How important is legislation to your business?

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Charlotte Smith takes a look at business legislation.  The law is an important consideration when running any business – there are obvious legal requirements, such as health and safety, and there are others that are not immediately obvious, which all businesses have to comply with.

Here, Charlotte takes you through the subject to give you a potted guide on legislation.

Why the need for legislation?

All businesses have to follow rules – these protect both the business, its staff and consumers alike, and for any kind of trade or market to proceed, these things have to be in place. But what things and why? We hope this little guide will help you through the apparent maze of business legislation.

Where does it all come from?

The way in which a business can operate is controlled by legislation. Laws can be imposed by the UK or European Union courts and government. Legislation mainly acts as a constraint on business.

The main areas of legislation that affect businesses are:

• Employment law
• Consumer protection
• Competition law

Employment Law

This is aimed at protecting the health, safety and rights of employees.

The main employment laws that a business needs to consider are:

The Health and Safety at Work Act

Employers must provide safe premises and machinery. They must ensure that workers health is not affected by their work. The key costs and benefits of the Health and Safety at Work Act for a business are:

  • Adds to costs to businesses that need to train staff and spend money maintaining the standards set out.
  • BUT may reduce cost in the long term because of a reduction in staff absences and not having to pay compensation for injuries.
  • Good health and safety record is a good way of encouraging recruitment of good workers.

Accidents within the workplace are becoming a more common occurrence, and with personal injury groups offering specialist advice for varying work related claims, it is important to know rights and duties as an employer when it comes to health and safety.

Putting adequate and effective prevention measures in place can save hundreds in compensation and litigation costs.

For many small businesses health and safety is as much common sense as it is legal requirement. The first thing to establish when discussing health and safety procedures is who will supervise or manage these duties.

Many business owners take on this responsibility themselves or appoint someone ‘in house’, although with more technical and legal issues it can be more effective to obtain external advice.

Once a health and safety supervisor has been appointed or hired, a health and safety policy will need to be drafted. This is a legal requirement for businesses that employ over five people, however it is good practice to keep records for smaller businesses. This document will need to detail who covers specific health and safety jobs, when they do this, and how.

The next step is then the management and prevention of any risks within the business. This will mean consulting employees on what they feel the day-to-day risks are, as well as recording your own thoughts as to what can cause harm and how it is to be prevented.

Determine any hazards within the workplace during a walk around and calculate the risk of harm that these hazards could cause to employees.

As a business owner it is then their responsibility to consider how these risks can be improved and to set in place preventative measures to avoid accidents occurring. Throughout the entire process business owners should record any finding to keep for the business health and safety records.

Training will then need to be put in place for any current and future employees as well as information that is openly available to them. This will need to cover any of the hazards within the work place and how they should deal with them within their day-to-day roles. It will also need to cover any emergency procedures, such as fire evacuation, and first aid arrangements within the company.

As a business you are responsible for ensuring the immediate attention of any employees if they are injured or taken ill whilst at work. It is a legal requirement to display the health and safety law poster alongside accessible information on who the first aider is and any health and safety procedures.

All businesses should have:

  • A fully stocked first-aid box
  • An accident report book
  • An appointed first aider

Under health and safety law, businesses must keep a record of any injuries, incidents and cases of work related disease – this is because there are a number of accidents that can happen that employees can take action for.

It is advised to keep up to date with any changes to health and safety policy as well as regular risk assessments.

In the case that any employees do become ill or injure themselves whilst working it is imperative to have employee’s liability insurance. This will provide cover in the event that employees seek compensation and will meet the costs for any litigation.

Another requirement of any workplace is to ensure that all of the relevant health and safety signage is in place. Signs such as fire exits, and the assembly points in case of a fire, so that people can exit the premises safely and as quickly as possible.

The Health and Safety Law poster should be displayed in the staff room in a visible place, and in the case of builders and factories, a notice board detailing accident rates and reportable incidents or near misses.

These are reportable under law if a serious injury occurs to the Health and Safety Executive who then has to carry out an investigation.

RIDDOR (Reporting of Injuries, Diseases and Dangerous Occurrence Regulations), states that all employers and employees have a duty to report serious workplace accidents, occupational diseases and near misses that could have resulted in a serious injury to the Health and Safety Executive (HSE). You must keep a record of the incident, and fill in a form to the HSE online.

All incidents should be reported online, but in the exceptions where those injuries are serious or fatal, then you should contact the HSE Incident Contact Centre on 0845 300 9923 as a matter of urgency.

The Equal Pay Act

Employees who do equal work or work of equal value must receive the same pay as workers of the other sex.

The Employment Equality Act

Employees cannot be sexually discriminated in employment, training or recruitment. Irrespective of gender in the eyes of the law, everybody is equal. It is illegal to discriminate against someone on the basis of race, ethnic group or colour, or discriminate against them as a result of their age, sexual orientation, or if they are disabled or if they suffer from some form of mental illness such as depression or a nervous disposition. If you have had gender reassignment surgery, or are pregnant, everybody is covered by this act.

The Employment Protection Act

Employees must be given a written contract of employment. It protects against unfair dismissal (without good cause) and says that redundancy pay must be paid if the worker has served more than two years and their job is to be abolished.

Employment law imposes additional costs to the business because they have to spend additional money on training, recruitment and pay. Like the Health and Safety Act, there are also benefits if the workers feel they are treated fairly and there is more security, they will be more motivated. Irrespective of whether you take on employees part time or full time, on contract or as a consultant, everyone is covered by this law. And employment tribunals can be costly for all concerned, even if you have just cause to dismiss somebody.

Therefore it is sensible to acquaint yourself with the inner workings of the act, and look at the pros and cons of employment. It could save you time and money.

Consumer Protection

This is aimed at making sure that businesses act fairly towards their consumers – especially since consumers are sometimes in a much weaker financial position.

The main consumer protection legislation all business have to observe are:

The Sale and Supply of Goods Act

This states that goods must be of satisfactory quality and fit for purpose.

The Trade Descriptions Act

Goods and services must perform in the way advertised by the business.

The Consumer Credit Act

This protects the consumer when borrowing money or buying on credit – consumer protection imposes additional costs to businesses since they have to comply with the act. If they do not, they risk fines and ultimately being put out of business by the courts of law. It doesn’t matter if your selling televisions on hire purchase, or mortgages. It applies to all businesses that allow customers credit.

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Competition law

Competition law aims to ensure that fair competition takes place in each industry. Governments believe that greater competition leads to lower prices, better quality goods and a wider variety of products.

The Competition Commission (CC) and the Office of Fair Trading (OFT) investigate any business that has more than 25% of the market share, especially if it merges with another business. They may feel that the business has too much power and can set high prices and provide poor quality products. The CC and OFT has the power between them either to fine these businesses, or prevent the merger taking place.

The OFT can also fine businesses who fix prices or prevent other businesses from trading in their market. Most recently they investigated the car industry and warranties offered by leading electrical retailers

In a nutshell…

We hope that you find this little short guide helpful. But please bear in mind, business legislation is changing all the time. Keep an eye on our Business Legislation round up and we’ll keep you up to date with the latest changes that you need to know about.

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Useful Links

Health and Safety Executive

Growth Business website

Advice Guide website

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