Introduction In his emergency summer budget of July 8, Chancellor George Osborne announced changes to the Sunday trading rules in England and Wales. In this bulletin we provide a brief reminder of the current rules and look at what the proposed changes mean.

The current rules for England and Wales Under the Sunday Trading Act 1994, 'large shops' are restricted to trading for a continuous period of no more than six hours between 10am and 6pm. For the purposes of the legislation, a 'large shop' is one with relevant floor space in excess of 280 square meters (around 3,000 square feet).

Exceptions to the Sunday trading rules Some businesses are exempt including registered pharmacies, shops located in airports and railway stations and retailers that wholly or mainly sell motor or cycle supplies or accessories.

Also exempt are shops occupied by persons observing the Jewish Sabbath and where a relevant notice has been put up to this effect. Specific procedural requirements are to be met for this exception to apply, which are not addressed in this client alert.

Notwithstanding the above exceptions, all large shops must close on Easter Sunday and on Christmas Day.

Employees of large shops may decide to opt out of working on Sunday by sending a written notice. This is provided that (i) they have been or may be required by their employer to work on Sundays; and (ii) they have not been recruited to specifically work on Sunday. An opting-out notice takes effect after three months and there is nothing a retailer can lawfully do to prevent its employees from opting out.

If the Sunday trading rules are not complied with, the occupier of the shop is liable on summary conviction to a fine not exceeding £50,000. It is a valid defence if it can be proved that that the customer was in the shop before 6 pm and left the shop by 6.30pm.

These rules were relaxed during the 2012 Olympic and Paralympic Games. This was a hugely welcome change for businesses, with retailers reporting a significant surge in sales.

Permanent changes afoot – summer budget 2015 As outlined in the latest budget, the Government is considering changing the law on Sunday trading by “devolving powers on Sunday trading to city mayors and local authorities. This will look at allowing mayors or councils to extend Sunday trading for additional hours within parameters that they would determine.” (Sections 1.289 and 2.28 of the summer budget 2015).

Potential impact of devolved Sunday trading rules The Government is expected soon to commence consultation on these changes, which could have far reaching consequences for large retailers with stores around England and Wales. We have considered some of the possible consequences below.

Operational difficulties The decentralised nature of the power to regulate Sunday trading rules means that opening hours in different areas of the country may differ. International, national and regional retailers will have to manage different opening hours for their branches across England and Wales, creating administrative and operational difficulties.

Economic consequences If local government decides within its devolved powers to increase Sunday trading hours for large shops, it will of course have an economic benefit. Longer Sunday trading hours will enable larger shops to compete further with online retailers, who trade ‘around the clock’ and account for 11% of overall retail sales.

Looked at from another standpoint however, the proposed changes have made smaller, independent retailers nervous. The Sunday trading restrictions are seen by many small retailers as an important leveller in their constant battle against the ‘big boys’. The press certainly seems to have focused more on this aspect in its reporting of the proposed changes.

The debate on the impact of additional Sunday hours for larger stores over small businesses should also take into account the strategic adaptation of large retailers to the Sunday trading rules by opening small stores competing directly with smaller businesses.

But the key point of this proposal is the impact created by devolving power to local government to regulate on these matters, and how this will be taken up by each local authority.

Uncertainty as to the scope of devolved powers The budget documents and Mr Osborne’s comments suggest that local government will have the right to regulate only with regard to increasing the number of hours of trading on Sundays for large shops. It is uncertain, however, as to where the limits of such devolved power will be set.

Although it appears unlikely and contrary to the Government’s objective, it is possible that local government will be given much more discretion in setting Sunday trading laws in its area. If that happens, local government would have the discretion to favour smaller businesses and reduce the number of Sunday trading hours for large shops, or even prohibit large shops from opening at all. In this situation, local government could also decide to alter the definition of ‘large shops’ (increasing or reducing the relevant floor space of the shops) and adjust the exceptions available to large shops currently in place. The uncertainty this would create would exacerbate the operational problems for retailers discussed above.

Consultation The proposed changes have the potential to significantly change the landscape of Sunday trading. The Government will be consulting with retailers on the proposal.

It has been mentioned that the proposal is expected to be passed with the Enterprise Bill this autumn.