Laws relating to production
- Health and safety issues
- Waste management and pollution
- Food safety
- Food labelling
- Vicarious liability
- Consumer protection
The Law and Consumer Rights (1)
The law protects customers and consumers:
Trade Descriptions Act (1968)
- Ensures businesses don't mislead customers with false decriptions on packaging or advertising materials.
Sale of Goods Act (1979)
- Sets out the main rights of customers when making a purchase.
- Updated by the Sale of Goods Act (1994) and the Sale and Supply of Goods to Consumers regulations (2002).
- Goods must be fit for purpose and of satisfactory quality.
Consumer Protection Act (1987)
- New customer goods must be safe.
- Along with this law, there are regulations governing things like furniture fire safety.
- Manufactures had to change the materials they use for sofa and chair cushions, which meant they incurred costs.
The Law and Consumer Rights (2)
Food Safety Act (1990)
- Producers must ensure that foodstuffs are not harmful.
- If any part of a batch of food is considered unfit for human consumption then the whole lot has to be destroyed. This has implications for cost and revenue.
- Foods must also not be labelled in a misleading way.
- The act also requires that workers handling food should be trained in basic food hygiene.
The community and the environment
- Environment Agency regulates industries which release waste into water or land.
- Businesses have to ensure their production processes don't cause unnecessary pollution, or risk heavy fines.
- Light industrial processes which release pollution into the air are regulated by Local Authorities.
Laws relating to the environment
- Waste Electrical and Electronic Equipment (WEEE)
- Landfill tax
- EU packaging waste directive
- Employment laws: ensure people are recruited fairly and have a certain amount of job security.
- Health and safety laws make sure people don't have to work in dangerous conditions.
Laws relating to factory construction
The law says where companies can and can't build factories:
- There are laws which prevent businesses from building wherever the want to or from extending their existing premises without permission. These are called planning laws.
- A business that's planning to build new premises has to submit paperwork to the local authority saying exactly what it wants to do. The local authority then has a meeting and decides whether or not to give the business planning permission.
- If a business builds without planning permission, they'll be asked to apply for permission even if they've already completed the work. If they don't get permission, the council can force them to take the building down.
- Employers are liable for any act commited by an employee in the normal course of their job.
- This has serious implications for businesses.
- The employer is responsible for paying compensation to anyone injured as a result of an accident.
Impact of the law on businesses
- If a company breaks the law then the local council can step in to penalise them. Fines are the most common penalty if a business breaks the law.
- Inspectors check that restaurants and cafes aren't breaking food safety laws. If a business is preparing food in a way that isn't hygienic, they'll be given a deadline by which they have to improve standards. If the standards of hygiene are really bad, they can close the business down for a certain number of weeks or months.
- The penalties for breaking health and safety laws were made tougher in 2008. The maximum fines have gone up and, in cases where somebody has died as a result of serious neglect or the law being broken repeatedly, it's possible for the person responsible to be sent to prison.
Implications of legislation for businesses
- New laws cost money - businesses may have to change their production processes.
- There may be reduced productivity during changeover.
- Staff may need retraining to meet the new standards.
- The new process may not be efficient and costs may increase.
- May require a change of culture in an organisation.
Laws and the business environment
- A set of rules and regulations with which a business has to comply.
- Can be a constraint on action, a threat, or an opportunity.
Main roles of business legislation
- 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.
Key area to consider