Retail Matters – Spring 2020


New deal for consumers: What retailers need to[...]
Commercial contracts and international dispute resolution specialists James Crayton and Gwendoline Davies explain that, whatever […]
Commercial contracts and international dispute resolution specialists James Crayton and Gwendoline Davies explain that, whatever happens with Brexit, retailers operating domestically, internationally and online need to know about the EU’s ‘new deal’ for consumers.
What’s new?
The Council of the European Union has adopted Directive PE-CONS 83/19 on the better enforcement and modernisation of European Union consumer protection rules (the Directive), which is intended to improve standards of protection for consumers buying goods or services online and to provide more robust measures against unfair or misleading trade practices [1].
Retailers should note that, whatever happens with Brexit, the Directive is likely to impact their business. Even if the UK has departed the EU and has not decided to implement the Directive or equivalent legislation into UK law by the time the Directive must have been adopted and started to apply in Member States (i.e. mid-2022), any UK-based retailers selling in the EU, including via online cross-border sale contracts, would be subject to the Directive and the EU-wide regime.
What do retailers need to know?
Retailers should familiarise themselves with the Directive and should note, in particular, the following changes:
- Increased fines of up to 4% of annual global turnover or up to at least €2 million for traders in breach of consumer laws.
- Changes to the criteria used to determine the level of penalties for breach of consumer laws.
- A right to individual remedies for consumers when they are harmed by unfair commercial practices.
- Enhanced transparency in online transactions, in particular regarding reviews [2], personalised pricing based on algorithms, paid placement product ranking, and so on.
- New obligations for online marketplaces to inform consumers whether the responsible trader in a transaction is the seller or the online marketplace itself.
- Protection of consumer data in respect of services for which consumers do not pay money but provide personal data (such as cloud storage and e-mail/social media accounts).
- Provision of clear information regarding pricing before a reduction to avoid misleading consumers about discounts.
- Updating of methods of communication to be used by traders (including references to e-mail as opposed to fax), and removing other disproportionate burdens on the consumer at various points before, during and after the purchase transaction.
Walker Morris will monitor and report on key developments. In the meantime, if you would like advice in connection with your contracts, T&Cs, business practices and/or policies in light of changing consumer protection regulation, please do not hesitate to contact James or Gwendoline, who will be very happy to assist.
[1] The Directive amends existing EU directives: 93/13/EEC (unfair contract terms), 98/6 EC (price indication), 2005/29 EC (unfair commercial practices) and 2011/83/EU (consumer rights)
[2] See our earlier article on review fraud for background information and advice

National Minimum Wage – Unintentional breaches
Increase in NMW: What are the risks for retailers? The government has recently announced the […]
Increase in NMW: What are the risks for retailers?
The government has recently announced the latest increase in National Minimum Wage (NMW) rates, which will come into force on 1 April 2020. The rate for over 25 year olds is set to rise from £8.21 to £8.72. This is big news for retailers for two reasons: 1) the majority of retail staff are paid by the hour and the cost of the new rates must be met from somewhere; and 2) retail is one of the key industries of interest to HMRC when auditing compliance with the NMW Regulations [1].
The retail industry has a high volume of hourly paid staff and we are now seeing more retailers paying at or around the NMW rate than ever before. However, compliance is not simply a case of “do you pay the correct NMW rate for the correct age bracket, per hour of a shift?”…
… In fact, the policies and practices that retailers apply to their employees (often innocently) could in fact be resulting in inadvertent breaches the NMW Regulations, leading to some employees receiving less than NMW. According to the Low Pay Commission, around one in five low-paid jobs for those aged 25 or above are paid below NMW.
The issue for retailers is not simply a case of meeting the increased costs (albeit that may be complicated enough, potentially having knock-on effects for employees, such as reductions in premiums and headcount cuts, etc.). In our experience of advising retail clients through HMRC audits, there are a number of areas in which employers risk being caught out.
Areas of compliance risk for retailers
Scenarios in which we have seen employers caught out are:
- Work uniform – If an employee has to supply any part of their own uniform (including shoes) the cost of purchasing these items should be deducted from their pay when calculating NMW. What this means is that the employee must receive the NMW after that deduction.
- Working time – An employee’s ‘working time’ might seem straightforward – you would think that it is simply calculated by reference to the time spent on shift doing the job. However, additional activities at the start or end of a shift can also count toward working hours, such as security searches, team briefings, getting changed for work on site or drug and alcohol tests. The time spent going through these processes is highly likely to be considered by HMRC as working time and should be paid at the NMW rate.
- Similarly, if employees work through an unpaid break, this becomes working time for which they should be paid NMW.
- Salary sacrifice – Where an employee is a member of a salary sacrifice scheme, including schemes for the payment of pension or childcare vouchers, then they must receive the NMW rate after this deduction has been made.
- Seasonal work – Retailers need to consider whether any of their employees work varying amounts over the year, for example to cove, or whether hours are averaged out over a year with pay given in equal monthly instalments. If the latter, retailers must have a contract which HMRC will classify as a “salaried hours” contract [2]. The contract must contain an “ascertainable” number of hours that the employee is expected to work in the year – expressed in the number of hours per month or per year. It should not refer to hours per week (as most do). If the contract is not truly a salaried hours contract, HMRC will not allow for pay to be averaged out over the year. This means that NMW Regulations breaches will occur in months in which an employee is paid less than the hours they have worked, and this is so even if there are other months in which the employee is effectively overpaid.
- Deductions – HMRC will consider that other areas of deduction, even where it is “opted into” by the employee, will reduce NMW pay. Example deductions could include some payments into savings schemes, social clubs and even the purchase of items from the employer where this is done by way of a deduction from pay. Again, NMW will need to be met after these deductions.
- Record keeping – It is a criminal offence under the NMW regulations not to maintain proper records showing that the NMW has been paid by the business for at least the last three years. There is also a presumption that an employee has not been paid the NMW unless an employer can prove to the contrary.
WM Comment
The above are just some of the areas in which we have seen retailers get caught out by HMRC for breaching the NMW Regulations – there are many others. NMW compliance is likely to remain a key area of focus for HMRC and for the press for the foreseeable future. Retailers must remember that the “intention” of the employer is not a defence, nor is ignorance of the detail of the NMW Regulations.
If HMRC come knocking (a fate already suffered by a significant number of retailers) a lengthy and intrusive investigation could ensue, with large financial penalties a real risk. It is therefore sensible to review your employment contracts and practices for compliance now.
Please do not hesitate to contact Walker Morris’ Employment team for further information, advice or assistance.
[1] National Minimum Wage Regulations 2015/621; National Minimum Wage (Amendment) Regulations 2020 (draft)
[2] This relates to HMRC’s definition, which differs from the common understanding of what is “salaried”

“Recycle”, “Don’t recycle”: Simplifying packaging
On-Pack Recycling Label (OPRL), the UK’s leading recycling labelling authority, of which over 400 retailers […]
On-Pack Recycling Label (OPRL), the UK’s leading recycling labelling authority, of which over 400 retailers and cross-sector brands are members, has launched new rules to simplify recycling labels. The majority of packaging will now carry a simple, binary message saying “Recycle” or “Don’t Recycle”, and labels that advise shoppers to “check locally” whether a product is recyclable will largely disappear. The changes are to be introduced by the packaging industry, food manufacturers and retailers in response to concerns that the existing system results in recycling bins becoming contaminated with non-recyclable waste. The idea is that the simplified labelling will assist consumers’ split-second decisions whether to recycle and will ensure that more packaging gets into the recycling system.

Drone delivery: An update for retailers
As retailers started to consider the possibility of drone deliveries, Walker Morris reported last year […]
As retailers started to consider the possibility of drone deliveries, Walker Morris reported last year on some of the legal issues of which drone operators should be aware. Technology and dispute resolution specialist Sally Mewies provides an update as food for thought for retailers.
Retail drone delivery is a reality
All indications are that retail drone delivery is becoming a reality:
- Amazon and Walmart have registered patents in the US which address various challenges associated with drone delivery, such as how parcels can be dropped or deposited without damage; lighting and communications issues; component faults and battery-life, and so on.
- The Federal Aviation Administration (FAA) has granted UPS a certificate which permits the company to fly an unlimited number of drones and which permits a cargo of up to 55 pounds (nearly 25 kg). By way of example, that would be sufficient for a relatively significant grocery order.
- Uber is testing drone delivery, which it expects to have up-and-flying for its food-delivery service by the end of 2020.
… And not just for the retail giants:
- In Iceland, a small group of technology entrepreneurs are operating ‘Aha.is’, an open market delivery service that allows a wide variety of local retailers and restaurants to supply to customers via online orders and drone delivery.
What do retailers need to know?
Reviewing international patent registrations and monitoring the outcome of schemes such as the FAA’s Unmanned Aircraft Systems Integration Pilot Program will help retailers to keep abreast of technical advancements and practical innovations in drone delivery development.
If and when any individual retailer decides that the time is right for it to launch drone delivery, the following is a (non-exhaustive) list of legal issues to consider:
- Whether a retailer will operate its own fleet or contract with third-party drone delivery providers (and, if the latter, on what terms?).
- Compliance with applicable drone regulation/legislation. In our earlier article we explained the key provisions of the Civil Aviation Act 1982 and the Air Navigation Order 2016 SI 2016/765 (the Order), which regulate and place obligations on drone operators and pilots. In addition, updated UK drone regulations came into force on 30 November 2019, implementing a new strict regime of registration and competency requirements in relation to drones weighing between 250 g and 20 kg; and new EU regulations [1], which replace national regulations in all Member States, entered into force on 1 July 2019 and will become applicable on 1 July 2020 (i.e. during the Brexit transition period).
- Flying with care.
- If an operator or pilot intentionally or recklessly hits someone with a drone, liability for battery could arise, which carries both criminal and civil sanctions.
- Intentional or reckless damage to someone else’s property occasioned by a drone could amount to criminal damage.
- Flying a drone without exercising a reasonable standard of care could cause injury to persons or damage to property, giving rise to civil liability in negligence and necessitating the payment of financial compensation.
- Flying a drone over someone’s land without their permission could constitute a trespass, nuisance or, potentially, an invasion of privacy.
- Data protection and privacy. Where a drone has a camera or any other recording/data collection device or capability, compliance with the General Data Protection Regulation will be essential and operators/pilots will need to ensure that any data collection does not amount to an invasion of privacy or harassment.
- Fulfilment and supply chain issues. Where it is envisaged that drone delivery will be used either direct to customers or elsewhere within the supply chain, consideration will need to be given to appropriate terms and exclusions in all relevant contractual arrangements. Matters to take into account will (non-exhaustively) include: delivery failures due to mechanical, technical or communication faults; damage to goods; delays; and so on.
Retailers might therefore wish to start thinking now about what practices, policies and precedent contracts might provide a feasible framework within which they could operate drone delivery.
WM Comment
There is no doubt that technological advances and automation are becoming increasingly prevalent throughout all aspects of the retail industry – from the point of a consumer ordering online, to products being selected and collected by robots and taken from warehouse or store to drone; and from automated stock control/replenishment and artificial intelligence-informed marketing and promotions to the tech-driven smart contracts of the future which may govern the whole of the supply chain and retail delivery process with minimal human involvement. While some of that may be a way off yet, drone delivery already seems set to play an integral part in the retailer of the very near future. If you would like further advice or assistance in relation to the legalities and practicalities involved, please do not hesitate to contact any of Walker Morris’ technology or retail specialists.
[1] (EU) 2019/947 and (EU) 2019/945

Injunctions against protestors (or ‘persons unknown’): Legal and[...]
Why is Canada Goose v Persons Unknown of interest? Parties often seek an injunction when […]
Why is Canada Goose v Persons Unknown of interest?
Parties often seek an injunction when the stakes are high and the pressure is on. Some action needs to be taken or prevented, usually with real urgency, to enable a deal or a development to proceed; to prevent funds being lost or trading disrupted; or to ensure that legal rights are enforced.
Injunctions are a highly effective weapon in a litigator’s arsenal and they can even achieve results when the identity of any wrong-doers or potential wrong-doers is unknown – for example when dealing with trespassers or protestors.
However, as the recent case of Canada Goose UK Retail v Persons Unknown [1] demonstrates, the granting of an injunction will not be taken lightly by the courts. Amid the pressure and the practicalities of injunction litigation, parties must not underestimate the importance of getting the legalities and the procedural aspects absolutely right.
What are the implications?
In the Canada Goose case the High Court refused to continue an injunction, which had previously been granted on an interim basis, against animal welfare protestors outside Canada Goose’s Regent Street store.
The following essential legal and practical implications arise for any business applying for an injunction against persons unknown.
Unlawful conduct
- There must be a real and imminent risk of a tort being committed to justify anticipatory/pre-emptive injunctive relief [2]. Conduct which is merely irritating or inconvenient for the applicant may not necessarily be unlawful and sufficient to found an injunction.
Terms of the injunction
- The terms of the injunction must correspond to the threatened tort and must not be so wide that they prohibit lawful conduct.
- The terms of the injunction must be sufficiently clear and precise as to enable persons potentially affected to know what they must not do.
- The injunction should have clear geographical and temporal limits.
As an aside, whilst a proposed injunction should not be any more wide than strictly necessary, it should, however, be comprehensive. In another 2019 injunction application against persons unknown [3], the successful property owner obtained an injunction which not only restrained further trespass at the site, but also secured removal from YouTube and other websites of footage of the trespass. In a world where everyone with a phone can film and post footage, consideration should be given to requesting a similar order in any case where there is evidence that internet footage of a trespass has encouraged others to do the same.)
Identifying potential defendants
- It must be impossible to name the person[s] likely to commit the tort unless restrained.
- Where the identity of any individuals becomes known, those persons should be added to the proceedings as named defendants as soon as possible.
- The applicant should endeavour to narrow the class of persons unknown, to enable them to be identified so far as possible. In practical terms this could involve describing appearances and/or actions at certain times, adducing CCTV/bodycam footage, etc.
Procedural requirements
- It must be possible to give notice of the injunction.
- In addition, service of the claim form, as well as of any interim injunction, must be properly effected, so as to give all persons potentially affected the opportunity to raise a defence.
WM comment and practical advice
In the Canada Goose case, the terms of the proposed injunction, and the class of persons unknown against whom it was sought, were too wide. The court was therefore concerned that, if ordered, the proposed injunction would interfere with lawful protest and would impact innocent persons. The applicant also fell short procedurally, in that it had failed to properly serve the claim form, as well as the interim injunction order. Any one such error might prompt a court to refuse an injunction.
This case is therefore a cautionary reminder that the courts will not take the granting of an injunction lightly – certainly not against persons unknown, and not even where an earlier interim injunction has been ordered.
In relation to any injunction against ‘persons unknown’, applicants/claimants should focus on the specific actions or risks against which they are trying to guard, and should not try to obtain any wider injunction than is strictly necessary. Applications and notices should use clear, plain English wording and, where possible, should not include legal jargon or terminology.
Applications for injunctions usually arise in pressured situations and there is often real urgency. However, remaining calm throughout the process can help to keep stress levels, and mistakes, to a minimum; as can ensuring that you have an experienced, expert team around you.
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[1] [2019] EWHC 2459 (QB)
[2] known as quia timet relief
[3] Ansco Arena Ltd v Law [2019] EWHC 835 (QB)