Legal disputes can not only be costly and time-consuming to businesses but they can also do irreparable damage in the long run if they are publicised, especially if a business owner doesn’t have the funds for adequate legal counsel.
There are a number of common legal issues that businesses face and the more you know about them, the more you can do as a business owner to not only avoid them but also prepare yourself against them should they occur in the future.
It is essential that you ensure that everything in your business is legitimate and above board, it is your duty as a business owner that you take legal issues incredibly seriously.
Ethical and Legal Issues in Business – What are they?
In business, legal issues will sometimes arise when you are not fully in line with particular laws. As a business, there are certain legal standards that you need to maintain, which are outlined clearly by laws set by the government.
Ethical issues on the other hand are not necessarily legally based. They are as a consequence of the difference between right and wrong, human values and ethics. Ethical issues in your business could arise if corners are cut and also if you do not show your customers or staff members with respect.
What are Some of the Most Typical Legal Issues in Business, and How to avoid them?
Depending on what industry your business is in will determine which legal issues you are likely to face. These are some of the most common legal issues the majority of businesses might have to deal with:
Not being Registered
In the United Kingdom, all businesses must be properly registered with the HMRC. Otherwise, they can face serious legal problems. It’s a relatively simple process that can be completed online and therefore should be done as quickly as possible.
You need to determine whether you want to register as a limited company, sole trader or as a partnership and register accordingly. Each business structure has different legal implications, so you need to ensure that you fully understand them.
Taking on members of staff is a serious commitment as a business owner. You are essentially responsible for their livelihoods and if you ever wanted to fire someone there are so many complications and hoops that you must jump through so you need to be extremely careful about who you employ. Some of the most common staff-related legal issues you could face include:
- Employee classification
To prevent legal issues from occurring you need to make sure that the classifications you give your members of staff are accurate i.e., full-time, part-time or contractor.
Terminating a member of staff’s contract needs to be handled very carefully or you could end up with a lawsuit filed against you. Verbal and written warnings need to be fully documented and you will need to draft a termination notice as well as provide adequate reasons. You should also give the member of staff sufficient notice if you wish to terminate their contract of employment with you.
Prejudices and discrimination are, unfortunately, very common in the workplace. Allegations of discrimination are often based on gender, ethnicity, race and age and you need to make sure that all members of staff are given equal opportunities and treated equally.
- Confidential Information
If you share confidential company information with members of staff you need to make sure that they have signed an NDA (Non-Disclosure Agreement) to avoid any possible issues.
- Health & Safety
Sticking to Health and Safety guidelines should be a priority no matter what industry you are in. You will need to draw up your own health and safety policy for your business to ensure you are completely above board.
- Foreign Workers
You obviously cannot discriminate against foreign workers but you must check that they have the relevant visas prior to employing them.
Not protecting their intellectual property is a common mistake that many new businesses make. Trademarks and Patents are a must have if you don’t want another business stealing your ideas, imagery and product designs and patenting them for themselves.
Legal disputes can be very complex and lengthy when it comes to intellectual property. Make sure you know enough about intellectual property to avoid any costly legal battles.
Disagreements between Shareholders
It may seem like a good idea at the time but starting a business with a friend or family member but there are many issues you’re likely to face as the business grows.
Quite often a shareholders agreement isn’t officially created and when disagreements or misunderstandings arise it can result in a bitter legal battle.
No matter who you start a business with always ensure an official shareholders’ agreement is in place that states the official shares, objectives and also the responsibilities and rights of each individual shareholder.
Dissing the Competition
They say talk is cheap. However, if you start bad-mouthing the competition it could end up costing you a small fortune.
Even if a comment made about your competition is said tongue-in-cheek there is always the possibility that someone could take it completely out of context and you could be made to look like the bad guy.
Be really careful what you say and who you say it to.
The best and safest thing to do is to respect your competition and treat them accordingly, avoid any drama or tit-for-tat rebuttals and make sure any members of your staff do the same.
Be Legally Sound
If you want to avoid legal disputes and issues then should make it a priority to ensure you and your business are legally sound. The best way to do this is to hire a business lawyer.
They will be able to appraise your business model and identify any possible issues you may have. Once you find and hire a business lawyer you will undoubtedly have peace of mind that you can always call on them if any legal issues should arise.