Legislation and Business

This section explains Legislation and Business. Businesses must operate within the framework of legislation (laws) to ensure fairness, safety, and transparency in their operations. This includes laws related to consumer rights, employment, health and safety, and discrimination. Understanding these principles is crucial for businesses to avoid legal issues and build trust with customers and employees.

Principles of Consumer Law – Quality and Consumer Rights

Consumer law protects the rights of individuals when they buy goods and services. The key principles of consumer law are centred around ensuring that products or services meet certain standards of quality, safety, and fairness.

Goods and services must be of satisfactory quality: Products should meet the expectations of a reasonable consumer. This means they should be fit for purpose, free from defects, and durable enough for their intended use.

Goods must be fit for purpose: Products must do what they are expected to do. For example, a kettle should boil water, and a mobile phone should be able to make calls and send texts.

Services must be performed with reasonable care and skill: When businesses offer services (e.g., repairs or consultancy), they must carry out the service to a reasonable standard.

The Consumer Rights Act (2015)

The Consumer Rights Act (2015) is a key piece of legislation that consolidates and updates consumer rights in the UK. It ensures that consumers are treated fairly when buying goods, services, and digital content.

Rights for goods: Consumers have the right to a refund, repair, or replacement if goods are faulty or not as described.

Rights for services: If a service is not performed with reasonable care and skill, or is not as described, consumers have the right to request a remedy, including a refund or re-performance of the service.

Digital content: The Act also applies to digital content (such as apps, music, and e-books), giving consumers the right to a remedy if the digital content is faulty.

The Consumer Protection Act (1987)

The Consumer Protection Act (1987) is a law designed to protect consumers from unsafe goods that could cause injury or harm. It established strict liability for businesses that sell products that are found to be dangerous, meaning that consumers do not need to prove negligence to claim compensation.

Defective goods: If a product is defective and causes harm, businesses can be held liable for compensation.

Dangerous products: Businesses must ensure that their products are safe to use, and if defects are found, they may be required to recall or repair the products.

Principles of Employment Law

Employment law governs the relationship between employers and employees. It sets out the rights and responsibilities of both parties and ensures fair treatment in the workplace.

Employment Contracts: All employees are entitled to a written contract, outlining their role, pay, hours, and other terms of employment.

Rights of Employees: Employees are entitled to various rights, such as paid holidays, sick leave, and protection against unfair dismissal.

Responsibilities of Employers: Employers must ensure that the workplace is safe, that employees are paid correctly, and that they are treated fairly in line with the law.

Recruitment

Recruitment is the process of attracting, selecting, and appointing new employees. Businesses must follow certain legal requirements during this process.

While Recruiting New Staff

Non-Discriminatory Practices: Employers must ensure their recruitment process is fair and free from discrimination. For example, they cannot refuse to hire someone because of their age, gender, race, or disability (as per the Equality Act 2010).

Advertising Jobs: Job advertisements should clearly state the role and qualifications required, without misleading or discriminatory language.

Interviews: During interviews, employers should ask relevant questions that assess the candidate’s ability to perform the job, rather than irrelevant personal information.

Once New Staff Have Been Recruited

Probation Periods: Many businesses have probation periods for new staff, allowing employers to assess their performance before confirming permanent employment.

Written Contracts: Once hired, employees must be given a written contract detailing terms such as their role, salary, working hours, and holiday entitlement.

Equal Opportunities: Employers must ensure that all employees have equal opportunities for development and advancement.

Pay

Businesses have legal obligations when it comes to paying employees.

What Businesses Must Do

• Minimum Wage: Employers must pay at least the national minimum wage (or living wage, depending on age and job). This ensures that workers are paid a fair wage for their labour.
• Payslips: Employees must receive an itemised payslip, showing their gross earnings, deductions, and net pay.
• Timely Payment: Wages should be paid on time and in full, as agreed in the contract.

What Businesses Must Not Do

• Underpaying Employees: Businesses must not pay employees less than the minimum wage or fail to meet other contractual wage commitments.
• Delaying Payments: Employers cannot withhold wages or delay payments without a valid reason.
• Discriminatory Pay: Employers must not pay employees less based on their gender, ethnicity, or other characteristics unrelated to their role.

Discrimination

Discrimination occurs when an individual is treated unfairly because of characteristics such as their gender, race, age, disability, or sexual orientation. Employment law under the Equality Act 2010 protects employees from discrimination in the workplace.

Protected Characteristics: These include age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation.

Types of Discrimination:

• Direct Discrimination: Treating someone unfairly because of a protected characteristic.
• Indirect Discrimination: A policy or practice that applies to everyone but has a more negative effect on people with a certain protected characteristic.
• Harassment: Unwanted behaviour related to a protected characteristic that creates an intimidating or hostile environment for the individual.
• Victimisation: Treating someone unfairly because they have made a complaint or supported a claim under discrimination law.

Health and Safety

Health and safety laws protect employees and customers by ensuring that businesses provide a safe working environment.

Health and Safety at Work Act (1974): This act requires businesses to ensure the safety, health, and welfare of employees at work. Employers must assess risks and put in place necessary measures to protect workers.

Risk Assessments: Businesses must conduct risk assessments and make efforts to control hazards (e.g., providing protective equipment, proper training, or regular safety checks).

Employee Training: Employees must be trained in health and safety procedures, and businesses must ensure that staff are aware of potential risks and how to manage them.

Costs

Complying with employment, consumer, and health and safety laws may increase a business’s operational costs. For example, businesses must budget for:

• Training Costs: Ensuring that employees are trained in health and safety procedures, as well as discrimination awareness.
• Legal Costs: If a business faces legal action for failing to meet its obligations, it may incur legal fees, fines, or compensation payments.
• Compensation Claims: Employers may face compensation claims if an employee is injured or discriminated against in the workplace.
• Recruitment Costs: Complying with non-discriminatory recruitment practices and providing employees with legal rights (e.g., fair wages, written contracts) may require additional resources.

Consequences of Meeting and Not Meeting Legal Obligations

Consequences of Meeting Legal Obligations

• Reputation: Businesses that comply with legal requirements build trust with customers, employees, and stakeholders, leading to a positive reputation.
• Employee Satisfaction: Compliance with employment laws leads to a more satisfied and motivated workforce.
• Avoiding Legal Action: Meeting legal obligations reduces the risk of lawsuits, compensation claims, and fines.
• Customer Loyalty: Consumers are more likely to return to businesses that provide high-quality goods and services and respect consumer rights.

Consequences of Not Meeting Legal Obligations

• Legal Penalties: Businesses that fail to comply with the law may face fines, compensation claims, or even closure in extreme cases.
• Damage to Reputation: Failing to meet legal obligations, such as discriminatory practices or poor consumer protection, can damage a business’s reputation and erode trust.
• Loss of Customers: Consumers may choose to take their business elsewhere if they feel their rights are not respected or if they experience poor-quality products or services.
• Low Employee Morale: Failure to meet employment laws, such as equal pay or safe working conditions, can lead to low employee morale, high turnover, or even strikes.

Conclusion

Legislation plays a vital role in shaping business practices. By understanding and complying with consumer law, employment law, health and safety regulations, and other legal obligations, businesses can avoid legal challenges and foster positive relationships with customers and employees. Non-compliance can lead to significant financial penalties, reputational damage, and legal consequences, making it essential for businesses to stay informed and ensure their practices align with the law.