Introduction to Legislation

Government legislation is one important part of the overall external environment.

You do not need to be an expert in the areas of legislation covered in this part of the specification. What is needed is more of an overview of the key areas where legislation impacts business activity. The key points for each are set out below.

Main roles of business legislation

Legislation as it relates to business is designed to:

  • Regulate the rights and duties of people carrying out business in order to ensure fairness
  • Protect people dealing with business from harm caused by defective services
  • Ensure the treatment of employees is fair and un-­‐discriminatory
  • Protect investors, creditors and consumers
  • Regulate dealings between business and its suppliers
  • Ensure a level playing field for competing business

Employee protection

The key areas impacting on business are those relating to individual employment (particularly pay and discrimination) and industrial disputes.

Equal pay

The basic rule: men and women are entitled to equal pay for work of equal value

  • “Pay” includes everything in the employment contract -­‐ bonuses and pension contributions, as well as basic wages or salary
  • Workers have the right to ask their employer for information to check equality – using the equal pay questionnaire
  • If they believe their pay is unequal, they can take the employer to an

Employment Tribunal

Minimum wage

  • Employers are required by law to ensure they pay their workers at least the national minimum wage (NMW)
  • Makes no difference when a worker is paid (monthly, weekly, daily, hourly). The NMW still applies

Discrimination

It is illegal for an employer to discriminate against an employee on the basis of:

  • Sex, including pregnancy and maternity
  • Marital / civil partnership status
  • A person’s disability
  • Race
  • Age
  • Sexual orientation
  • Religion/belief
  • Trade union membership or non-­‐membership
  • Status as a fixed-­‐term or part-­‐time worker

Employment rights

Laws provide a variety of “rights” for employees, including:

  • Reasonable notice before dismissal
  • Right to redundancy
  • Right to a written employment contract
  • Right to request flexible working
  • Right to be paid national minimum wage
  • Right to take time off for parenting

 

Industrial relations

 

  • Protection from unfair dismissal

 

  • Employers must recognise union is >50% of staff are members

 

  • Regulation of procedures for industrial action (e.g. ballots)

 

  • Role / powers of Employment Tribunals

 

  • EU – Works Councils requirements

 

Consumer Protection

 

Legislation provides a wide variety of protections to consumers when they transact with businesses. In particular, businesses must ensure that

 

  • Goods fit their description

 

–  E.g. organic wine really must be organic

 

–  Businesses need to take care with descriptions – avoid inaccurate claims

  • Must be of satisfactory quality

 

–  Test is of a “reasonable person”

–  Must work and have no major blemishes

  • Goods are fit for the purpose specified

 

–  E.g. a watch should tell the time

 

– Businesses should take care when explaining what a product can be used for

 

Other ways in which consumers are protected by legislation:

 

  • Businesses may not use unfair commercial practices – e.g. misleading advertising

 

  • Customers have a right of return and full refund if goods /services do not comply with law

 

  • Services

 

–  Must be done at a reasonable price and by the time stated

 

– Customer can request that unsatisfactory work be repaired or carried out again at no cost

 

 

 

Topic: Legislation

 

Theme 2: Section 2.5 External Influences

 

  • Consumers have the right to a “cooling off period”

 

  • Distance selling regulations provide further protection for consumers against online businesses

 

 

Distance Selling

 

Regulations

 

The Sale of Goods

Act

 

Supply of Goods

 

and Services Act

 

Trade Descriptions Act

Gives consumers protection when they buy goods or services by mail order, phone or online

 

Requires goods to be as described, fit for their purpose and of satisfactory quality. If they are not, the customer can reject them

 

Customers are entitled to work that’s carried out with reasonable skill, in a reasonable time, at a reasonable price

 

Required any descriptions of goods and services given to be accurate and not misleading

 

 

 

Environmental Protection

 

Businesses must comply with a wide variety of environmental laws and regulations. These are set at local, UK and European levels. The key areas of impact are:

 

-­‐ Emissions into the air

 

-­‐ Storage, disposal & recovery of business waste -­‐ Storing and handling hazardous substances -­‐ Packaging

 

-­‐ Discharges of wastewater

 

Competition Laws

 

The main aims of laws designed to regulate market competition include:

 

  • Wider consumer choice in markets for goods and services

 

  • Encouraging and protecting innovation

 

  • Effective price competition between suppliers

 

  • Investigating allegations of anti-­‐competitive behaviour within markets which might have a negative effect on consumers

 

Both UK and EC competition law prohibit agreements, arrangements and concerted business practices which appreciably prevent, restrict or distort competition (or have the intention of so doing)

 

Examples of prohibited agreements include:

 

  • Agreements which directly or indirectly fix purchase or selling prices, or any other trading condition (e.g. discounts or rebates, etc)

 

  • Agreements which limit or control production, markets, technical development or investment (e.g. setting quotas or levels of output)

 

  • Agreements which share markets or sources of supply

 

Health & Safety Legislation

 

 

 

 

 

 

 

Theme 2: Section 2.5 External Influences

 

Health and safety is about preventing people from being harmed at work or becoming ill, by taking the right precautions and providing a satisfactory working environment.

 

An employer has important responsibilities for health & safety. It is not just about protecting staff – health & safety applies to many people who come into contact with the business; for example:

 

  • Employees working at the business premises, from home, or at another site

 

  • Visitors to the premises such as customers or subcontractors

 

  • People at other premises where the business is working, such as a construction site

 

  • Members of the public -­‐ even if they’re outside the business premises

 

  • Anyone affected by products and services the business designs, produces or supplies

 

There are stringent health & safety regulations specific to particular industries too:

 

for example:

 

  • Food processing (hygiene)

 

  • Hotels (guest safety, hygiene)

 

  • Chemical production (dangerous processes, waste disposal)
  • Air travel (passenger safety)
  • Tour operators (holidaymaker safety)