LEGAL (ETHICAL , LEGAL AND ENVIRONMENTAL FACTORS)

What are legal factors in business?

Legal factors are laws and regulations that businesses must follow when operating, which influence how they treat employees, customers, competitors, and the environment.

Why are legal factors important for businesses?

They ensure fairness, safety, and accountability, while non-compliance can lead to fines, legal action, reputational damage, or closure.

What is company law?

Company law governs how businesses are formed, owned, managed, and dissolved.

How does company law affect businesses?

It sets rules on: - Directors’ responsibilities - Financial reporting - Shareholder rights

How does company law affect stakeholders?

• Shareholders are protected - Customers gain confidence - Managers face legal accountability

What is employment law?

Employment law regulates the relationship between employers and employees.

What does employment law cover?

• Contracts - Working hours - Redundancy - Dismissal rights

What is anti-discrimination law?

It prevents unfair treatment based on gender, race, age, disability, religion, or sexuality.

How do employment and anti-discrimination laws benefit employees?

They provide job security, fair pay, equal opportunities, and protection from exploitation.

What are the disadvantages of employment law for businesses?

• Higher labour costs - Reduced flexibility - Legal risks if laws are broken

What is consumer protection law?

Consumer protection law ensures customers receive safe, high-quality products and accurate information.

What does consumer protection law require businesses to do?

• Sell goods fit for purpose - Provide refunds or replacements - Avoid misleading advertising

How does consumer protection law affect businesses?

It increases customer trust but also raises costs due to compliance and quality control.

What is competition policy?

Competition policy prevents businesses from restricting competition unfairly.

What practices does competition policy restrict?

• Price fixing - Market sharing - Abuse of monopoly power

How does competition policy benefit consumers?

It leads to: - Lower prices - Greater choice - Higher quality

How can competition policy negatively affect businesses?

It limits growth strategies such as mergers and dominant pricing.

What is health and safety legislation?

Health and safety laws ensure safe working conditions for employees and customers.

What must businesses do under health and safety legislation?

• Provide training - Maintain safe equipment - Carry out risk assessments

What are the benefits of health and safety laws?

• Reduced accidents - Improved employee morale - Lower absenteeism

What are the drawbacks of health and safety laws?

• Compliance costs - Administrative burden

What is data protection law?

Data protection law controls how businesses collect, store, and use personal data.

Why is data protection important?

It protects customers’ privacy and prevents misuse of personal information.

How does data protection law affect businesses?

• Requires secure IT systems - Staff training - Risk of fines for breaches

What is intellectual property (IP)?

Intellectual property protects ideas, designs, brands, and inventions.

What types of intellectual property exist?

• Patents - Copyright - Trademarks

How does IP protection benefit businesses?

It prevents copying, protects competitive advantage, and encourages innovation.

What are the costs of intellectual property protection?

• Registration fees - Legal enforcement costs

What is the minimum wage?

The minimum wage sets a legal minimum level of pay for workers.

How does minimum wage law benefit employees?

It improves living standards, reduces poverty, and ensures fair pay.

How does minimum wage law affect businesses?

• Increases wage costs - May reduce profits - Encourages automation or price increases

What are environmental laws?

Environmental laws control pollution, waste disposal, and carbon emissions.

How do environmental laws affect businesses?

They increase operating costs but improve sustainability and public image.

What are ethical legal responsibilities?

Ethical responsibilities involve doing what is morally right, even if not legally required.

Why are ethical considerations important for businesses?

They improve reputation, customer loyalty, and long-term success.

How does legislation affect business costs?

Legislation often raises costs due to compliance, training, and monitoring.

How does legislation benefit businesses?

• Creates a level playing field - Improves trust and reputation - Reduces exploitation

How does legislation affect employees?

Employees benefit from safety, fairness, and protection, but firms may hire fewer workers.

How does legislation affect customers?

Customers benefit from safer products, fair pricing, and data protection.

How does legislation affect shareholders?

Shareholders benefit from reduced risk, but profits may be lower due to higher costs.

Why is evaluation important in exam answers?

Eduqas requires balanced judgement, showing advantages and disadvantages for different stakeholders.

What is a strong evaluative conclusion for legal factors?

The impact of legislation depends on: - Industry - Business size - Ability to absorb costs. Overall, legislation protects stakeholders but increases business costs.