What are ethical and legal issues in business?

Legal issues in business will arise when you are not in line with certain laws. There are certain legal standards which are required to be upheld as a business, which have been outlined by governmental laws.

Ethical issues do not generally have a legal base, but are based on human ethics, values, as well as the concept of right and wrong. Ethical issues could arise in your business in case you try to  cut corners or do not treat your employees or customers with due respect.

Some of the common legal issues in business and ways to avoid them-

The legal issues which you are most likely to face would depend upon the type of industry you deal in, mentioned below are some of the most common legal issues facing majority of businesses:

Having not registered-

Any business needs to be officially registered as per the due process. Otherwise, such business may face huge legal problems. You must ensure that you decide if you shall register as a sole trader, a partnership, or a limited company, as per the requirements of your business ideals and objectives and thus, register accordingly. Each structure has different legal implications, thus in order to make sure that you understand them properly, it is advised that you seek guidance from an experienced advocate as required.

Employee issues

Hiring employees is a serious commitment. You will be responsible for livelihood of people and there are would be numerous hurdles to jump through when there is a situation where you wish to fire anyone. Thus, it is important that you are very careful about who you appoint. Some of the most common employee-related legal issues are:

• Employee classification- You would have to ensure that your employee classifications (part-time, full-time, contractor) are as per the requirement and accurate in order to prevent legal issues.

• Termination- It is important to deal with employee terminations in a careful manner.  Wrongful terminations could often end up with a lawsuit. You would have to draft a notice of termination, provide necessary reasons, and provide the employee sufficient notice in case you wish to terminate the employment.

• Discrimination- Unfortunately, discrimination and nepotism are very common in the workplace. Discrimination allegations are often based of race, gender, age or even   ethnicity. You must ensure that all your employees are treated equally and shall be provided with equal opportunities.

• Confidential Information- When you host meetings with the employees where you share confidential company information, it is important that you make sure that have them to sign confidentiality agreements in order to avoid potential issues.

• Health & Safety- No matter what industry you are in, you must prioritise sticking to the required health and safety guidelines which have been set out for your line of work. 

Intellectual property

A common mistake committed by the new businesses is to not properly protect their intellectual property rights. When the patents and trademarks are not properly applied or used, you may have to experience another business stealing your ideas or patenting them.

Also, if you do not check the patents and trademarks on ideas or products used by your business,  you may find that other business believe that they have ownership over the said property hence ensuing a legal battle.

Legal disputes for intellectual property could be very complex and may take years to come to a decision. You would have to prepare yourself with necessary knowledge about the intellectual property in order to avoid being dragged into a costly and lengthy legal case.

Disagreements between the shareholders

Initiation a business with a family member or friend may seem as a good idea, however as the business grows, there will be many issues which you may have to face. There are various  instances where an official shareholders’ agreement (referring to the objectives, official shares, as well as the rights and responsibilities of each shareholder) is often not created, and when misunderstandings or disagreements arise, it may turn into a huge legal issue.

Disrespecting your competition

It is something that you must be careful of. Although, it may seem to be somewhat ‘normal’ to trash talk your competition, social media and the internet provides a platform where such trash talk could be documented and recorded for all to see and can also be used as a proof in legal battles in case your competition ever wishes to sue you for defamation. You must be careful of  how you refer to your competition and to whom you say it to. Something innocent could sometimes be taken completely out of context and be used to make you look like the villain.

The safest bet will be to treat your competition with respect, staying out of any unnecessary  drama, and ensure that your employees should do the same.

Prioritise being legally sound

If you wish to prevent any future legal issues or prioritise being a legally sound company, it is advised that you seek advice and guidance from an official legal service provider. They will be able to assess your business model and point out any potential issues you may have. After you have appointed a lawyer whom you could trust, you will have the assurance that you could contact them anytime you deal with any problem in case of any emergency.

For in case of legal issues, prevention will always be better than cure.

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