Legislation: how the law shapes business decisions

UK businesses operate within a dense web of laws designed to protect customers, employees, the environment and competition. Compliance is not optional — penalties, lawsuits and reputational damage can cripple a business. AQA expects you to know the main areas of business law and their effects.

Consumer law

Protects customers from unfair, dangerous or misleading goods/services.

Consumer Rights Act 2015

Consolidated previous laws. Goods must be:

• Of satisfactory quality — durable, free from minor defects.
• Fit for purpose — does what it's meant to.
• As described — matches advert and packaging.

Customer rights include:

• 30-day right to reject for full refund (faulty goods).
• Repair or replacement within 6 months.
• Partial refund beyond that if not durable.

Sale of Goods Act, Trade Descriptions Act, Misrepresentation

• Goods must match description.
• No false advertising.
• No bait-and-switch pricing.

Consumer Protection from Unfair Trading Regulations 2008

Bans misleading actions, omissions, aggressive selling.

Impact on business

• Costs — quality control, warranty provisions, returns/refunds.
• Brand-building — strong consumer rights mean trust matters.
• Competitive pressure — firms with better products win.

Employment law

Equality Act 2010

Protects against discrimination based on 9 protected characteristics: age, disability, gender reassignment, marriage/civil partnership, pregnancy/maternity, race, religion/belief, sex, sexual orientation. Applies to recruitment, pay, training, promotion and dismissal.

Working Time Regulations 1998

• 48-hour-week limit (opt-out exists).
• 11 hours' rest between shifts.
• 28 days' paid annual leave.

National Minimum Wage / National Living Wage

• 21+: £11.44 (April 2024); rising to £12.21 (April 2025).
• 18–20: £8.60 → £10.00.
• Under 18 / apprentices: lower rates.

Health and Safety at Work Act 1974

• Employers must provide a safe environment.
• Risk assessments, PPE, training.
• HSE can fine, prosecute or shut down sites.

Other key laws

• Employment Rights Act 1996 — unfair dismissal, redundancy.
• Pensions Act 2008 — auto-enrolment for staff aged 22+ earning over £10 000.
• Modern Slavery Act 2015 — see ethics topic.

Impact on business

• Direct costs — wages, pensions, training, PPE.
• Admin costs — HR systems, contracts, payroll software.
• Risk of litigation — employment tribunals.
• Talent attraction — strong rights make UK a more attractive place to work.

Health and safety legislation

Beyond the 1974 Act, sector-specific laws apply:

• Food businesses: Food Safety Act 1990 + hygiene regulations.
• Construction: CDM Regulations 2015.
• Drivers: Drivers' Hours rules (HGV).
• Buildings: Building Safety Act 2022 (post-Grenfell).

Penalties for breaches range from fines to corporate manslaughter prosecutions.

Competition law

Competition Act 1998 + Enterprise Act 2002. Enforced by the Competition and Markets Authority CMA.

Banned activities

• Cartels — secret price-fixing or market-sharing agreements.
• Abuse of dominance — predatory pricing, refusal to supply.
• Anti-competitive mergers — CMA can block or impose conditions.

Real-world examples

• 2021: CMA fined construction firms £36 m for cartel behaviour.
• 2023: CMA blocked Microsoft–Activision before approving with conditions.
• 2024: CMA investigating Google's online ad market dominance.

Impact on business

• Cannot collude on prices.
• Mergers above thresholds must be notified.
• Risk of fines up to 10 % of global turnover.

Other regulation

Data Protection (UK GDPR + Data Protection Act 2018)

• Lawful basis required to process personal data.
• Right to access, correct, erase data.
• Breach notification within 72 hours.
• Fines up to 4 % of global turnover (British Airways fined £20 m in 2020).

Advertising Standards

• ASA enforces the CAP Code.
• Misleading or harmful ads banned.
• Recent action on greenwashing (Shell, BP, HSBC ads removed).

Environmental

• Climate Change Act 2008 (Net Zero by 2050).
• Plastic Packaging Tax 2022.
• Producer responsibility for packaging waste.

Sector-specific

• FCA (financial services).
• Ofgem (energy).
• Ofcom (media/telecoms).
• MHRA (medicines).

Costs and benefits of legislation

Costs

• Direct compliance — wages, equipment, training, audits.
• Admin time — paperwork, reports.
• Reduced flexibility — can't fire freely, can't close site overnight.
• Possible loss of competitiveness vs less-regulated countries.

Benefits

• Customer trust — UK products and services trusted globally.
• Attracts talent — workers prefer fair, safe employers.
• Level playing field — no race to the bottom.
• Long-term sustainability — businesses operate within social licence.

Examiner tips

When asked about a specific law, name it, describe its effect on the business and the trade-off. "The Equality Act protects customers and staff from discrimination, but compliance requires HR training and updated recruitment processes." Always link law to a real business decision.