Legal Controls Over Employment Issues (Cambridge (CIE) IGCSE Business): Revision Note

Introduction to legal controls

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

• Many countries have passed laws that determine the required behaviour of employers towards their workers

Legal controls over business

Unfair dismissal

• Dismissal takes place when an employer ends an employee’s contract of employment with the business

• Dismissal can be fair for a number of reasons

  • The job no longer exists, which means the employee is made redundant

  • An employee cannot do the job properly, e.g., they may lack the right skills

  • Long-term illness

  • Gross misconduct, such as theft or violence at work

  • For other “substantial” reasons, such as the employee has been sent to prison

• Unfair dismissal is when an employee of a business has their employment terminated without a valid reason or against government legislation

  • Reasons for unfair dismissal include discrimination or avoidance of paying compensation for redundancies

• In cases where there is unfair dismissal, the worker may take his/her complaint to a court called an industrial tribunal to decide whether there is a case to answer

  • If the independent tribunal finds that the worker was wrongfully dismissed, then the worker receives compensation and their job is offered back to them

Discrimination

• Discrimination at work occurs when the employer treats employees with protected characteristics such as gender or race less favourably than one without these characteristics

  • In many countries, discrimination based on these characteristics is illegal

The main forms of discrimination

• Employees who are victims of discrimination in the workplace can take legal action against the employer

  • Trade unions often support employees with legal claims against employers and provide legal advice and support 

• Businesses can miss out on recruiting the best applicant if recruitment policies are discriminatory

• Reputational damage may result if a business is found to have discriminated against employees

Health and safety

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

• Health and safety 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 investigations by the Health and Safety Executive and, in some cases, prison sentences

Legal minimum wage

• A national minimum wage (NMW) is a legally imposed wage level that employers must pay their workers

  • It is set above the market rate of pay

  • In some countries, the minimum wage varies by age

  • A minimum wage makes it illegal for an employer to pay an hourly rate below the minimum wage set

The impact of a legal minimum wage

• Businesses in some countries are free to pay their workers very low wages, leading to much lower business costs

• Businesses are often questioned about this decision, as it compromises business ethics

Effects of legal controls over employment issues on employers and employees

• Employers need to understand the impact of employment laws to stay legal, avoid fines and manage their staff fairly and effectively

• For employees, understanding their legal rights can help them feel more confident and supported in their jobs

Impact on employers

• Increased responsibilities

  • Employers must follow legal rules when hiring, managing and dismissing staff

  • This includes giving written contracts, fair pay and safe working conditions.

• Extra costs

  • Legal controls may lead to higher costs, such as paying minimum wage, providing sick leave or making workplaces safe

• Avoiding legal trouble

  • By following the law, employers reduce the risk of being taken to court by employees, which could damage their reputation and finances

• Improved staff relations

  • Fair treatment and clear policies can lead to better motivation and lower staff turnover, saving money in the long term

Impact on employees

• Greater protection

  • Employees are protected from unfair treatment, such as being dismissed without reason or being underpaid

• Safer working environment

  • Legal controls help ensure that workplaces are safe and that employees are properly trained to avoid accidents

• More job security

  • Employees are less likely to lose their jobs unfairly or face discrimination, which gives them more confidence at work

• Better working conditions

  • Laws encourage fair pay, rest breaks, equal treatment and protection from bullying or harassment