Legal Environment (AQA A-Level Business): Revision Notes

Employment Law

What is employment law?

Employment law exists to create fairer working conditions and prevent employers from exploiting their workers. These regulations establish minimum standards that all businesses must follow when employing staff. Understanding employment law is crucial for both employers (to avoid legal issues) and employees (to know their rights).

Labour laws and employee rights

The right to fair treatment

Every employee has a legal right to be treated fairly both during their employment and when applying for jobs. This fundamental principle underpins all employment legislation in the UK.

Equality Act 2010

The Equality Act 2010 is the main piece of legislation that safeguards employees from discrimination. This Act consolidated and simplified several previous laws, including the Race Relations Act (1976) and the Sex Discrimination Act (1975). It also reflects the content of the EU's Equal Treatment Directive.

Types of discrimination

There are two main types of discrimination that the law recognises:

For example, refusing to employ someone because of their disability, or paying women less than men for doing the same job, would constitute direct discrimination.

Reasonable adjustments for disabilities

Employers have a legal duty to make reasonable adjustments for workers with disabilities. This might include installing wheelchair ramps, providing specialist equipment, or adjusting working hours. The adjustments must be "reasonable" – meaning they should be practical and affordable for the business.

Flexible working rights

Parents have the right to request flexible working arrangements from their employers. Employers can only refuse such requests if they have a good business reason for doing so.

This protection is particularly important for working parents with young children. If an employer refuses a flexible working request from a man with young children but had previously approved similar requests from women, this could constitute direct sex discrimination.

How discrimination laws affect business operations

Discrimination legislation impacts all aspects of how businesses operate. Understanding these requirements helps companies avoid costly legal disputes and build diverse, talented workforces.

Recruitment and selection

During the recruitment process, businesses must be careful to avoid discrimination:

• Employers cannot state in job advertisements that candidates must have particular characteristics (such as age, gender, or race). They cannot use discriminatory language – for example, advertising for a "waitress" would exclude men from applying.

• Businesses can only advertise for someone with a specific characteristic if it is a genuine requirement of the job. For instance, a female toilet attendant for ladies' toilets would be acceptable because gender is genuinely relevant to the role.

• Companies must make hiring decisions without discriminating. They need to be able to justify why they offered a job to a particular candidate, in case an unsuccessful applicant takes them to a tribunal.

Pay and benefits

Employment law requires that businesses provide equal treatment in terms of compensation:

• Male and female employees must receive the same pay for work of equal value. They are also entitled to the same benefits (such as company cars or health insurance).

Promotions and redundancies

Discrimination laws ensure fairness in career progression and job security:

• Everyone should have the same opportunity to be promoted. Businesses cannot simply promote older employees because they assume younger workers are more likely to change jobs soon. Decisions must be based on merit and suitability, not on protected characteristics.

• When making staff redundancies, employers cannot deliberately select certain individuals based on their age, disability, or other protected characteristics. The selection criteria must be fair and justifiable.

Employment tribunals

What are employment tribunals?

If employees believe they have been treated unfairly by their employer, they can make a claim to an employment tribunal. These are specialist courts that handle workplace disputes.

The tribunal process

At a tribunal hearing, representatives from both the employer and employee present their cases and supporting evidence. A tribunal judge (or sometimes a tribunal panel) listens to both sides and makes a decision about who is in the right.

Possible outcomes

If the tribunal rules in favour of the employee, several outcomes are possible:

• The employer might be ordered to pay compensation to the employee for the unfair treatment they suffered
• In cases of unfair dismissal, the employer may be required to give the employee their job back

Minimum wage legislation

National Minimum Wage

The National Minimum Wage was introduced in 1999 to prevent employees from being paid unfairly low wages. This legislation sets a legal minimum hourly rate that employers must pay.

The minimum wage rises every year to keep pace with inflation and living costs. Different rates apply to different age groups:

• $6.70 per hour for people aged 21 or over
• $5.30 per hour for people aged 18-20
• $3.87 per hour for 16 and 17 year olds
• At least $3.30 per hour for apprentices

National Living Wage

In July 2015, the government announced a National Living Wage of $7.20 per hour for workers aged over 25, which came into effect in April 2016. This replaced the previous minimum wage for this age group.

The National Living Wage is controversial because it is lower than the independently calculated living wage – the amount that experts believe people actually need to cover basic living costs. However, some employers voluntarily choose to pay employees the higher, independently calculated rate. This can bring several business benefits:

• Increased motivation among staff who feel valued
• Reduced absenteeism as satisfied workers are less likely to take unnecessary sick days
• The ability to market themselves as an ethical employer, which can attract customers and talented job applicants

Consequences of non-payment

Employment contracts

What is an employment contract?

An employment contract is a legally-binding agreement between an employer and an employee. It sets out the duties and rights of both parties, covering aspects such as working hours, salary, holiday entitlement, and notice periods.

Employees are entitled to receive a written statement of their main employment terms within two months of starting work. This ensures both parties are clear about the arrangement.

Common rights and responsibilities

Employment contracts include certain rights and responsibilities that are standard across most workplaces:

Health and safety rights

Employees have the right to a safe working environment. The Health and Safety at Work Act (1974) requires employers to ensure that the workplace is safe. This includes making sure that electrical equipment, moving machinery, and other potential hazards are properly maintained and used safely.

Holiday entitlement

Employees are entitled to paid holiday. The European Working Time Directive (introduced in April 2009) gave full-time workers the right to 28 days of paid holiday per year, including bank holidays.

This right ensures employees can rest and maintain a healthy work-life balance, which benefits both their wellbeing and their productivity.

Maternity and paternity leave

Employees have the right to take paid maternity and paternity leave, though this is usually not at full pay. Historically, mothers could take up to 39 weeks of paid leave plus 13 additional weeks of unpaid leave, whilst fathers received 2 weeks of paid paternity leave.

Employee responsibilities

Employees also have certain duties under their contracts:

• They must attend work when they are supposed to and arrive on time
• They must be willing to carry out any reasonable task that their employer asks of them, as long as it relates to their role

These responsibilities help ensure that businesses can operate effectively and that all team members contribute fairly.

State pension

What is the state pension?

The state pension is a government benefit that provides everyone with some income to live on in their old age. The amount you receive depends on how many years you have paid National Insurance contributions during your working life.

Anyone earning more than $155 per week must pay National Insurance, which funds the state pension system.

Rising pension age

For many years, men could claim their state pension from age 65 and women from age 60. However, because people are living longer, the government has been gradually increasing the pension age. By 2018, the state pension age will be 68 for both men and women.

This change aims to ensure the pension system remains affordable as the population ages.

Workplace pensions

A recent change to the law means that employers must enrol most employees in a workplace pension scheme and contribute to it. This provides workers with additional retirement savings on top of the state pension.

Remember!