Factory based legal issues

Man operating machinery in factory with another man in background using machinery

The legislation that applies to your business will depend very much on what type of business you have in mind. It would be advisable to obtain guidance on what applies to businesses in your particular industry. The following is an outline of some of the areas which may be relevant to you. The list is not exhaustive.

The Factories Act and subsequent regulations cover such things as working conditions and the safety of machinery.

What licences does a factory based business need?

Licensing requirements for your business will depend very much on what type of business you have in mind. For example, if you are going to make or process food products then you'll need to register with your local environmental health department. If you are planning to manufacture medicines you'll need a licence from the Medicines and Healthcare products Regulatory Agency (MHRA). You will need a licence from the Health and Safety Executive and local authority assent if you manufacture explosives like fireworks.

Anyone handling industrial denatured alcohol (IDA) must obtain authorisation from HM Revenue & Customs. (IDA used to be known as industrial methylated spirits.)

The REACH regulations require you to register with the European Chemicals Agency if you place more than one tonne of certain chemicals on the market in a year. You can find out more on the Health and Safety Executive (HSE) website.

Note that any business which produces 500kg or more of hazardous waste at a premises in Wales within a 12 month period must register with Natural Resources Wales as a hazardous waste producer. You can find out more about hazardous waste producer registration on the Gov.uk website.

If you run delivery vehicles over 3.5 tonnes you will need an operator's licence.

If you manufacture Fairtrade marked products you'll need to be approved as a registered licensee by the Fairtrade Foundation and sign a licensing agreement. There is a fee for using the Fairtrade Mark - the amount is based on quarterly reports that you must submit to the Foundation giving details of your purchases and sales of Fairtrade marked products.

Don't forget that if you plan to play background music in your premises (or music played when telephone callers are put on hold) you will need a Music Licence from PPL PRS Ltd. There is an annual fee for this which you can pay online on the PPL PRS website.

Trade associations representing your particular type of manufacturing business may be able to give guidance on any licensing requirements. You can access a directory of trade associations on the Trade Association Forum website.

Product safety

It is an offence to sell products that are unsafe or that aren't 'fit for purpose'. You could be held financially liable for any personal injury or damage caused by a defective product you manufacture. There are also specific regulations applying to certain types of product to make sure they are safe - for example, toys, electrical goods, medical devices and many more. If you manufacture these goods for sale within the EU or the EEA, you will need to make sure they carry the CE mark. You can find out more about CE marking on the Gov.uk website.

Food safety

All businesses in the food sector must comply with strict food safety legislation. Before you start trading, you must register your business with the local authority environmental health department. Your local environmental health officer will be able to give you advice and guidance as to what you should install in your premises to make sure your operating areas are hygienic and how to comply with the requirements of food safety legislation.

You will also have to make sure that food products are correctly labelled. This includes details of 14 specified allergens. You can find detailed guidance on the Food Standards Agency website.

If your business produces waste foodstuffs you must dispose of them correctly. You can find out more about the Animal By-Products Regulations on the Gov.uk website.

Food hygiene rating scheme

Food businesses in Wales - including manufacturers and wholesalers - must display their food hygiene rating. The lowest rating is 0, meaning urgent improvement is needed, and the highest is 5, indicating very good hygiene levels. This also applies to food businesses in Northern Ireland that sell food directly to the public. There are similar schemes in the rest of the UK but these are voluntary, although England and Scotland are likely to make it compulsory in the near future.

Packaging regulations

Businesses which handle 50 tonnes or more of qualifying packaging materials must register with:

  • the Environment Agency in England
  • Natural Resources Wales
  • the Northern Ireland Environment Agency
  • the Scottish Environment Protection Agency (SEPA) in Scotland

They must carry out the necessary recovery and recycling of packaging waste. Alternatively they may join one of the compliance schemes currently operating (for example Valpak or Paperpak). A fee is paid and packaging data supplied to the scheme which then takes on and discharges the recycling and recovery obligations which the member business would have had.

COSHH Regulations

These regulations cover the use and storage of any potentially hazardous substances. Employers must carry out a risk assessment and put in place measures to remove or reduce the risk to employees. There are specific Workplace Exposure Limits (WELs) that apply to many chemicals, dusts and fumes - these limits must not be exceeded.

Environmental protection

Environmental legislation regulates the disposal of industrial waste products. You may need to obtain an environmental permit (in England and Wales) or a pollution prevention and control (PPC) permit (in Scotland and Northern Ireland). You may also be affected by regulations referred to as REACH - this stands for the Registration, Evaluation, Authorisation and Restriction of Chemicals. It aims to protect human health and the environment by controlling chemical substances. REACH covers most chemicals that are manufactured or imported into the EU in quantities of one tonne or more in a year. Regulations introduced to protect the environment mean that if your manufacturing business carries out an activity that causes environmental damage you will have to prevent and remedy any damage.

The Gov.uk website contains information and guidance on environmental management, waste and pollution prevention.

Waste Electrical and Electronic Equipment

If you manufacture electrical goods you need to be aware of regulations concerning waste electrical and electronic equipment (WEEE). The regulations aim to minimise the impact of WEEE on the environment.

Manufacturers of electrical or electronic equipment need to join an approved compliance scheme. The compliance scheme undertakes the required recycling and recovery of waste appliances on behalf of the manufacturer. Manufacturers must also provide information to assist in the treatment and re-use/recycling of any electrical goods that they produce. In addition, all new electrical products must be marked with the crossed out wheeled bin symbol, a producer identification mark and a date mark. You can find out more on the Gov.uk and the Northern Ireland Environment Agency websites.

Restrictions on the use of certain Hazardous Substances in electrical and electronic equipment (RoHS) Directive

Manufacturers who want to sell their goods in the EU must make sure that the products don't contain more than the agreed amounts of substances such as lead, cadmium, mercury, flame retardants and so on. The RoHS section of the Gov.uk website contains further information.

Waste batteries

If you produce batteries or electrical and electronic items you should be aware of regulations that control the cadmium and mercury content of batteries. The regulations also cover how the batteries are labelled. Separate regulations make battery producers responsible for collecting and recycling old batteries by joining a Battery Compliance Scheme. You can find out more on the Waste Support website.

Animal testing of cosmetic products

Note that EU-based manufacturers of cosmetics must not test them on animals. Since March 2013 cosmetics tested on animals in countries outside the EU have also been banned for sale in the EU.

Employment matters

Anyone employing staff must comply with employment legislation. Important pieces of legislation which you must be aware of include:

  • The Employment Rights Act
  • The National Minimum Wage Act
  • The Working Time Regulations

The employing people section of the Gov.uk website includes information and guidance on all aspects of employment legislation. Information for businesses in Northern Ireland is available on the NI Business Info website.

Using labour providers

Food processing and packaging businesses that use the services of gangmasters - basic labour providers - are required by law to use only gangmasters that are licensed by the Gangmasters and Labour Abuse Authority (GLAA), previously the Gangmasters Licensing Authority (GLA). More information about gangmaster licensing, including a database of licensed gangmasters, is available on the Gangmasters and Labour Abuse Authority website.

Provision of sanitary conveniences and washing facilities

  • For 1 to 5 people at work, at least 1 toilet and 1 washbasin
  • For 6 to 25 people at work, at least 2 toilets and 2 washbasins
  • For 26 to 50 people at work, at least 3 toilets and 3 washbasins

Make sure the facilities are suitable for disabled persons to use.

Separate rooms should be provided for men and women except where each convenience is in a separate room which can be secured from inside.

In the case of facilities used only by men, alternative arrangements may be used:

  • For 1 to 15 men, 1 water toilet and 1 urinal
  • For 16 to 30 men, 2 water toilets and 1 urinal
  • For 31 to 45 men, 2 water toilets and 2 urinals

Goods vehicles

If you operate delivery vehicles over 3.5 tonnes you will need to comply with goods vehicle legislation. You can find out more on the Gov.uk website. In Northern Ireland, contact the Transport Regulation Unit (TRU) of the Department for Infrastructure (DfI).

Health & Safety, fire

You must comply with workplace health and safety and fire safety legislation.

Employment legislation

Anyone employing staff must comply with employment legislation. Important areas of legislation include recruitment, employment contracts, pay, working hours, holidays, employment policies, sickness, maternity, paternity, discrimination, discipline, grievances, dismissals, redundancies and employment tribunals.

Insurance for a factory based business

Contact an insurer or insurance broker and explain exactly how your business will operate - they will then explain what insurance cover you must have by law, and other cover you should consider. This might include:

  • premises, premises contents
  • raw materials, work in progress, stock
  • goods in transit
  • employers liability
  • public and products liability
  • environmental liability
  • motor insurance (for delivery vehicles)

You will probably find that the trade association for your particular type of manufacturing business has negotiated advantageous premiums for its members so it is worth checking.

When comparing insurance quotes, uncover the differences between policies by using an insurance comparison form.

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