IGCSE Business Studies - 2.1.2 Employment Contracts and Legal Controls

Effects of Legal Controls over Employment Issues on Employers and Employees

Introduction

Legal controls over employment are crucial in ensuring fair treatment and protecting the rights of both employers and employees. These controls are established by government legislation and aim to address issues such as unfair dismissal, discrimination, working conditions, and minimum wages. This section will explore the effects of these legal controls on both employers and employees.

Effects on Employers

Legal controls can have a significant impact on employers, influencing their operational costs, decision-making processes, and risk management strategies.

• Increased Costs: Employers face increased costs due to legal requirements such as National Insurance contributions, employer's pensions, sick pay, and compensation for unfair dismissal.
• Administrative Burden: Compliance with employment law requires significant administrative effort, including maintaining accurate records, implementing fair recruitment and selection procedures, and conducting regular audits.
• Reduced Flexibility: Legal controls can limit employers' flexibility in areas such as working hours, holiday entitlement, and the termination of employment.
• Risk of Legal Action: Failure to comply with employment law can lead to costly legal action, including fines, compensation payments, and damage to the company's reputation.
• Improved Employee Morale and Productivity: Fair treatment and a positive working environment fostered by legal controls can lead to improved employee morale, loyalty, and productivity.
• Enhanced Reputation: Companies with a strong reputation for fair employment practices may attract and retain better employees and customers.

Effects on Employees

Legal controls provide essential protections and benefits for employees, promoting fairness, security, and well-being in the workplace.

• Job Security: Employment laws provide protection against unfair dismissal, ensuring employees have a degree of job security.
• Fair Treatment: Legislation prohibits discrimination based on protected characteristics such as age, gender, race, religion, and disability, promoting equal opportunities in the workplace.
• Minimum Standards of Working Conditions: Laws set minimum standards for working conditions, including health and safety regulations, working hours, and holiday entitlement.
• Protection of Rights: Employees have legal rights regarding pay, deductions, and access to information about their employment.
• Redundancy Protection: Laws provide employees with certain rights and entitlements in the event of redundancy, such as consultation and redundancy pay.
• Improved Work-Life Balance: Legislation regarding working hours and holiday entitlement contributes to a better work-life balance for employees.

Specific Legal Controls and Their Effects

Here's a table summarizing some key legal controls and their effects:

Legal Control	Effect on Employers	Effect on Employees
National Minimum Wage	Increased labour costs	Ensures a basic standard of living
Working Time Regulations	Requires monitoring of working hours and potential overtime costs	Protects against excessive working hours and ensures rest periods
Equality Act 2010	Requires fair recruitment and treatment, potential for legal action	Protects against discrimination and promotes equal opportunities
Health and Safety at Work Act 1974	Requires investment in safety measures and risk assessments	Ensures a safe and healthy working environment
Unfair Dismissal Regulations	Limits flexibility in dismissing employees, potential for compensation	Provides protection against unfair dismissal and ensures fair procedures

Conclusion

Legal controls over employment issues have a multifaceted impact on both employers and employees. While they can increase costs and administrative burdens for employers, they provide essential protections and benefits for employees, promoting fairness, security, and well-being in the workplace. Understanding these effects is crucial for businesses to operate legally and ethically and for employees to assert their rights in the workplace.