Coronavirus and the supply chain

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How will this affect supply contracts?

The NFU's legal team has put together a briefing for members - click here to download and read.

If you are concerned about the solvency of the businesses you supply, then you may want to consider seeking shorter payment terms or asking for cash payment on delivery. Given the current situation, it is possible that some of the businesses you supply may ask you for ‘payment holidays’ or extensions on the current payment terms under your contract.

Before you decide whether to extend credit to your buyers, you should consider running a credit check so that you can understand the financial position of the relevant business. It will be a commercial decision for you to make for your business in each individual circumstance; you may wish to agree to extend credit to buyers to ensure you continue your supply relationship with them, but it is advisable to have all of the available information about your buyer to assist you in making that decision.

What about extending credit to buyers?

If you are concerned about the solvency of the businesses you supply, then you may want to consider seeking shorter payment terms, or asking for cash payment on delivery. Given the current situation, it is possible that some of the businesses you supply may ask you for ‘payment holidays’ or extensions on the current payment terms under your contract.

Before you decide whether to extend credit to your buyers, you should consider running a credit check so that you can understand the financial position of the relevant business. It will be a commercial decision for you to make for your business in each individual circumstance; you may wish to agree to extend credit to buyers to ensure you continue your supply relationship with them, but it is advisable to have all of the available information about your buyer to assist you in making that decision.

What are the changes to competition law?

On 19 March 2020, the Prime Minister announced that elements of competition law would be relaxed to “allow supermarkets to work together to feed the nation”. The elements of competition law to be relaxed include allowing retailers to:

  • Share data with each other on stock levels;
  • Cooperate to keep shops open;
  • Share distribution depots and delivery vans; and
  • Pool staff with one another to help meet demand.

Not all elements of competition law are covered. For example there is no mention of allowing the supermarkets to work together to fix prices. The relaxations are focused on areas which will help to maintain the food supply chain and ensure that food and other supplies continue to be available to consumers.

The announcement also suggests that the relaxations will apply only to retailers, so processors and growers are unlikely to benefit from the changes.

New legislation is expected to be laid before Parliament imminently, which will provide further clarity on exactly what will be permitted.

Read the government's announcement at the Gov.uk website here.

What has the CMA said?

The Competition and Markets Authority has issued a statement saying that it realises that competition law enforcement could hinder the ability of businesses to cooperate in order to maintain supplies of essential goods and has welcomed the government’s announcement.

The CMA’s statement also indicated that it has no intention of taking enforcement action against business cooperation or goods rationing that is necessary to protect consumers, even if it is outside the scope of the relaxations. However, it has indicated that it will not tolerate businesses exploiting the situation cover for non-essential collusion, including sharing longer term business strategies. The CMA will be issuing further guidance shortly.

Read the CMA announcement at the Gov/uk website here.

The CMA have produced a briefing which can be read here. 

NFU Cymru Policy Adviser, Dafydd Jarrett, has prepared a briefing that members can read here. 

What does this mean for farmers and the NFU/NFU Cymru?
The current announcements suggest that the changes will be focused on retailers so it is likely to be largely business as usual for NFU Cymru and its members in terms of what is directly allowed, however, this will become clearer when the draft legislation to implement the changes is published.

Members may, however, be contacted by retailers to discuss how they can assist with the long-term maintenance of supply chains, and in some instances collection and distribution arrangements may change, especially if retailers are sharing shelf space.

NFU Cymru staff and members may be involved in discussions about what the agricultural sector, or individual businesses, can do to help to ensure that supply chains are maintained. While these discussions are likely to be acceptable in the current circumstances, it will be important to ensure that the focus is on the maintenance of supply. Price fixing to exploit the situation or placing unnecessary restrictions on goods are likely to result in enforcement action.

Caution should also be used when discussing longer term strategies that extend beyond the period for which restrictions are likely to be in place unless it can be shown that there is a good reason for doing so.

Conclusions

At present, there is very little detail about the relaxations available, so it is impossible to be certain what the implications for members will be. However, we are expecting to see draft legislation in the near future which, along with the guidance from the CMA, should help to clarify exactly what the position is.

The Specialist Advisers at NFU CallFirst (0370 845 8458) can offer free initial legal and professional advice to NFU Cymru members, and can arrange a referral to one of  NFU Cymru’s panel firms of solicitors if further detailed advice is required.

Updated: 23rd April 2020

Will there be a relaxation on drivers’ hours for the delivery of food?

The government has relaxed the EU and GB rules controlling the number of hours drivers involved in the carriage of goods can work before a break is required and the minimum length of breaks taken. 

Who is in scope of EU driver’s hour’s rules? 

In general terms drivers of all vehicles over 3.5 t involved in the commercial carriage of goods are in scope of the rules. There are some important exemptions from the rules e.g.: 

  • Agricultural tractors up to 100km from base 
  • Dual purpose vehicles e.g. Land Rover Defender 

More information on EU driver’s hours rules is available here. 

Who is in scope of GB driver’s hours rules? 

GB driver’s hours rules apply to most vehicles which are exempt from EU rules. There are some important exemptions from GB rules e.g.: 

  • Drivers who always drive off the public road systems 
  • Private driving i.e. not on connection with a job or in any way to earn a living 

More information on GB driver’s hours rules is available here. 

What are the relaxations? 

1. The EU drivers’ hours rules have been temporarily relaxed as follows: 

   a) Replacement of the EU daily driving limit of 9 hours with one of 11 hours 

   b) Reduction of the daily rest requirements from 11 to 9 hours 

   c) Lifting the weekly (56 hours) and fortnightly driving limits (90 hours) to 60 and 96 hours respectively 

   d) Postponement of the requirement to start a weekly rest period after six 24 hours periods, for after seven 24 hours period; although 2 regular weekly rest periods or a regular and a reduced weekly rest period will still be required within a fortnight 

   e) The requirements for daily breaks of 45 minutes after 4.5 hours driving replaced with a break of 45 minutes after 5.5 hours of driving 

Drivers must not use relaxation ‘a’ and ‘d’ at the same time. This is to ensure drivers are able to get adequate rest. 

2. The GB drivers’ hours rules have been temporarily relaxed as follows: 

   a) Replacement of the GB duty time limit of 11 hours with 12 hours 

   b) Replacement of the GB daily driving time limit of 10 hours with 11 hours 

Drivers can only take advantage of this temporary relaxation 5 days in any 7 day period, and must take a rest period of 24 hours within the same 7 day period when taking advantage of this relaxation. 

When do the relaxations come into operation? 

The relaxations started on Monday 23 March 2020 and will end at midnight on 31st May 2020. 

Who can use the relaxations? 

Anyone driving under the EU drivers’ hours rules or the GB drivers’ hours rules and undertaking carriage of goods by road can use the relevant relaxation where necessary. The relaxations are not limited to specific sectors or journeys. 

Using the relaxation safely 

Although the rules have been relaxed driver safety must not be compromised. Drivers should not be expected to drive whilst tired - employers remain responsible for the health and safety of their employees and other road users. 

More information on the relaxation of the driver’s hours rules is available here

What about access to welfare facilities for delivery drivers?

The HSE has received reports that visiting delivery drivers are being refused access to welfare facilities when delivering at customer sites. The HSE has reminded all industries that it is a legal requirement to provide sanitary and washing facilities at work places and failure to do so is an offence. In addition, it is vital that all visitors have the ability to take the appropriate personal hygiene steps to control possible spread of coronavirus.

Frequent handwashing is important to slow the spread of COVID-19. Please see the below tips for ensuring delivery drivers are able to abide by this advice:

  • Ensure access to hot and cold running water
  • Ensure there is plenty of soap available (preferably antibacterial soap where possible)
  • Ensure there are appropriate facilities to thoroughly dry hands after washing, ideally paper towels alongside a bin to dispose of them
  • Some optional steps to limit the spread:
    • Provide delivery drivers with access to hand sanitiser as soon as they arrive on site
    • Where possible, keep doors to handwashing facilities propped open, to limit the number of surfaces needing to be touched
    • Clean down sanitary facilities after each use with an antibacterial cleaner

Last edited: 11:13 on 23 April 2020

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