Legal Controls over Employment (Edexcel IGCSE Business)

Revision Note

Written by: Lisa Eades

Reviewed by: Steve Vorster

An Introduction to Legal Controls over Employment

Legal controls are the laws and regulations passed by governments that require businesses to conduct their behaviour in a particular manner
Many countries have passed laws and introduced regulations that affect the relationship between employers and employees and relate to aspects including
- Pay
- Hours and conditions of work
- Safety
- Discrimination
- Rights to paid and unpaid absence e.g. holiday
- Dismissal
The main aim of employment law is to protect and prevent exploitation of workers

Equal Opportunities

Equal opportunities means that all individuals should be treated equitably, regardless of protected characteristics such as gender, race, religion and disability
Many countries have introduced laws preventing discrimination in the workplace
- E.g. France's discrimination laws identify a range of protected characteristics that cannot be discriminated against including sexual orientation, gender identity, age, pregnancy, trade union activities and physical appearance
Businesses must comply with equal opportunities legislation to prevent discrimination from occurring in the workplace
Discrimination at work is when the employer makes decisions that are based on ‘unfair’ reasons
- In most countries many of these forms of discrimination are illegal
- Workers who have suffered discrimination can take legal action against an employer

Diagram: The main Forms of Discrimination

EiCi432r_main-forms-of-discrimination-cie-igcse-business-rn

If an employee has suffered discrimination at work they can take legal action against their employer

Benefits of Complying with Employment Laws

A business which follows and encourages an equal opportunities policy can help
- Improve it's reputation
- Keep employees happy and motivated
- Prevent serious or legal issues arising, such as bullying, harassment and discrimination
- Better serve a diverse range of customers
- Improve ideas and problem-solving
- Attract and keep good staff

Examiner Tips and Tricks

You do not need to know specific examples of legislation from different countries for the exam. The extracts in the exam paper will clearly define what laws are in place in a given country e.g. equal opportunities legislation. Make sure that you understand the purpose of the legislation, in other words, what are the legal controls tying to do. Remember, the main aim is to prevent the exploitation of workers!

Minimum Wage Laws

A minimum wage is the lowest wage permitted by law
Some countries may have a very complicated minimum wage system
- India has hundreds of minimum wage rates for different types of industries, geographical regions and skill levels

Other countries set a minimum hourly, weekly or monthly wage level for all citizens
- In 2022 Belgium’s minimum wage rate was €1,691 (US$ 2,000) per month
- In Estonia the minimum wage in 2023 was €4.30 (US$ 5.09) per hour
- Countries including Ireland and the UK set different minimum wage rates according to age

There remain some countries without minimum wage laws
- In Finland there is no minimum wage but all employers must pay minimum rates agreed in collective bargaining agreements
- The United Arab Emirates has no minimum wage requirements
The implementation of a minimum wage can have many consequences for both employers and employees
- The main effect for the business is the likelihood of an increase in costs

Impacts of Implementing a National Minimum Wage

Employers	Employees
Wages are a large cost to a business so the implementation of a NMW will increase variable costs as all workers will need to be paid the minimum legal limit The business may increase prices to compensate for the higher costs Encourages employers to invest more in training unskilled workers as they are now paying them a higher wage Some employers will not be able to afford these wage rates May cause some skilled workers who are receiving slightly more than the NMW to negotiate higher pay This would also increase business costs	Reduces exploitation of workers Without a NMW businesses may pay their workers very poorly Acts as an incentive to enter the workforce due to the attractiveness of higher pay Low-paid workers will earn more and will have higher living standards Workers who are paid at or above the minimum wage are more likely to be motivated and productive and take less time off work Some job losses may occur when a NMW is introduced as businesses move to cheaper capital intensive processes

Employers

Employees

Wages are a large cost to a business so the implementation of a NMW will increase variable costs as all workers will need to be paid the minimum legal limit
- The business may increase prices to compensate for the higher costs
Encourages employers to invest more in training unskilled workers as they are now paying them a higher wage
Some employers will not be able to afford these wage rates
May cause some skilled workers who are receiving slightly more than the NMW to negotiate higher pay
- This would also increase business costs

Reduces exploitation of workers
- Without a NMW businesses may pay their workers very poorly
Acts as an incentive to enter the workforce due to the attractiveness of higher pay
Low-paid workers will earn more and will have higher living standards
Workers who are paid at or above the minimum wage are more likely to be motivated and productive and take less time off work
Some job losses may occur when a NMW is introduced as businesses move to cheaper capital intensive processes

Last updated: 11 October 2024

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