Legislation & Business (Edexcel GCSE Business)

The Purpose of 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 but when laws change they may need to make significant changes to the way the business operates which can increase costs

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

  • Consumer protection

  • Employee protection

  • Health and safety legislation (this could be added under employee protection)

The effects on businesses of consumer protection laws

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

• The legislation covers areas including

  • The safety of products

  • The standard and quality of products

  • The rights of customers if they are unhappy with their purchase

  • The product information that must be given to customers 

• Meeting the requirements of each of the above laws results in increased business expenditure, which may reduce profitability

  • However, all businesses are subject to these extra expenditures  

• Consumer protection legislation aims to provide a level playing field for businesses ensuring that no business can gain an unfair advantage over rivals by taking shortcuts or by making false claims about its products

The effects on businesses of employee protection laws

• Employee protection legislation aims to prevent the exploitation of workers

• Legislation covers areas including

  • Pay and working conditions

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

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

  • Contracts and termination of employment

• Meeting employee legislation 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 likely to be attracted to work for a business that fulfill its legal obligations

The impact of employee legislation on business 

The effects on businesses of health and safety legislation

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

• Implementation of procedures and equipment required to maintain healthy working conditions are likely to incur financial and time costs such as:

  • Staff training and supervision

  • Changes to working hours and rest provisions

  • Arrangement of manuals, signage and safety documentation

  • Purchase and maintenance of safety equipment

  • Drawing up and implementing a code of practice

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