IGCSE Business Studies - 2.1.2 Employment Contracts and Legal Controls

Objective: Effects of legal controls over employment issues on employers and employees

Introduction

Employment contracts form the foundation of the employer-employee relationship, outlining the terms and conditions of work. However, these relationships are significantly influenced and regulated by various legal controls. These controls aim to protect employees and ensure fair employment practices. This section will explore the impact of these legal controls on both employers and employees.

Types of Employment Contracts

Understanding the different types of employment contracts is crucial to understanding the legal controls that apply.

• Permanent Contract: A continuous, indefinite period of employment.
• Fixed-Term Contract: Employment for a specific period.
• Part-Time Contract: Working fewer hours than a full-time employee.
• Zero-Hours Contract: No guarantee of work; the employer is not obliged to offer work.
• Agency Workers: Employees working through a temporary employment agency.

Legal Controls and Their Effects

Numerous legal controls exist to regulate employment. These can be broadly categorized into:

• National Minimum Wage/National Living Wage: A legally mandated minimum hourly rate of pay.
• Working Time Regulations: Rules regarding maximum working hours, rest breaks, and holiday entitlement.
• Health and Safety at Work Act: Employer responsibility for ensuring a safe working environment.
• Discrimination Legislation: Laws prohibiting discrimination based on protected characteristics (e.g., age, gender, race, disability).
• Unfair Dismissal Legislation: Rules governing how an employer can terminate an employee's contract.
• Employment Rights Act: A comprehensive piece of legislation covering various aspects of employment rights.

Effects on Employers

Legal controls impose various obligations and costs on employers:

Control	Effect on Employers
National Minimum Wage/National Living Wage	Increased labour costs. Requires accurate record-keeping of hours worked.
Working Time Regulations	Need to manage staff schedules carefully. Potential costs associated with overtime and ensuring adequate rest breaks.
Health and Safety at Work Act	Investment in safety equipment and training. Ongoing monitoring and risk assessment. Potential legal penalties for breaches.
Discrimination Legislation	Need for fair recruitment and promotion practices. Potential for costly legal action if discrimination occurs.
Unfair Dismissal Legislation	Strict procedures must be followed when dismissing employees. Potential for compensation payments if dismissal is deemed unfair.
Employment Rights Act	Compliance with a wide range of legal requirements. Potential for legal challenges if rights are not respected.

Effects on Employees

Legal controls provide significant benefits and protections for employees:

• Guaranteed Minimum Income: The National Minimum Wage/National Living Wage ensures a basic standard of living.
• Protection from Exploitation: Working Time Regulations prevent excessive working hours and ensure adequate rest.
• Safe Working Environment: The Health and Safety at Work Act protects employees from workplace hazards.
• Equal Opportunities: Discrimination legislation ensures fair treatment in recruitment, promotion, and termination.
• Job Security: Unfair dismissal legislation provides protection against arbitrary dismissal.
• Rights to Entitlement: The Employment Rights Act guarantees various rights, such as holiday pay and notice periods.

Conclusion

Legal controls over employment issues play a vital role in shaping the employer-employee relationship. While they impose obligations and costs on employers, they also provide essential protections and benefits for employees. A balance must be struck to ensure a fair and sustainable employment landscape.