Legislation & Business (AQA GCSE Business)

An Introduction to Legislation

• Legislation refers to laws and regulations passed by governments that require businesses and individuals to conduct their behaviour in a particular manner

• Following existing laws is usually quite straightforward for businesses

• When laws change, businesses may need to adapt the way they operate, which can increase costs

• There are three areas of legislation that have significant impacts on businesses

  • Employment law

  • Health and safety law

  • Consumer law

Employment Law

• Employment law aims to prevent the exploitation of workers and provide a series of rights to those employed

• Legislation covers areas including

  • Pay and working conditions, including the right to paid holiday, a limit to working hours and a minimum wage

  • The right to take maternity, paternity or adoption leave and return to the same job thereafter

  • The right to belong to a trade union and take industrial action

  • Contracts and termination of employment

  • Equality of employment rights for marginalised groups (e.g. those with disabilities) to avoid discrimination

• The Equality Act, 2010 replaced a series of laws that protected employees against discrimination

  • Employees cannot be treated differently or denied opportunities on the basis of:

    • Age

    • Race, religion or beliefs

    • Disability, pregnancy or maternity

    • Gender, including gender reassignment

    • Sexual orientation

    • Marriage or civil partnership

• The National Minimum Wage Act, 1998 implemented hourly wage floors for workers over the age of 16 in the UK

  • From 2016, workers over the age of 25 became entitled to a higher hourly rate of pay, called the National Living Wage

    • The minimum hourly rate a business can pay its workers is updated each year,

    • In 2024, rates stood at £6.40 for 16-17 year-olds (including apprentices), £8.60 for 18-20 year-olds and £11.44 for workers aged 21 and over

Health & Safety Law

• Health and safety legislation requires businesses to operate in a way that protects the physical and mental wellbeing of its employees and contractors and customers

• Legislation covers areas including

  • The provision of adequate breaks and rest periods

  • Temperature and noise levels

  • The provision of safety equipment

  • Hygienic, safe and sanitary conditions

  • Preventing stress

• The Health & Safety at Work Act, 1974 requires businesses to safeguard the health, safety and welfare of employees

  • Aspects covered by the Act include

    • The maintenance of suitable workplace temperatures

    • The provision of safety equipment, including protective clothing and guards on dangerous equipment

    • The right to adequate breaks during and between working periods

    • The management of toxic substances, including chemicals and emissions

    • Having a written health and safety policy that is understood by staff

    • The safe use of computer equipment

  • The Act requires employees themselves to safeguard their own safety and that of others

  • The Health and Safety Executive (HSE) investigates breaches of the Act and carries out inspections, with the ability to fine businesses that do not follow the law

Consumer Law

• Consumer protection laws aim to ensure that consumers are treated fairly by the companies with which they interact

• A range of laws protect consumers from:

  • Inappropriate use of personal data

  • Aggressive sales tactics

  • The incorrect labelling of goods, including ingredients and weights

  • Unfair credit arrangements, including high rates of interest

  • The right to withdraw from a contract

  • Unsafe ingredients or components

  • Illness or injury caused by a product

• The Consumer Rights Act, 2015 is a key law that provides a range of protections related to the sale of products, including:

  • Returns of goods to suppliers

  • Obtaining refunds or replacements

  • Acceptable quality

  • The delivery of products

  • Unfair terms in contracts, such as hidden fees

The Impact of Legislation on Business

Meeting employment laws

• Adhering to employment law is likely to have a range of benefits

  • Businesses can avoid attracting unwanted media attention

  • They are less likely to be subject to legal action

  • New employees are attracted to work for a business that fulfils its legal obligations

Diagram: The Impact of Employee Protection Legislation on Business

The impacts of employee legislation on business include the need to change working practices, higher labour costs, compliance costs and potential penalties

Meeting health and safety laws

• Meeting health and safety requirements may require new procedures and equipment, which are likely to incur financial and time costs, such as:

  • Staff training and supervision will be ongoing, requiring regular updates

  • Changes to working hours and rest facilities will need to be provided

  • Safety manuals, signage and safety documentation must be in place and kept up-to-date

  • Purchase and maintenance of safety equipment

  • Drawing up and implementing a [popover id="bEGngku~bJTmGJq4" label="code of practice"]

• Serious health and safety breaches can lead to fines or investigation by the Health and Safety Executive and in some cases, they can lead to prosecution

  • The reputation of a business can be significantly affected if workers come to harm as a result of negligence

  • Fines can be large, e.g. in 2023 Tesco was fined £7.56 million for a series of food safety breaches at stores in Birmingham

Meeting consumer laws

• Meeting the requirements of consumer laws can increase business costs, which may reduce profitability

  • Businesses must ensure labelling is correct and mechanisms are in place to ensure consumers receive the correct volume of product purchased 

  • Training of sales staff is required to ensure they behave fairly towards customers

  • Databases containing customer data must be kept secure and up-to-date, and data must only used for a narrow range of specific purposes

  • Returned products need to be managed

    • Faulty goods will need to be replaced or refunded at no cost to the consumer

• Consumer laws aim to provide a level playing field for businesses

  • No business can gain an unfair advantage over rivals by taking shortcuts or by making false claims about its products