2.5.2 - Legislation

Question 1

What is legislation?

Answer 1

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

Question 2

What are the five areas of legislation that impact a business?

Answer 2

• Consumer protection
• Employee protection
• Environmental protection
• Competition policy
• Health and safety

Question 3

What is consumer protection legislation?

Answer 3

Aims to ensure that consumers are treated fairly by the companies with which they interact

Question 4

What areas does consumer protection legislation cover?

Answer 4

• The safety of products
• The standard and quality of products
• The rights of customers if they are unhappy with their purchase
• The product information that must be given to customers

Question 5

What is the negative to meeting consumer protection requirements?

Answer 5

Increased business expenditure, which may reduce profitability

Question 6

What is the positive to meeting consumer protection requirements?

Answer 6

Provides a level playing field for businesses, ensuring that no business can gain an unfair advantage over rivals by taking shortcuts or by making false claims about their products

Question 7

What is employee protection legislation?

Answer 7

Employee protection legislation aims to prevent the exploitation of workers

Question 8

What areas does employee protection legislation cover?

Answer 8

• Pay and working conditions
• Equality of employment rights for marginalised groups (e.g. those with disabilities) to avoid discrimination
• The right to belong to a trade union and take industrial action
• Contracts and termination of employment

Question 9

What are the impacts of employee legislation on a business?

Answer 9

• Changing working practises
• Potential penalties (fines may be issued and business reputation damaged if laws are not followed) and potential rewards (motivated and productive staff)
• Compliance costs
• Higher labour costs

Question 10

What is environmental protection legislation?

Answer 10

Environmental protection legislation aims to hold businesses responsible for their environmental impact

Question 11

What areas does environmental protection legislation cover?

Answer 11

• Pollution
• Destruction of wildlife
• Traffic congestion
• Air quality
• Resource depletion

Question 12

What may happen if a business fails to follow environmental protection laws?

Answer 12

May be fined or forced to cease commercial activity until they resolve problems they have caused

Question 13

What is competition policy legislation?

Answer 13

Competition legislation aims to protect the interests of both consumers and businesses by restricting anti-competitive practices

Question 14

What areas does competition legislation cover?

Answer 14

• Abuse of market power so as to limit monopoly power
• Anti-competitive acquisition activity
• Cartel activity and collusion (where a group of businesses collude with each other in order to improve their profits and dominate the market)

Question 15

What are the aims of competition legislation?

Answer 15

• Widen consumer choice in markets for goods or services
• Ensure effective price competition between suppliers
• Deal with anti-competitive behaviour which might have a negative effect on consumers

Question 16

Anti-competitive agreements are illegal, what are anti-competitive agreements?

Answer 16

Agreements, arrangements, and concerted business practises which appreciably prevent, restrict or distort competition

Question 17

What different aspects, that are a part of anti-competitive agreements, are not allowed?

Answer 17

• Agree prices with competitors
• Share markets or limit production to raise prices
• Impose minimum prices on different distributors
• Cut prices below cost in order to force a smaller or weaker competitor out of the market

Question 18

What is health and safety legislation?

Answer 18

Health and safety legislation required businesses to operate in a way that protects the physical and mental wellbeing of its employees and contractors, as well as its customers

Question 19

What areas does health and safety legislation cover?

Answer 19

• The provision of adequate breaks and rest periods
• Temperature and noise levels
• The provision of safety equipment
• Hygienic, safe and sanitary conditions
• Preventing stress

Question 20

What financial and time costs may be incurred when implementing health and safety legislation into a business?

Answer 20

• 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 code of practise