Legal Advice and Red Tape – Understanding business codes of practice, laws and regulations


 Legal Advice

When a new company is being considered, the directors and shareholders need to consider many aspects of what is involved. There are many legal requirements, rules and regulations and codes of practice to be understood and complied with. All this can be considered red tape, but it is important to both companies and their staff.

Two other tasks which are vital when starting up a business are an effective business plan for the company and a comprehensive and user friendly website.

Description of a business code of practice

A business code of practice is required to allow the company to state its principles, standards and priorities. For example, it provides protection if legal proceedings are taken out against the company by a disgruntled employee. Therefore, it is vital to have a code of practice, and there are a number of differing ways of composing one:

1)   Before starting to prepare the code of practice, think about the company’s mission statement and how it affects the way the business is operated on a daily basis. This will form the foundation of the code of practice as it should work in conjunction with the principles and standards the directors and shareholders have agreed.

2)   The code of practice should be closely linked to the type of business being operated. Every business will have a specific character and features and these should be included. Therefore, employees can be assisted to answer any direct questions.

3)   A business code of practice should establish the company’s ethical code, eg their products are not tested on animals or their packaging is minimal.

4)   The principles of the company should be considered carefully before preparing the business code of practice. These values must be discussed and decided before the code of practice is written, as it is important to ensure all aspects of the company’s ideologies and philosophies are agreed. It is vital that nothing important is missed out.

Pertinent company laws

Company laws obviously exist to guide businesses to remain on the right side of the law. The laws are many and various and must be studied extensively so directors are fully aware of what is permissible and what is not. Apart from the restrictions, they do protect companies from other organisations’ dubious activities. These can include their business rivals, suppliers or, on occasions, even government bureaus.

Company laws typically apply from the beginning of the financial year (6th April) and 1st October. The current government has promised to assist small businesses and they have issued a memorandum of the new UK rules and regulations for domestic companies.

What is this memorandum for the new domestic regulations?

The government’s memorandum came into force on 1st April 2011. This includes assistance for small businesses (those with less than ten employees), also known as micro-businesses. For a period of three years, the ‘one in, one out’ rule will not affect small businesses. Any new regulations will be deliberated by the relevant governmental department with the effect on micro-businesses taken into account.

Regulations applicable to the appointment of new employees

As businesses grow, there will be a requirement to employ additional staff. However, it is important to meet the rules and regulations of hiring new employees. Some of these are outlined below:

–          Contracts

A contract of employment is a legal document which is binding on both sides and this must be explained to the new employee. The contract must be handed over to the member of staff within two months of the start of their employment. The contract should detail information including the job title, a comprehensive job description covering all duties and responsibilities that the employee will undertake, the salary/wage, the holiday entitlement and the required notice period.

–          Discipline

The company’s disciplinary and grievance procedures should also be provided to the employee to inform them about what behaviour the company expects, and what it will not tolerate from its employees. The new employee should be told who their line manager is. This person will be the first port of call for any grievance an employee may experience. It is vitally important to have a comprehensive discipline and grievance policy to protect both the workforce and the company itself. Employees who are breaking the company’s rules, eg taking home stationery for personal use or accessing the internet for personal reasons during work time must be identified and warned or dismissed if the incident is serious enough.

–          Anti-discrimination process

Discrimination of any kind is not permitted in the workplace – either person to person or by the company itself. Discrimination can be viewed as prejudice by race, nationality, disability, age, gender, sexuality, marital status, parental responsibility and political or religious beliefs. Companies must ensure their job advertisements are receptive to all applicants. The anti-discrimination policy must apply to all existing employees as well as potential new staff.

The above shows that codes of practice and important laws, rules and regulations should be in place for all companies in order to comply with the laws of the country. Although these may take some time to understand fully, they are helpful to companies and can contribute to their success.





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