Legal Challenges for Small Firms

Introduction to Business Law - keeping up with changes in the law can be confusing and full-time occupation, for owners of small businesses.  The main areas of legal regulation to consider are employment contracts, protecting employees privacy, ensuring workers health and safety, disciplinary staff fairly, making staff redundant or cutting back on staff related costs, ensuring salaries and other financial benefits are implemented fairly, as well as implementing a business transfer from all closing down the business as a going concern. Business owners tend to see regulations and laws as red tape, and do not devote as much time in understanding the benefits protection law provides. However, the cost of doing nothing or very little could be a lot higher In the long term. For instance, an employment tribunal's an award damages for unfair dismissal, constructive dismissal or changing the terms the conditions of an employment contract. Another example would be an uncapped compensation claim from any employee as a result of workplace accidents that could have been prevented, and the health and safety policy being formulated and implemented.  For cash-strapped small businesses, a large payouts such as these could push the small firm into administration.  Failure to run a business properly according to the law may also put off potential employees from wanting to join, lowers workforce morale, puts off customers from submitting repeat orders, and makes suppliers nervous about providing trade credit.  If you are setting up a new business, researching the law now is a sensible first to to ensure best practice, before the burden of day-to-day activities restricts the amount of time you have to think about the sort of things .

Directors Duties - entrepreneurs that have never set up a company before, need to be aware of the practical and legal implications of doing so. A limited company exists as a separate legal entity in that it's financial assets and liabilities are entirely separate from those of its shareholder owners. With the exception of a personal guarantee, shareholders are not liable for business debt of the company.  It the company fails and can no longer trade, shareholders may lose their investment. Conversely, the profits and cash surpluses of the company, are the property of the company and not the director or shareholder.  Profits are provided to shareholders in form of dividends.   Directors need to be aware of the principles of legal liability and the practicalities of directors duties.

Protecting Your Ideas Using Business Law - the concept of protecting a small business idea with regard to intellectual property, allows business owners to protect your creation as an asset, similar to that of owning physical property. The concept of Intellectual property is underpinned by law for technological inventions and their design specification. Whereas the concept of protecting a small business idea using copyright, usually protects musical or literary creations including computer programs and games.  Design Registration protects the shape and appearance of a commercial product.  Intellectual property laws vary according to geographical regions of the world and vary in length.  The remedy for infringement of one of the four intellectual protection categories is usually financial redress via the courts system. Unfortunately, for inventors, using the court system to protect and gain remedy for infringement, can be extremely costly and expensive and time-consuming. An infringement claim which fails in court will cost the the entrepreneur valuable time and money.

Understanding UK Employment Business Laws - it is vital that first-time employers gain an understanding of the various UK employment laws, redundancy laws, best practices, opportunities and changes to regulations, related to their particular industry. employment laws have evolved to protect both employees from management exploitation, and employers from business failure. Regulation is unavoidable, and so it is sensible to embrace regulation designed to help organising business in a fair manner,  (as opposed to viewing them as unnecessary red tape). By providing attractive uk employment conditions and a transparent set of company policies, potential employees will be more attracted to working for a company. There are many employment laws which, as an employer, you will need to familiarise yourself with.  In general terms, full-time and part-time employees are entitled to basic employment rights. The main areas to review are as follows:- The national minimum wage, the maximum hours employees should work per week (via the Working Time Regulations), equality and equal pay, discrimination laws, health and safety laws, statutory maternity and paternity pay, the written statement of employment particulars, redundancy pay and paid holiday.

Protecting Business Data - owners need to ensure they comply with business laws designed to protect data from threats such as identity theft.  Most business owners are not IT literate enough to know whether the data they are responsible for, is secure and properly protected.  As computer networks have become more geographically disparate, powerful and difficult to manage, small firms have chosen to outsource computer services and data handling functions, to specialist computer organisations. The Data Protection Act 1998 (DPA) is a piece of regulatory legislation passed by the United Kingdom Parliament.  Its primary purpose is to define how information about individuals living in the UK, should be collected, managed and protected. The act has important implications for the way in which commercial organisations store, retrieve and exploit data stored within their organisation.  The act refers to a person or business known as a 'data controller' (the nominated person) collects and keeps data about people.  Under the Act, data must be processed lawfully in a fair and proper way. In the context of small firms, the act applies to both customer data as well as existing and former employee data.