Eversheds Food and Drink SectorSeminarAdvice and guidance with real biteParmjit Singh, Head of Food and Drink SectorEversheds LLP4 October 2011
Food & Drink Annual SeminarChanging your Operational SpaceLisa Barge & Wie-men Ho, Eversheds LLP4 October 2011
Changing your Operational Space• People – Managing Redundancies – Redundancy selection criteria – Agency Workers – Implementing pay cuts• Property – Sale – Getting out of leases – Residual liabilities
Changing your Operational Space• Managing Redundancies – Selection – Consultation – Alternative employment
Selection Pools• Disability Discrimination & Reasonable Adjustments – Lancaster -v- TBWA Manchester UK EAT – Employee suffered from panic and social anxiety disorder – 3 selection criteria focused on communication skills – Does an employer have a duty to make reasonable adjustments to redundancy selection criteria applied to a disabled employee?
Selection Pools• Bumping Redundancy – Fulcrum Pharma (Europe) Ltd -v- Bonassera and Other – Importance of considering whether a redundancy pool should be constituted on a “vertical” rather than a “horizontal” basis – Onus on employer to raise issue
Consultation• Age Discrimination and Consultation – Woodcock -v- Cumbria Primary Care Trust – Does it amount to age discrimination to dismiss someone without proper consultation so that the notice period expires before the employee qualifies for enhanced pension payments? – Considering the defence of justification
Collective Consultation• In what circumstances can employer can treat employee representatives as elected without holding a formal ballot – Phillips -v- Xtera Communications Ltd – Number of candidates for employee representatives in a collective redundancy situation exactly matches the number of vacancies does the employer still have to hold a ballot?
Alternative Employment• Regulation 10 of the Maternity and Paternity Regulations• Alternative employment and redundancy of employee on maternity leave• Trial periods - Optical Express Limited -v- Williams
Agency Workers and Redundancy Laws• Obligation to inform and consult in a collective redundancy situation will include information about agency workers• Access to information about vacancies
Alternatives to Redundancy• Reducing employee headcount• Work stoppages• Pay Reductions• Secondments• Early Retirement
Sale Options• Sale• Sale and Leaseback Owner Buyer of Freehold (Landlord) Lease back to original owner (Tenant)
Getting out of LeasesFlexibility Timing•Bargaining Power •Critical?•Strength of Legal Breaks •Flexible on Position Timing?•Ability to Commit •Cost of delay•Branch Performance s.25/ Landlord s.26/Litigation Costs Breaches s.27 Strategic Importance•Cost/Benefit •Consider•Recoverability Alienation Surrenders•Streamlining •Quickest Route to exit?
Break Options Drafting Service Conditionality Loose Ends • Insurance • By when do the conditions need• Correct Parties • Vacant to be complied Possession • Method with?• Searches • Return of Lease • Place • Use of• Calculation of correspondence Dates • Return of Keys • Timing to put landlord in a more difficult• Interpretation • Dilapidations position • Confirmation
AlienationHow to make the best application The Application The Response• Compliant with 1988 Act • Is it in time? And does it comply with the• Includes undertaking 1988 Act?• Encloses references/accounts • If not – you may be able to proceed• Warns of consequences without consent• Seeks to obtain consent via a signed • Implications/risksletter. The Outcome The Proceedings• Consent obtained; or • Fixed fee• Issue proceedings; or • 3-4 months if part 8 claim• Proceed anyway. • Create tactical pressure • Can recover damages.
Landlord BreachesPossible (usually tricky) optionsRepudiatory breach by Landlord e.g. derogation from grant or breach of quiet enjoyment Has the Lease been affirmed? No Yes Tenant may be able to terminate the Lease
Residual Liabilities – Dilapidations Injunctions Damages Forfeiture Re-Entry to Undertake Works • Is notice validly served? • Leasehold Property • Leasehold • Can some of (Repairs) Act Property the work be 1938? (Repairs) Act excluded? 1938? • Can the• Rainbow v • Can entry be landlord show • S.146 LPA 1925 Tolkenhold refused? that there is a diminution in • Waiver • Can the value to its landlord be interest? • Right to relief deterred based (Section 18 upon the LTA 1927) practical difficulties?
Key Legislation• Section 2 HSWA 1974• Section 3 HSWA 1974• Regulations Duties flow from the main legislation for individual offences and for organisation specific criminal offences
Qualified Duty• Regulation 40: – …it shall be for the accused to prove (as the case may be) that it was not practicable or not reasonably practicable to do more than was in fact done to satisfy the duty or requirement…
What is reasonable practicability?• Balancing exercise• Risk – what is the potential for harm and the chance of it occurring?• Forseeability – the more forseeable, the graver the offence• Ultimately only the Court can decide…
Successful Health and SafetyManagementThe Core Elements
HSG 65• “…organisations need to manage health and safety with the same degree of expertise and to the same standards as other core business activities, if they are to effectively control risks and prevent harm to people.”
HSG 65• Current guidance• Consultation on proposed changes to HSG 65
Core Elements of Management System• Plan – determine your policy and plan its implementation;• Do - organise and implement;• Check – measure performance;• Act – review performance. What are the lessons learned?
PitfallsWhat will prevent the system from working as itshould?
Pitfalls – low level• Policies and procedures inadequate• Training not up to date• Culture amongst employees of not following procedures• Monitoring breaks down – not a localised failure• Internal/external audits not acted upon• Minutes and other corporate documents tell a poor story• Previous similar incidents – no lessons learned
Pitfalls – high level• Poor industrial relations - where to find reliable witnesses• Customer/publicity aversion - a commercial factor but often important• Cost v prospects of success• Perception of harm to relationships with food authority/local EHOs
Health and Safety Offences 2004/2005Penalties imposed by the courts following work-related fatalitiesYear of verdict Total penalty Average penalty Average penalty per per case conviction1999/00 £1,618,250 £24,896 £16,6832000/01 £1,577,250 £21,030 £13,5972001/02 £4,376,300 £37,727 £24,5862002/03 £2,387,137 £31,410 £23,1762003/04 £3,540,300 £43,707 £27,8762004/05p £2,867,250 £42,795 £29,867Feb-Apr 10 £1,640,000 £136,666 £109,333
Proactive StepsImproving Culture and Commitment
Culture – which is your organisation? Generative Safety is how we do business around here Proactive We work on problems that we still find Calculative We have systems in place to manage all hazards Reactive Safety is important, we do a lot every time we have an accident Pathological Safety? Who cares as long we we’re not caught
Challenge your organisation …• What could go wrong?• Why won‟t that happen? – today? – tomorrow?• What else should we do?• What else could we do?• Are we improving?• Is the safety management system working as it should?
Brainstorming…1. How are you able to demonstrate the company‟s commitment to health and safety?2. How are you ensuring all staff – including the board – are sufficiently trained and competent in their health and safety responsibilities?3 How confident are you that your workforce, particularly safety representatives, are consulted properly on health and safety matters, and that their concerns are reaching the appropriate level?4 What systems are in place to ensure your organisation‟s risks are assessed, and that sensible control measures are established and maintained?5 How well do you know what is happening on the ground, and what audits or assessments are undertaken to inform you about what your organisation and contractors actually do?6 What information does the company collate regularly about health and safety, eg performance data and reports on injuries and work-related ill health?7 What targets have you set to improve health and safety and do you benchmark your performance against others in your sector or beyond?8 Where changes in working arrangements have significant implications for health and safety, how are these brought to the attention of the board?
Proactive Steps1. Review your systems and processes – legal audit?2. Consider training of “senior managers”3. Engage the business in H&S4. Documents and Record Keeping5. Risk assessments6. Culture
Health and Safety Hot Topics• Work at Height• Respiratory risks• Asbestos risks• Managing Contractors
Implementing the new European ruleson labellingElizabeth Hyde, Eversheds LLP4 October 2011
Implementing the new European ruleson labellingThis session will cover:• The Food Information Regulation – what is changing?• The latest on the implementation of the Nutrition and Health Claims Regulation.
The Food Information RegulationWhat is changing?• Minimum font size for • Extension of rules for mandatory origin of food labelling information • Food authenticity• Nutrition labelling • Distance selling• Mandatory information on • Alcohol allergens
Requirements for mandatoryinformationWhat is mandatory information? Article 9• The name of the food• The list of ingredients (extended)• Allergens / intolerances from a prescribed list (eg wheat, eggs, mustard, milk etc).• Quantity of certain ingredients• The net quantity of the food• Date of minimum durability or use by date• Any special storage conditions/conditions of use
Minimum font size for mandatoryinformationMandatory information cont …• Name / business name and address of the food business operator• Country of origin / provenance• Instructions for use• The actual alcoholic strength by volume (beverages containing more than 1.2%);• A nutrition declaration
Requirements for mandatoryinformationArticle 13• Mandatory food information must be: – marked in a conspicuous place – easily visible, clearly legible – cannot be hidden, obscured, detracted from or interrupted by any other written or pictorial matter or any other intervening material
Requirements for mandatoryinformationPresentation - minimum font size• Standard rule - any lower case characters must be equal to or greater than 1.2mm• Largest surface area is less than 80 cm squared the minimum lower case height must be equal to or greater than 0.9mm• Exemptions – glass bottles – small items (largest surface area is less than 10 cm squared – only name, allergens, net quantity and use by date need appear. What about the remaining information?).
Mandatory nutrition labellingRequirements• The nutrition declaration will include: – energy value; and – the amount of fat, saturates, carbohydrate, sugars, protein and salt.• This declaration may be supplemented with details such as starch, fibre etc (as prescribed in the Regulation).• No requirement for front of pack labelling.• Information to be presented in tabular format where possible• Exemptions
Mandatory allergen informationRequirements• Allergens – includes any ingredient or processing aid specifically listed in the Regulation (eg wheat, eggs, fish, milk etc) – the typeset should clearly distinguish the wording and be set out in the list of ingredients – not required where the name of the food clearly refers to the substance or product concerned
Mandatory country of origin/ place ofprovenance labelling Requirements• Mandatory if failure to indicate would mislead• Extension of the rules for origin of food labelling. – fresh, chilled or frozen meat from pigs, sheep, goat and poultry• If the country of origin of primary ingredient differs then: – country of origin of the primary ingredient shall also be given; or – country of origin shall be indicated as being different to that of the food• Implementing rules to be produced within two years of the Regulation‟s entry into force.
Mandatory country of origin/ place ofprovenance labelling cont …Possible future changes• Country of origin labelling could be extended in the future (eg to milk, milk used as an ingredient in dairy products, unprocessed foods, other meats).• Commission to complete an impact assessment.
Food authenticity…Requirements• Food authenticity: – Ban on saying a product does not contain an ingredient if that kind of product never does – eg fat in wine gums – Ingredient substitution made clear on packaging. – Added water and protein made clear on meat and fish products.
Distance sellingRequirements• All mandatory information must be made available before purchase (save for „use by date‟ or date of minimum durability).• All mandatory information must be available on delivery.• Catalogue selling must also make required information clear.
Non pre-packed foodRequirements• Mandatory provision of allergen info• Implications for restaurants• Members States could adopt more stringent requirements and insist that more particulars are highlighted to the consumer (eg full list of ingredients).• Members States may specify how the particulars are to be made available and, where appropriate, their form of expression and presentation.
Future CoverageAlcoholic Beverages• Alcoholic beverages are exempt from the requirements to include: – An ingredient list; and – Nutritional information.• This is subject for review three years after implementation.
Timetable for Implementation• The labelling requirements are to come into effect 3 years after the adoption of the legislation.• The obligations for nutrition labelling will not apply until 5 years after adoption.• Do you comply with nutrition labelling already on a voluntary basis?
Issues• Supply of raw materials change regularly• Practical management of product• Cost and practicality of changing labelling and packaging• Restrict trade• Food costs increase as flexibility diminishes?• Increased bureaucracy for business?• Are consumers benefiting?• Difficult to enforce
The Nutrition and Health Claims EC Regulation 1924/2006 transitions into effect• Nutrition and Health Claims (England) Regulations 2007• Nutrition and Health Claims may be used in labelling, presentation and advertising provided they comply with Regulation 1924/2006.• Claims must not be: – False, ambiguous or misleading; – give rise to doubt about the safety and/or the nutritional adequacy of other foods – encourage or condone excess consumption of food – suggest a balanced diet cannot provide appropriate nutrients etc.
The Nutrition and Health Claims Regulation 1924/2006 transitions into effect• Nutrition claims – include “low in fat” / “high in fibre” etc – Since 19 January 2010 must be listed in the Annex – Annex now includes omega claims – More claims are being added• Health and slimming claims – More complicated – More claims have been added
Nutrition claims If a claim is not included in the Annex?• If a claim is not going to get listed in the Annex – Use a nutrition table instead – Rely on consumer knowledge – Turn to the media
Nutrition claims Future new claims• Forthcoming amendments to the Annex: – “no added sugars” – if sugars are naturally present and are higher than <0.5g/100g or ml must say “contains naturally occurring sugars”. – “no added sodium/salt” – provided it does not contain more than 0.12mg/100g or ml – Reduced [name of nutrient] – reduction at least 30% compared to a similar product. – “now X % less ” claims – must be 15% less energy/fat/saturated fat/sodium/salt/sugars than original product • valid for 1 year after reformulation
Health ClaimsTwo main streams1. „General function claims‟. Well understood by the average consumer and based on generally accepted scientific data (Art 13.1). These describe: - the role of a nutrient or other substance in growth; – psychological and behavioural functions; – slimming or weight control / reduction in hunger.2. „New science, proprietary, children‟s health and disease risk reduction (Arts 13.5 and 14).
Health Claims• Both streams of health claims: – must go through an approval process. – will appear on an approved list of authorised health claims in the Community Register1. General function claims – January 2008 - Member States provided the Community with a list of claims. – EFSA to provide an opinion on each claim with the Commission to consider adding them to the Community Register by January 2010. Deadline not met. – July 2011 EFSA published final set of opinions – Commission to adopt final list (non-botanicals) by the end of 2011.
Health Claims2. „New science, proprietary, children‟s health and disease risk reduction (Arts 13.5 and 14). – Claims are made by individual applicants – EFSA considers the claim and produces an opinion – Opinion is then referred to the Commission Standing Committee
Practical application - health claimsIf the claim is not approved• Make a nutrition claim – and rely on consumer knowledge and the media• Re-apply, making a better case• Conduct fresh research and then re-apply• Find a new proposition to market the product to the consumer• Go to court to challenge to EFSA/Commission – procedural errors – challenge on basis of free speech (cf USA)• Use other routes to continue to make the claim
Health claims - Using other routes• Background: – NHCR applies to “nutrition and health claims made in commercial communications” (Art. 1.2) in the labelling, presentation and advertising of foods placed on the market in the Community” (Art. 3)”
Health claims - Using other routes• The media – They can carry articles which make the claims – But • possible risk if what they do is regarded as “presentation” or “advertising” or “commercial” • associated advertising must avoid making the claim • labelling cannot make the claim – Is the act of providing information to the media a “commercial communication presenting or advertising the food”?• Where the product is placed in the shop – Health claim “by association”
NHCR - Implications for the Food Sector• Reduction in the nutrition, • New ability to make a claim slimming and health claims for disease reduction may that can be made stimulate the sale of certain• Impact on unethical foodstuffs and ingredients competitors• May reduce demand for • NHCR may stimulate research certain foodstuffs and directed at developing new ingredients products, new ingredients or• Products will be reformulated new strains of crops so that claims can be made – NB apparent “quasi or introduced patent” for proprietary• Changes to the sales claims proposition for some products
Guide to Better ContractsRachel Newth, Eversheds LLP4 October 2011
Planning – saving time and cost• What we have seen – a shift in contracting approach• Prevention of problems is key• Early relationship challenges• SLA issues• Everything changes over time• You need: – practical management of the problems that will arise – future proofing
Common issues / themes• Early relationship challenges – customer view – Due diligence or post contract verification – Testing before transfer – Need to tie in with termination for superseded contracts – Transformation • timing • remedies for failure to achieve it – Service level / service credit free / ramp up for “bedding in period”
Common issues / themes (Cont…)• Early relationship challenges – supplier view – Has the supplier deceived anyone (BSkyB v EDS) – What if the supplier‟s discover phase is inaccurate? – Objectivity and fairness (is the remedy of any issue determined by the customer?) – Difficult/incumbent supplier contracts – Mitigating early phase risks (no service levels or credits, etc.)
Managing the contract• Letters of Intent• What are you buying? – Description of the Services is key – Importance of the project language• Services Levels – drive performance but keep it simple!• Remediable action plans
Managing the contract (Cont…)• Change Control Procedure – Importance of clear procedure – How will costs be calculated?• Governance – tie into the CCP?• Step – in• Variations
Planning for termination• Who wants to terminate?• Consider the various termination rights• Analyse the impact of each termination trigger – risk matrix• How long do you need? Different for each trigger or e.g. between 0 – 180 days?• A specific right to terminate for breach of service levels – otherwise risk of remediable breach relief applying
Embracing social mediaAndrew Terry, Eversheds LLP4 October 2011
What do we mean by social media?• A “conversation” v “one-way traffic”• Wide ranging: – Social and business networking sites • e.g. Facebook, LinkedIn, MySpace, Bebo – Blogs: a “web log” • e.g. Twitter, Blogspot, Square Space – Digital media sharing • e.g. YouTube, Flickr, Slideshare – Wiki• BUT much overlap and rapidly changing• AND your own website
Areas of corporate risk• Another means of corporate communication BUT lack of control, brevity and casual use increase reputational risk: – defamatory comments – misleading advertising – disclosure of private information – employee misconduct• Manage by: – adopting appropriate internal policies – reviewing regularly – devoting adequate resources – complementing established marketing
Employee social media policies• Risk of abuse, data leaks, time wasting• Issues can still arise if comments out of hours and on own equipment• Need clear policy for misconduct and consequences of breach• Adequate training and agreeing social media (and email) “etiquette”
Third party comments• Monitor third party sites for damaging comments and IP infringement• Monitor sites/content under your control (even though you may lose “intermediaries” defence)• Identify and communicate with disaffected customers• Internal response team• Legal intervention – Defamation law – Notice-and-take-down procedures – Privacy rights
Defamation• Wide protection – any statements which make readers think worse of a person or organisation• Publication• Balance of power in Claimant‟s hands• Defences available (justification, fair comment, qualified privilege)• Aim – vindication (damages, apology, retraction, costs)• Clear potential for vicarious liability
Notice-and-take-down procedures• Defamation actions: author, editor, publisher – Identifying the author – Likelihood of relief against bloggers etc – Position in meantime• Role of ISPs and other “intermediaries” – E-Commerce Regs 2002 (Reg.17-19) - defence for mere conduit, caching or hosting if no actual knowledge – s. (1) Defamation Act - if not an author, publisher etc and no reason to believe defamatory – May lose protection if have editorial control• Put on notice (including for IPR infringers)
Privacy rights• Right to respect for private and family life, home, health and correspondence – Article 8 ECHR (1) Is it private information? (2) Is there a reasonable expectation of privacy? (3) Is there a genuine public interest?• “Private Information” – emotional relationships / family / friends – job performance – business information• Injunctions v “Super Injunctions”
ASA : online remit extension“Advertisements and other marketingcommunications by or from companies,organisations or sole traders on their ownwebsites, or in other non-paid-for space onlineunder their control, that are directly connectedwith the supply or transfer of goods, services,opportunities and gifts”• Primary intent is to sell something though not necessarily immediately• Has it appeared in the same or very similar form in third party space?• New sanctions – enhanced name and shame, removal of adverts
ASA : food & drink• 2010 - 3rd most complained about sector• Dedicated sections of CAP/BCAP Codes (Rules 13/14)• Special restrictions for HFSS• Reflect wording and requirements of EC Regulation 1924/2006 on Nutrition and Health Claims• General health claims – grace period until Community Register is up and running then must be accompanied by approved health claim• Nutrition claims - as per the Annex to the Regulation• But no “immunity” - all adverts will still be assessed and interpreted by ASA
ASA : user generated content• UGC is content created by private individuals – outside remit• But UGC falls within remit if adopted and incorporated within own marketing communications• Customer reviews – inside or outside remit?• Content excluded from remit extension: – press releases and other public relations material – editorial content – natural listings – heritage advertising
Content of social media policies• who writes the copy?• tone of company “voice”?• what is the posting process from inception to publication?• how often do you update or post?• who monitors and how often?• policing in moderation (abuse v negative comments)• correcting mistakes quickly• ensure enforcement is uniform