The Government has published its response to the consultation confirming that it will press ahead with its proposals to devolve powers to extend Sunday trading hours to local councils (or to elected mayors for areas that have them). Currently, large stores, ie those with a net retail sales area of more than 280 square metres, are limited to trading for only six hours between 10:00 and 18:00 on Sundays.
Retailers will be keen to know how they can take advantage of the new rules once they are in force and what the implications of extended Sunday trading hours might be for their businesses. A key issue for some employers will also be the changes to the rights of workers to "opt-out" of working on Sundays.
Importantly, the Government has confirmed that it will be for local councils to determine what Sunday trading hours in individual areas should be. Local councils will be able extend Sunday trading hours throughout their entire administrative area or alternatively, just in specific parts, such as town centres and high streets.
A number of local councils have already indicated that, once the rules are in force, they will not allow out of centre retail parks to open for longer on Sundays in order to support local high streets. Devolving Sunday trading powers will be taken forward in the Enterprise Bill, currently before Parliament.
The Bill is expected to be approved later this year and the Government's press release states that the new powers to extend trading are expected to be introduced in the Autumn.
Key considerations for retailers wishing to extend their Sunday trading hours:
- Balancing the cost: Whilst increased hours may be an opportunity for more sales and a move that has been welcomed by many large retailers and business leaders, this will need to be balanced against increased overheads including staffing and other operating costs.
- National or local approach? Retailers will need to consider if they take a national approach and leave their Sunday trading hours as they are or take advantage of extended hours where this has been adopted by the local council. This may result in an increased administrative burden on retailers, as they would need to manage different approaches in different regions.
- Planning and landlord considerations: A store's Sunday trading hours may also be restricted by planning conditions or obligations. If so, the local council's permission will be required before the store can take advantage of extended trading hours. Where a retailer is occupying a store under a lease, the landlord's consent may be required before any application is made to the local council.
- Licensing: Stores that sell alcohol will need to consider whether their current premises licence restricts the sale of alcohol to the current opening hours on a Sunday. If so, an application may need to be made to vary the licence to reflect the extended opening hours.
- Managing the workforce: Retailers may need to review their contracts and policies to determine whether they contain sufficient flexibility to require their workforce to cover additional hours on Sundays whilst being mindful of the increased rights which"shopworkers" have to opt-out of Sunday working.
We would be happy to discuss how your business can prepare for the new powers that are expected to be introduced in the Autumn. Please contact Patrick Howarth, partner, employment and head of retail. For more information from our specialists in these areas, please also see below.
For many stores, their Sunday trading hours are also regulated by a planning condition. Before such stores can take advantage of the new rules, the retailer must apply to the local council for the condition to be varied or removed. Such applications are given a target date of eight weeks to be determined. This is not a guarantee that the application will be determined within this period. An application will have a right of appeal if the council fails to determine the application by the target date or if it refuses the application.
Restrictions on trading hours may also be contained in planning obligations (known as section 106 agreements), but this is less common. If the obligation is five or more years old, then the retailer may apply for it to be varied or discharged. As with planning conditions, the application will be given a target date of eight weeks to be determined and there is also a right of appeal if the council fails to determine the application by the target date or if it refuses the application. If the obligation is less than five years old, any varying or discharging of the obligations can only be achieved through negotiation with the local council.
James Clark, associate, planning comments: "Retailers wishing to take advantage of the extended Sunday trading hours should start identifying those stores with Sunday trading hours restricted by a planning condition or obligation so they are ready to make any necessary applications once the new rules are in force".
Where you are a tenant you may need to consider whether your lease will be impacted by any changes to Sunday trading and whether you might need to consider obtaining any consents from your landlord.
There could be a keep open clause that might require you to open when legally able to do so. In circumstances where you might not see the merit of Sunday working this provision might force you into opening when you would have preferred not to. Alternatively, your lease might restrict your trading hours and therefore prevent you from taking advantage of Sunday trading. It may therefore be necessary to negotiate with your landlord to deal with any problems that your lease might throw up.
You may also have turnover rent provisions that might be impacted by Sunday trading or where you are based in a shopping centre there could be additional costs imposed by the landlord as a consequence of increased services on a Sunday. These are all factors that need to be considered when working out the merits of the Sunday trading.
Dan Cuthbert, partner, property litigation and retail expert also comments that: "A postcode lottery for where extended Sunday Trading will take place is less desirable than a national uniform policy. However some retailers will see this as at least going some way to levelling the playing field with regards to the competition from online retailers."
A premises licence for the sale of alcohol will usually be restricted to specific hours each day. For retail stores, licensed hours usually reflect the opening hours. If the opening hours for a particular store are extended, any sale of alcohol during the extended hours could be in breach of the premises licence. Any such breach could lead to a review, and possible revocation, of the premises licence.
To amend the licensed hours for the store an application should be made to the local licensing authority to vary the premises licence. Once submitted an application for variation of the licensed hours should be determined within 28 days but there is a risk (especially for stores within a cumulative impact zone or residential area) that the application may go to a hearing and/or be rejected. If the variation application is refused the store will not be able to sell alcohol during any extended opening hours.
Chris Pritchett, partner, commercial and head of business regulation said: "Early engagement with the stakeholders is the key. We would recommend discussing any proposed change in licensing hours with the local authority and potentially the police to flush out any potential issues that may arise. There is likely to still be some morally-focussed resistance to extended Sunday trading, and licensing applications are vulnerable to this from various quarters".
Managing the Workforce
If contracts and policies do not contain sufficient flexibility to require workers to cover additional hours on Sundays then amendments to current contracts may be required and/or alternative staffing arrangements considered (e.g. recruitment or use of agency staff). Employers will need to consult with staff if they are looking to change their hours and, depending on the approach taken, this may be at the national or local level. Potentially, if dismissal and re-engagement of more than 20 staff at one establishment is envisaged and proposed within a 90 day period, collective consultation will be necessary. Retailers will also need to be alive to the fact that negotiation with unions may be necessary and that unions are likely to resist any proposed changes.
In response to the consultation a number of individuals, unions and religious groups expressed concern about the potential impact that any extension of Sunday trading hours would have on shop workers. As such, the Government has set out a number of proposals in the response which it hopes will strike "the right balance" between opportunities for businesses and workers' rights. There is already existing legislation in place which allows shop workers who were not specifically employed to work on Sundays to opt-out of Sunday working by giving their employer notice which takes effect three months later. The Government proposes to strengthen this right by reducing the opt-out notice period from three months to one month at large stores. It also proposes to introduce a new right for shop workers to opt-out of working more than their normal Sunday hours. This new opt-out right will also be subject to one month's notice for shop workers at large shops, and three months' notice for those at small shops.
Additionally, the Government proposes to provide clarification on the existing duty on employers to provide written notice to their shop workers about Sunday opt-out rights. Employers will be required to include information on where their shop workers can find support and advice about their rights in the notice. If an employer fails to notify their shop workers of their rights, the notice period will, in respect of both opt-out rights detailed above, be automatically reduced from one month to seven days for employees in large shops and from three months to one month for shop workers in small shops. In addition, an Employment Tribunal will be able to make an award of two to four weeks' pay if the employee brings a related successful claim (eg an unfair dismissal claim). It is not yet clear whether this will be capped at the statutory limit for a week's pay (currently £475).
Currently, employers cannot refuse a worker's right to opt-out because of a business need, even if all employees opt-out leaving it unable to do business and the response does not suggest that this will change. However, there are practical ways around this being an issue that we would be happy to discuss.
Employers should remember that shop workers are protected from dismissal, selection for redundancy and detrimental treatment as a result of their decision to opt-out from Sunday working and this protection will remain in place.
Retailers also need to remain alive to the risk of indirect religious discrimination claims where they have a policy of requiring staff to work on Sundays. This has been considered in recent case law but, ultimately, the question of whether it amounts to unlawful discrimination will depend on whether a business can objectively justify its policy of requiring Sunday working.
For more information on the employment and other issues in this article, please contact Patrick Howarth.