Legislation and its impact
Legislation is law passed by government, in the UK mainly by Parliament, alongside regulations that implement it, that businesses have a legal duty to follow, unlike ethics, which is a voluntary choice to go beyond what the law requires.
Before you start
No specific prerequisites - this is a good place to start.
Method
- Identify which area of legislation the question concerns: consumer, employment or health and safety, data protection, or competition law.
- Identify the specific duty or right the legislation creates, e.g. a duty to provide a safe workplace, or a customer's right to a refund for faulty goods.
- Identify the cost of compliance to the business, e.g. staff time, new equipment, training, or compensation paid to a customer or employee.
- Identify the risk or cost of non-compliance, e.g. a fine from a regulator, an employment tribunal claim, or reputational damage from a public breach.
- For explain questions, link one duty created by the legislation to a specific consequence for the business's costs or its way of operating.
- For evaluate questions on how a change in the law affects a business, weigh the extra cost of compliance against the risk or cost avoided by complying, using detail from the case, such as the size of the business or how the case describes a breach.
- Note that legislation changes over time, e.g. new laws, higher minimum wage rates, or new data protection duties, so businesses must monitor legal changes as an ongoing external influence, not a one-off requirement.
Worked example
Bramwell Cleaning Services employs 30 staff to clean offices, often at night, sometimes working alone. New health and safety guidance now requires that any employee working alone after 9pm must carry a personal safety alarm and check in with a supervisor every hour. Explain one way this legislation could affect Bramwell Cleaning Services.
- Identify the type of legislation: health and safety law, aimed at protecting lone workers.
- Identify the specific duty created: providing personal safety alarms and setting up an hourly check-in system for staff working alone after 9pm.
- Identify the cost this creates for Bramwell: buying and maintaining alarms for relevant staff, and paying for supervisor time to manage the hourly check-ins.
- Identify the benefit of complying: it reduces the risk of harm to lone staff and avoids the much larger cost of a health and safety prosecution or claim if an employee were injured while uncontactable.
- Write the explained answer: the new guidance increases Bramwell's costs, through buying alarms and paying supervisor time for hourly check-ins, but complying protects lone night staff from harm and avoids the much greater potential cost of a health and safety investigation, fine, or compensation claim if a worker were injured unsupervised.
Practice questions
Try each question, then tap to reveal the answer.
Q1Define legislation.Show answer
Answer: Law passed by government that a business has a legal duty to follow.
Q2State one area of business legislation.Show answer
Answer: For example, consumer law, employment law, health and safety law, or data protection law.
Q3State the difference between legislation and ethics.Show answer
Answer: Legislation is a legal requirement a business must follow; ethics is a voluntary choice to do what is morally right, beyond what the law requires.
Q4Give one cost to a business of complying with new legislation.Show answer
Answer: For example, staff training, new equipment, or compensation payments.
Q5State one risk to a business of breaking the law.Show answer
Answer: For example, a fine, legal action, or reputational damage.
Q6Give an example of a data protection duty a business has.Show answer
Answer: For example, keeping customer personal data secure and only using it for the purpose it was collected for.
Q7Explain why legislation is described as an external influence on business.Show answer
Answer: Because it is imposed by government or Parliament, and an individual business has no control over it, but must still respond to it.
Exam-style questions
Written in the style of a GCSE Business exam paper, with a full mark scheme.
Explain two reasons why a business might increase its costs after new legislation is introduced.
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Petfield Stores sells pet food and accessories online. New consumer data protection legislation now requires Petfield to appoint a dedicated data protection officer, estimated to cost 25,000 pounds a year, and to delete customer data automatically after two years unless the customer opts in to keep it. Evaluate the likely impact of this legislation on Petfield Stores.
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See real GCSE Business past-paper questions, with official mark schemes →
Free printable worksheet
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