensing at Harper Macleod. ”Although this might mean that there is not direct impact until late 2023 or early 2024, business that may be affected may consider it wise to contribute to the consultation to ensure their views are properly heard.”
National Planning Framework 4
Delayed by Covid, the National Planning Framework 4 (NPF4) is expected to be adopted in early 2023.
NPF4 sets out Scotland’s planning strategy to 2045, and the Scottish Government have put the transition to net zero at the heart of national policy. Signalling what is to come, Minister for Public Finance, Planning and Community Wealth Tom Arthur commented when introducing it to the Scottish Parliament that a net zero Scotland will look very different to the Scotland of today.
Craig Whelton, a partner in the planning and compulsory purchase unit at Burges Salmon, who leads the firm's Scottish planning team from its Edinburgh office, reckons this is evidence of new policies on energy.
"Renewable energy developments and related grid infrastructure will benefit from strong policy support – and will be classed as ‘essential infrastructure’.
"Onshore wind can often prove controversial, with schemes rejected because of concerns over landscape and visual impact," he continued. "While NPF4 retains protection for the national parks and national scenic areas, the positive support for development that helps address climate change will likely see schemes proposed in areas that had hitherto been seen as 'no go'."
Whelton added: "During 2023, we will see the extent to which the policy intentions of NPF4 will prevail over objections to schemes and if it represents a genuine shift in position.
"It will undoubtedly give rise to some interesting and challenging decisions for local councils and Scottish ministers."
Requesting flexible working
Since June 2014, all employees with 26 weeks' continuous service have had a right to request to work flexibly.
On 5 December, the UK Government confirmed that this qualifying period is to be removed, permitting employees to request to work flexibly from day one.
The experts from law firm Brodies stated that this is a significant change - it has been suggested that making flexible working more accessible will allow an additional 2.2 million people to enter the labour market, with 91% of consultation respondents being in favour of it.
A few of the other changes to the flexible working request process which are also laid out in the UK Government's response to the consultation are:
- Employers will have to show that they have consulted with the employee and considered alternatives to the requested proposal before rejecting a flexible working request;
- Employees will be able to make two statutory flexible working requests in a 12-month period (an increase from one at the moment);
- And employees will no longer have to explain in their request the effect of the change on the employer, and how that might be addressed.
The UK Government has not yet provided a timeline for these changes, but has said they will be brought forward 'when parliamentary time allows'.
Online Safety Bill
The Online Safety Bill, which is expected to be passed by parliament and come into force in early 2023, is the UK Government’s initiative to set up a new regulatory regime to address illegal and harmful content online.
The scope of the new legal duty of care is very broad, applying to online service providers that host user-generated content, facilitate public or private online interaction between users, or provide search engines across different websites. It will apply not just to giants like Twitter, Tik Tok and Google, but to a wide range of internet services – including many Scottish businesses.
Any business or organisation that provides online services allowing user content sharing or storage - dating apps, instant messaging tools, search engines, online marketplaces, and even video games that allow user interaction - will be affected.
Callum Sinclair, a partner and head of technology and commercial at Burness Paull, reckons that navigating the fine line between freedom of speech and prevention of online harms is a tricky balance, which is why the legislation has been subject to so much scrutiny since it was first introduced in 2019.
Indeed, the current draft of the Bill seems unlikely to be the final version.
"The government has indicated that it anticipates further amendments will be made at later stages of the bill’s passage, which creates uncertainty for affected businesses, and online service providers should review guidance from the Department of Culture, Media and Sport that is intended to help platforms take steps now, both to keep users safe and to comply with the legislation once it is in effect.
"Ofcom is set to be the regulator and its enforcement powers will include the ability to issue fines of £18m or 10% of global annual turnover (whichever is the higher), apply to court for business disruption measures like blocking non-compliant services, and issue notices requiring online service providers to use accredited technology to identify and swiftly take down content that is in breach of the legislation."
Sinclair said that compliance for organisations in the bill’s scope will be a challenge.
"Under what the government is calling a 'triple shield' of protection, online service providers will be legally required to remove illegal content, take down material that breaches their own terms of service, and provide users with tools to give them greater control over the content they see."
There is also the international landscape to consider. Scottish online service providers with global users will need to bear in mind that other countries and jurisdictions are also passing online safety legislation - the EU Digital Services Act and the Australian Online Safety Act - so in a relatively short space of time, the sector is transitioning from little or no regulation to highly complex and potentially conflicting regulation, globally.
"However, with an ethics-by-design approach, and the right advice, affected businesses should be able to not only navigate the Online Safety Bill, but gain competitive advantage by embracing its purpose and principles," Sinclair added.
UK subsidy control regime
On 4 January 2023, the Subsidy Control Act 2022 and the regulations which support it will come into force. This is the UK's long-term replacement for the European state aid regime, to regulate subsidies provided by public bodies to businesses.
The UK Government's aim in preparing the new law has been to 'permit public bodies to support viable businesses quickly and simply, delivering good value for taxpayers while ensuring that businesses can help deliver economic growth'.
The intention is that final streamlined routes will be published, laid before MPs at Westminster, and available for use by public authorities at the start of the new year.
Freedom of information in Scotland
There are currently two consultation exercises running in respect of possible changes to the Scottish freedom of information regime, closing in February and March 2023.
The first is a consultation on a bill proposal by Katy Clark MSP in relation to a potential Scottish Parliament Member's Bill and the second was launched by the Scottish Government.
Brodies argued that it would be worthwhile for businesses which have contract with public bodies to consider the questions in both consultation exercises, particularly those that relate to: the bodies covered by the freedom of information legislation and ensuring the right to access information is reflective of changes in how public bodies deliver services, e.g. through ALEOs and under contracts with the private and third sectors.
The law firm also suggested questioning the definition of the term 'information' and what this should cover, alongside exemptions to the obligation to release information and whether those should be curtailed; in particular the commercial interests exemption.
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