Unit 1: People in Business

Stakeholders

Definition

People who are affected by how the business is run

Roles

Extra Notes:

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Relationships

1. Co-operative
2. Competitive
3. Dependant
4. Dynamic
5. Co-operative: Parties work together to achieve their common goal. Mutually beneficial/win-win situation.

Example:

Entrepreneur & Investor

The relationship is co-operative when the entrepreneur gives open, transparent and honest information to the investor and in return the investor gives finance to the entrepreneur at a reasonable rate.

1. Competitive: Both parties go after the same thing but only one party gets it at the expense of the other (win/lose)

Example:

Entrepreneur & Investor

The entrepreneur and investor compete with each other. The entrepreneur may want to use any profits the business makes to further develop/expand the business whereas the investor may want profits to be paid out regularly.

Competitive relationships between other stakeholders

A competitive relationship between producers in the same line of business means each is pursuing different objectives in an effort to achieve particular objectives at the expense of the other (win-lose relationship).

This is beneficial for the consumer as every business must work hard to satisfy customer needs.

Producers in the same line of business may compete on:

• Prices of goods and services
• Quality
• Sales
• Recruitment of labour etc.

Rival business(e.g., Supermarkets) may compete with each other in the following areas:

• Quality of goods
• Price of goods
• Customer Service
• Choice of goods and services

Benefits for consumers

Reduced Prices

The consumer benefits from rival supermarkets reducing their prices in order to attract consumers. Established supermarkets have been forced to lower their prices in order to compete also. This is of financial benefit to the consumer.

Sales Promotions/Special offers

Competing supermarkets regularly offer gimmicks such as 3 for2, loyalty card points etc. SuperValu, Dunnes Stores and Tesco regular offer special sales promotions in order to incentivise consumers. This provides value to the consumer.

Improved quality of goods or quality of service

A competitive relationship between supermarkets leads to the rival supermarkets attempting to maximise the quality of the goods and service they provide. Consumers are offered a wider range of products and are provided with a better service. e.g. Supermarkets offering home delivery.

1. Dependant: Parties need each other in order to achieve their goals

Example:

Consumer & Producer

Consumers need the producer to produce the products they want/need. The producer depends on the consumer to buy their products so they can make a profit.

1. Dynamic: A constantly changing relationship between stakeholders, sometimes co-operative, sometimes competitive.

Example:

Employers

During the Rose of Tralee Festival businesses that normally compete with each other, co-operate to organise the festival that brings people/money to the area.

Examples of different stakeholder relationships in action:

Employer & Employee

If the employer provides a fair wage to the employee, the employees will benefit from this and thus cooperate by working hard for the employer, increasing their profits.

Investor & Manager

The manager provides the investor with accurate, honest & transparent information. The investor will benefit by knowing his investment is safe and thus provide further investment that the manager needs to run his business effectively.

Producer & Consumer

The producer provides good quality goods that the consumer needs at a reasonable price to the consumer. In return the consumer buys these providing the producer with good profit.

Legislation

Contract Law

Definition

A contract is a legally binding agreement between two or more parties in which each promises to do something for the other. It is enforceable by law.

Essential elements of a contract

1. Offer

An offer is made when a person asks another to enter into a deal with them. It can be made orally, in writing or by conduct.

e.g. Offering to buy groceries when you place them on the conveyor belt in a supermarket.

Note: Invitation to Treat is not an offer. For example if a good is displayed in a shop at a certain price, this is an indication that the seller would like to receive offers for the good. The seller is free to accept or reject any offers.

1. Acceptance

Occurs when the other person agrees precisely to all the terms of the deal without any conditions. Again it can be orally, in writing or by conduct.

e.g. The supermarket accepting your offer to buy the groceries when the shop assistant scans them.

Note: If a person changes any term of the deal it becomes a counter offer.

1. Consideration

This means that some advantage or benefit must move from one party of a contract to the other party in order for a contract to be legal. It refers to what is exchanged between the buyer & seller.

e.g.The purchase of a CD for €20 from your local music shop-the buyer gives €20 to the seller & in return gets a CD.

1. Intention to Contract

Both parties to the agreement must mean for it to be legally binding.

e.g. Agreements between businesses are always contracts because both sides always intend for them to be legally binding.

1. Capacity to Contract

This means that all persons and companies have the legal right/ability to enter into a contract.

The following however, do not have the capacity to contract:

• Infants (those under 18 years of age) except in certain cases e.g. necessities

• Persons under the influence of drink or drugs

• Insane persons

• Bankrupt persons

• Diplomats

1. Consent to Contract

For a contract to be valid both parties must give their permission to enter into it.

e.g. They must not be forced or tricked into a contract.

1. Legality of Form

Certain contracts must be in a particular form in order to be legal.

e.g. A contract for the sale of a house must be in writing

1. Legality of purpose

The purpose of a contract must be legal in order for it to be upheld in court.

e.g. A contract to buy illegal drugs is not a legal one

Termination of a Contract

1. Performance:

A contract ends when each party to the contract carries out their side of the contract as agreed.

e.g. A contract to buy a house is fulfilled when the buyer receives the property & the seller receives the sale price.

1. Agreement:

The parties to the contract may agree to end or cancel a contract by mutual consent whether or not the purpose of the contract has been achieved.

e.g. A contract of employment may be ended by agreement if it includes a clause stating the contract can be terminated if one month’s notice is given.

1. Frustration

This occurs when an unforeseen event prevents the contract from being completed. This event was not under the direct control of either party & makes it impossible to complete the contract.

e.g. The death of one of the parties to the contract

1. Breach

If one of the parties to a contract does not perform his/her side of the bargain then the contract is said to be repudiated. One of the parties is in breach of an essential element of the agreed contract and so the second party has the right of action in the courts against them.

e.g. A condition of a contract states that furniture purchased is to be black leather. When the furniture is delivered it is red polyester. This is a fundamental breach of a condition of the contract & the buyer is entitled to seek redress

Remedies for Breach

1. Damages

A judge can order the person who broke the contract to pay financial compensation to the innocent party.

e.g. A performer pulling out of a concert (for which they have been paid a €250,000 advance) may have to compensate the promoter for any money lost + inconvenience.

1. Specific Performance

A judge may order the person who broke the contract to carry out the original terms of the contract exactly as promised.

e.g. The performer being instructed to perform the concert as promised but at a later date.

1. Rescind the Contract

A judge orders the contract be set aside and both parties be returned to exactly the positon they were in before the contract was agreed.

e.g. The performer paying back the €250,000 advance and the contract being set aside.

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Consumer Legislation

** Non Legislative methods of solving Consumer Conflict**

1. Negotiation

The consumer & business talk until they reach a mutually acceptable decision. Compromise

1. Consumers Association of Ireland (CAI)

• An interest group for consumers. Consumers can contact the CAI who will give them advice on their rights and how to solve their problem.
• Publishes Consumer Choice magazine.
• Lobbies the government on consumer issues.

1. The Sale of Goods & Supply of Services Act 1980

Main Provisions

1. Merchantable Quality

This means that goods bought must be of a reasonable quality taking into account the price paid for them, and their durability.

Example: If a customer buys a shirt for €90 then the buttons must not fall out in a day or two.

1. Fit for their purpose

This means that goods must be able to do what they are designed to do or intended for.

Example: A waterproof jacket must keep out water

1. Be as described

A product must be exactly as it was described on packaging, by a salesperson or in a catalogue.

Example: A shirt described as 100% cotton must be made only from cotton & no other fabric.

1. Identical to sample

If a good is bought based on a sample shown, then the good received must be identical to the sample in every way.

Example: If a consumer buys green wallpaper from a sample shown in store, the wallpaper they received must be the same in every way to the store sample.

If any of the above occurs customers are entitled to the following:

1. Refund/Replacement

If the fault is a major one and the consumer complains promptly then they are entitled to a full cash refund or a replacement good.

Example: If a consumer purchases a microwave oven and discovers on first using it that the timer does not work, then they are entitled to a full refund for the product or a replacement model of the same or similar quality.

1. Repair

If there is a delay between the purchase date and the actual complaint or if the fault is of a minor nature then the consumer may only be entitled to partial refund or repair.

Example: If the bulb in the microwave stops working after a number of months then a repair or partial refund is all the customer would be entitled too.

Other provisions of the act

Service Providers:

Must have the necessary skill

The person providing the service should be qualified to do so e.g a qualified electrician rewiring a house

Use due care & diligence

Every effort should be made to ensure the delivery of the service is of good quality e.g. it should be given plenty of time and not rushed

Use materials that are of merchantable quality

All goods supplied with the service must be of reasonable quality taking into account their price and durability e.g. flowers supplied for a wedding should be fresh

Unsolicited Goods:

These are goods that are sent to someone who has not ordered them. The consumer has the right to keep the goods without payment after thirty days if the consumer has sent written notice to the sender and informed him where they can be collected. She has the right to keep the goods after six months if the sender has not collected them and the consumer has not prevented the firm from collecting them.

Guarantee:

Guarantees are seen as additional protection given to the consumer and they cannot limit the consumer’s rights under consumer law. The guarantee must clearly show what goods are covered, the time frame involved and the procedure for making claims. The consumer can choose to have the goods fixed by the manufacturer or they can insist that the retailer deals with the complaint. The contract is between the seller and the buyer

Signs limiting consumer rights:

Consumers’ rights under the act cannot be taken away or limited by signs such as ‘Credit Notes Only’, ‘No Cash Refunds’, ‘No exchange’ etc. These signs are illegal and do not affect your statutory consumer rights. A credit note is not a refund as it restricts you to shopping in that shop. It is an offence for the retailer to display signs that give the consumer the impression that they have no legal rights.

Evaluation

• Good because consumers are entitled to their money back if they purchase faulty goods or services. This is protected by law.

2. Consumer Protection Act 2007

This law deals with unfair business to consumer commercial practices.

It prohibits 3 kinds of unfair commercial practices:

1. Misleading Practices

This means deceiving or giving false information to a consumer that causes him to buy something he would not otherwise have bought.

A business cannot make false or misleading claims about:

1. The nature of a product- Danone actimel
2. Results to be expected-L’oreal Mascara
3. Main Characteristics-Sky Package
4. Geographical Origin-Made in Ireland, pictures of harps
5. Usage & prior history-Used Cars
6. Previous Price-sale price
7. Aggressive Practices

Coercing or pressuring a consumer to buy a product.

The law bans:

1. Threatening or abusive language or behaviour by the trader-bullying into buying
2. Taking advantage of a consumers circumstances or misfortune-cowboy builders & the elderly
3. Prohibited Practices

Certain practices are completely illegal under the law:

1. Untrue claims of curing illness
2. Closing down sales when a business is not closing down
3. Advertising aimed specifically at children
4. Free gifts that cost to claim
5. Competitions with a non-existent top prize
6. Demanding payment for unsolicited goods

Other points- Pyramid Schemes are also banned under the law

The act also provides rules for Pricing & Price Display:

1. Weighing scales must be provided in a prominent position
2. Prices must be clearly on display
3. The Minister has the power to make regulations requiring certain prices to be displayed in a particular way e.g. inclusive of taxes & charges
4. In emergencies the Government can actually set a maximum price for a product

Sanctions & Penalties

Under this law the CCPC can subject any business found to be in breach of the law to the following:

1. Prosecution-take them to court
2. Issue a ‘Compliance Notice’ –business must stop engaging in illegal practice and comply with law by a certain date
3. Force the business to stop engaging in illegal practices & compensate any consumers affected.
4. Apply for a ‘Prohibition Order’ that forces a business to stop committing a prohibited practice
5. On-the-spot fines-if price display rules are broken.
6. Name & Shame businesses that are in breach of the law.

Consumer Redress

If consumers fall victim to any firms operating the illegal practices outlawed under this act then they are entitled to the following:

1. ‘Compensation Order’. The CCPC may apply for a Compensation Order on behalf of the consumer to force the business to compensate the consumer.
2. ‘Exemplary damages’ may also be awarded as punishment for the business. This is an extra sum in addition to any compensation due to the consumer.

Evaluation:

• Protects consumers from rogue traders
• Ensures consumers are provided with honest information & can therefore make informed decisions
• Businesses are punished for lying to or misleading consumers.

Solving Consumer Disputes

1. Competition & Consumer Protection Commission

Formed through the merging of the former Competition Authority & The National Consumer Agency

It is the state agency responsible for promoting fair competition & protecting the interests of consumers.

Main Functions:

• Advises the Public

Provides Information & advice to the public on personal finance and their rights as consumers. This is done mainly through their website, publications & telephone helplines

• Advises Businesses

Provides information & advice to businesses on their legal obligations regarding consumers & other businesses

• Advises the Government

Advises the government on how best to ensure fair competition and that the welfare of consumers is protected. New legislation

***Use advice as one point only***

• Enforcement

Enforces consumer & competition law by investigating suspected breaches.

• They have the power to enter premises, accompanied by Gardai if necessary, to gather evidence.
• It can issue on-the spot fines to businesses for breaches of consumer law.
• Serious breaches can be referred to the Director of Public Prosecutions.
• Name & Shame

They publish a Consumer Protection List that identifies businesses found to be breaching consumer law

• Investigates mergers & takeovers

They examine mergers and takeovers to ensure there is not a substantial lessening of competition in Ireland which could impact on prices/services provided to consumers

Product Safety

• Responsibility for market surveillance in relation to safety of products covered by various EU Directives

1. The Small Claims Court/Procedure

Benefits:

• Inexpensive

The application fee is €25 which you send along with your application form to a district court clerk, called the Small Claims Registrar. The fee is non-refundable.

• Online application system

Making it available to all people regardless of where they live and easy to access also.

• No Solicitor is required

Person can represent themselves meaning they don’t have expensive legal charges

Challenges:

• Limited Compensation

You can only use the Small Claims procedure if your claim is for €2,000 or less.

• Certain types of cases

The small claims procedure doesn’t deal with debts, personal injuries or breaches of leasing agreements. It also does not deal with most claims about private rental properties.

Evaluation:

• In my opinion the Small Claims Court is effective because it ensures that all consumers can get justice easily, quickly & cheaply without involving a solicitor.
• Consumers in Ireland can make cross-borders claims of up to €5,000 against businesses in other EU countries (except Denmark) through the European Small Claims procedure. Cut-off value very low and should be raised from its current level.

1. Ombudsman for Public Services

• This Ombudsman will investigate complaints on behalf of members of the public who feel they have been unfairly treated by public bodies including Government Departments, Local Authorities & the HSE.
• It cannot investigate complaints concerning the President, The Dáil, Defence Forces, Garda Siochána, the Judiciary or the Prison Service.
• Its recommendations are not legally binding but are generally obeyed by the public body involved.

Evaluation:

• In my opinion the Ombudsman for Public Services is very effective as they provide an independent & impartial service free of charge-this saves the complainant a lot of money as they don’t have to bring the public body to court.

Industrial Relations Conflicts

Non legislative methods of solving industrial relations conflicts

1. Negotiation-meeting to discuss issue-compromise
2. Conciliation-independent third party encourages the parties to come up with a solution themselves through continued negotiation
3. Arbitration-independent third party suggests a solution to the issue-must be decided before hand if binding or non-binding

Legislative methods

1. Industrial Relations Act 1990

(i) Definition:

Defines a trade dispute as a dispute between employers & employees in connection with the employment or non-employment of employees and the terms & conditions of the job.

(ii) Sets out Reasons for Legitimate trade dispute:

• Pay-pay not in line with others in a similar industry
• Working conditions/duties-unsafe working conditions
• Redundancies/Promotions-unfair selection
• Union recognition-refusing to recognise a union
• Demarcation-who does what dispute
• New technology-no training
• Unfair Dismissal/ Discrimination-in support of a work colleague

(iii) Conditions for a legitimate strike/industrial action:

• • Secret Ballot with the majority voting yes
  • One week’s notice to employer
  • Sanctioned by ICTU

Legitimate industrial action:

Official Strike

Employees do not enter their workplace and do not do their work. An official strike involves a secret ballot, one week’s notice and sanction by ICTU. Workers engage in primary picketing outside their place of work.

Work- to- rule

Employees only undertake the exact jobs written in their job description or contract of employment. Workers follow the rules of their employment contracts to the ‘letter of the law’ e.g nurses refusing to answer phone.

Go Slow

Employees complete their job really slowly. Frustrate employer.

Overtime ban

Workers refuse to do overtime. This can cause major disruption, leading to lost orders and lost sales, especially at peak trading times e.g. a toy shop at Christmas, an airline during holiday time

Token Stoppage

A brief stoppage of work intended to carry the threat of further, more serious action if agreement is not reached

Stakeholders impacted by trade disputes

Employees

Employees will not be performing their duties resulting in conflict between them and management. They will not receive a wage during an official strike. Prolonged industrial action may result in financial hardship for the employees. Employees may become unmotivated/unproductive.

Customers/consumers

The disruption to the business caused by a work to rule or official strike will result in consumers being unable to purchase products/services. They may lose faith in the brand/may change to another brand/business.

Investors

Trade disputes are bad publicity for the business. Share price may fall, reducing the market value of the investor’s stake. Prolonged industrial action will reduce profit levels and the chance of a dividend being paid to investors at the end of the year. Investors may sell their shares.

Management / Employer

Loss of profits as business is not operating. More management time and effort required to resolve conflict rather than focusing on the goals of the business. Management must follow agreed codes of practice. This distraction may lead to production delays and wastage.

Suppliers/Service Providers

Suppliers and Service Providers are normally paid after their product or service is sold. This period of time (credit) may be extended due to industrial action. They may not be able to sell their products or have their accounts due paid on time.

Government

If the dispute is an official strike, the ceasing of business activity will reduce taxation revenue such as PAYE, VAT, and CPT for government. Business may close down requiring government payment of social welfare. Government agencies such as the Workplace Relations Commission may get involved to bring the dispute to a timely solution. This involves resources and time.

(iv) Picketing:

Once a secret ballot has been held & one week’s notice given to employer then picketing outside the employer’s business premises is allowed. Picketing involves workers walking up and down with placards outside their place of work. The picketing must be peaceful, with no intimidation or obstruction.

(v) Secondary Picketing:

Secondary picketing outside another employer’s business premises is allowed if the workers can prove the second employer is helping their boss break their strike/frustrating their action.

(vi) Immunity:

Employees cannot be sued by their employer provided they have held secret ballot & given one week’s notice. The employer cannot take them to court to stop picketing and the Gardai cannot arrest or move peaceful picketers.

(vii) Workplace Relations Commission:

The act sets up the WRC

1. Workplace Relations Commission

The Workplace Relations Commission is the state agency that provides employers & employees with a one-stop-shop industrial relations service.

Its role:

1. Industrial relations information service

• The WRC provides information to ensure employers & employees understand their employment rights & responsibilities.
• Answers questions & provides information on industrial relations matters.
• Prepares & offers guidance to firms in drawing up codes of practice (Codes of practice are voluntary rules that are recommended for use in solving industrial relations disputes).

1. Dispute resolution services

The WRC helps to resolve industrial disputes & strikes through:

• Conciliation: assists employers and union representatives in sorting out their differences themselves through negotiation.
• Arbitration: The WRC investigate the dispute and come up with a solution.

Decisions of the WRC are not legally binding and can be appealed to the Labour Court.

1. Grievance resolution services

• The WRC helps resolve employment grievances that individuals or small numbers of staff may have. This would include grievances regarding unfair dismissals, discrimination or unfair leave entitlements.
• These can be submitted online to the WRC
• The WRC will then visit the place of the dispute, investigate the issue on-site and make a recommendation.

Again this recommendation is not legally binding and can be appealed to the Labour Court

1. Investigates compliance with employment law.

They have the power to conduct unannounced workplace inspections. If employers are found to be breaking employment law they can be prosecuted.

1. The Labour Court
   • Free service for solving IR problems
   • Court of last resort
   • Labour Court’s recommendation not legally binding except in cases of breaches of the Employment Equality Act 1998 & Industrial Relations Act

Seven members: Chairperson, 3 employer reps & 3 employee reps.

Functions:

• • Investigates industrial disputes that could not be solved by the WRC. Gets employer & employee to submit a written submission prior to hearing. Then holds formal hearing after which it issues a non-binding recommendation.
  • Hears appeals from employer or employee against the recommendation an Adjudication Officer previously made under the Employment Equality Act or Unfair Dismissals Act. The Labour Court considers the matter again & then makes a legally binding judgement on the matter.
  • Interprets the WRC’s codes of practice
  • Registers collective agreements made between employers & employees
  • Establishes Joint Labour Committees (JLC)

1. Unfair Dismissals Act 1977/2007

Protects employees from being unfairly sacked from their jobs.

Every sacking is unfair unless the employer can prove it was fair.

Reasons for Fair Dismissal

• • • Incapable of doing the job: physically unable, persistent absenteeism
    • Not qualified: lied on CV
    • Incompetent: failing to meet standard of work required
    • Misconduct: theft or bullying
    • Redundancies: cannot afford to keep him
    • Legal Reasons: if continuation of the job was to break the law in some way e.g. if an employee’s work visa had expired.

Reasons for Unfair Dismissal

• • • Pregnancy
    • Union Activities
    • Beliefs
    • Race
    • Age
    • Suing boss
    • Membership of the Travelling Community
    • Sexual Orientation

Procedure/steps for dismissing employee

• • • Advice/Counselling
    • Formal Verbal Warning
    • Written Warnings
    • Employee’s Right of Appeal

Redress for unfair dismissal

Re-instatement

• This means you are treated as if you had never been dismissed.
• Reinstatement entitles you to repayment for earnings lost between the date of the dismissal and the date of the hearing, and also to any favourable changes in the terms of employment during that period, such as pay rises.

Re-engagement

• Re-engagement means you will be given your job back but only from a particular date, such as the date of the decision in your favour.
• This means that you will not be entitled to compensation for any loss of earnings.
• Often this remedy is used where the adjudicator feels the employee contributed to the dismissal, even though the actual dismissal was unfair

Compensation

• This is the most common remedy – where compensation is awarded in respect of financial loss only. Generally, the maximum compensation is 2 years’ pay.
• If you were dismissed for making a protected disclosure, the maximum is 5 years’ pay.
• You cannot claim any compensation for such matters as injury to your feelings or stress caused by the dismissal

Constructive Dismissal: when an employer deliberately makes life so difficult, the employee is effectively forced to resign. E.g an employee constantly being ridiculed by the employer may feel they have no option but to resign

The onus is on the employee to prove this.

1. Employment Equality Act 1998-2015

(a) Defines discrimination as treating one person less favourably than another person is treated, has been treated, or would be treated on any one of the following nine grounds:

• • Gender
  • Civil/Marital Status
  • Family Status
  • Age
  • Disability
  • Race
  • Sexual Orientation
  • Religious Beliefs
  • Membership of the Travelling Community

(b) This act bans the following types of discrimination:

(c) Illegal to discriminate when hiring, training and promoting employees

(d) Advertisements that discriminate

(e) Equal pay for equal work

(f) Positive discrimination is allowed to promote equal opportunities

(g) Harassment & sexual harassment at work is illegal

Investigating breaches of the Act

The role of the Workplace Relations Commission in resolving cases of discrimination.

Mediation: The WRC can investigate a case of discrimination by appointing an Equality Mediation Officers who deal with the case in a conciliatory manner. Equality Mediator, who facilities both parties to reach a mutually acceptable agreement. Mediation is an attempt to get agreement between the parties. At the end of mediation both sides sign an agreement which is legally binding so that both sides must keep to the terms of the decision. Mediation is held in private and the agreement is not published.

Adjudication: If you do not reach an agreement through mediation you can request your case be brought to investigation by an adjudication officer. The adjudication officer hears a case and makes a legally binding decision on the dispute.It must be done within 6 months of the discrimination. A Hearing will be held at which the employer & employee present their case and can question each other as can the Adjudication Officer.The Adjudication Officer then makes a judgement (a written decision) to both sides which is published on WRC website. The decision can be appealed to Labour Court.

Remedies

Where the Adjudication Officer finds in favour of the employee, the following can be awarded:

• Equal Pay Claims: Equal pay in the future, back pay & compensation for discrimination
• Other cases: Equal treatment & compensation up to a max of 2 years pay (or €40,000 if this is more) for an employee. €13,000 can be awarded for a non-employee.

Evaluation:

• Effective because it protects all people regardless of colour, beliefs etc from prejudiced bosses