Impact of Employment Law and Corporate Governance on Business Operations

This essay discusses the impact of UK Employment law on businesses and the responsibilities of corporate governance on business operations. It covers the areas like environmental awareness, ethical behavior, strategies for corporate, compensation and risk management.

FdSc in Business Management
BAM4011 INTRODUCTION TO BUSINESS LAW
Impact of employment law on
business and evaluation of the
responsibility of corporate
governance on business operations.
Semester 2
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Table of Contents
INTRODUCTION..........................................................................................................................3
MAIN BODY................................................................................................................................3
Impact of employment law on business and evaluation of the responsibility of corporate
governance on business operations...........................................................................................3
CONCLUSION ...........................................................................................................................10
REFERENCES.............................................................................................................................10
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INTRODUCTION
The United Kingdom is the popular place around the world to do business and the reason
is the availability of large number of skilled and talented workers. It also become the safest place
to do business in context to the workers as it allowed them to work in minimum working
standards which protect them from worst working conditions and also from less pay and the
exploitation. In the UK Employment law there are various rules which are given in the provision
of the act to protect the rights of every employee's. The act has the great impact on business also
like there is a provision mentioned in the act which prescribed the UK hourly minimum wage that
depends on the age of individual. For the compliance employers has to check the current national
minimum wages. There is a system in UK for the payment made by the employers for the
employee's which is known as “pay as you earn”(PAYE). In the business employers have to pay
taxes on behalf of their employee's through PAYE to the UK tax authority which is HMRC, but it
would not applied for the independent contractor (Adnan, Hay, and van Staden, 2018). In regard
to corporate governance, it is the system through which UK companies got directed and
controlled. There are board of directors who are responsible for the governance of their
companies. Main purpose of the corporate governance is to bring accountability, transparency,
fairness, responsibilities and risk management in a business organization. It covers the areas like
environmental awareness, ethical behavior, strategies for corporate, compensation and risk
management. This essay will cover the same topic such as; impact of UK Employment law on
businesses, detailed explanation of corporate governance which includes its evolution and its
responsibilities on business operations.
MAIN BODY
Impact of employment law on business and evaluation of the responsibility of
corporate governance on business operations
In the United Kingdom the Employment law got defined as “ contract of service”. It is
an agreement which provides the common or same obligations to both i.e. to employers and
the employee's. Its an area of law which deals with legal rights and duties of employers and
employees. The law got enacted by the UK parliament on 1963, its an old law and various
efforts has been made by the authorities to enact such law which build the relation between
employers and the employee's. The UK Employment Act has mainly three sources i.e.
Common Law, Statute and the European law. The main reasons where the need of
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employment act got felt when the workers were not treated in a good manner at workplace
and even they were unable to get their basic rights like; holidays, pay and apart from that the
employers were highly exploited the employees for their own business benefits like;
employers dismissed the employee's unfairly, not provided the medical care and also remove
them after business operation got complete without paying them (El-Bassiouny, and El-
Bassiouny,2018). At the first sight it would be look complex and varied especially by the
business managers. However the Employment laws or the act also provide aiding to the
businesses in a manner to provide the guidelines and become the legal framework for all the
business employers to fulfill their obligations towards their employee's and the act also
protects the business owners as the act keep the employment relationship fair for both parties.
The English legal system is unique and complex and it is based on the principle of equity
which means just, fair and reasonable treatment with the individual in order to secure their
rights and interest within the country. The detailed legislation was made for the protection of
the rights of the employees and employers. It cover certain legislation including company
Act of 2006, contract law and employment law. The comprehensive legislation aims to
improve the performance of the employees and encourage them towards the organizational
goal. UK Employment Law plays a crucial role in the business sector as there are laws too for
protecting the businesses, there are some obligations for the employers which have to be
fulfilled towards the employee's. The act become helpful for the businesses as UK
employment law safeguard the business organizations as there are some rule for both i.e.
employers and the employee's which assist them to bring clarity between their relations. The
contract has to be made between them regarding holidays entitlement, rules to maintain
discipline and also for the rules of notice period. That contract protected the employers in a
manner that it brings the clarity to them about the things which they have to provided and that
Providences will makes the employee's satisfied and happy in a organization. On the other
hand employee's feel satisfied to work at such places where the organization understood their
situations and provide all the basic rights which is essential for the working conditions. The
Employment Act also protect the employee's at the time of hiring in a business organization
and particularly at workplace. The act bound the employers or the business organizations
managers to provide the National Minimum Wages based on their age's and the employee
after the age of 23 get entitled to receive National Living Wages (Johnstone, and Dobbins,
2021). From the very starting at the the moment the person become an employee got covered
from Equality Act 2010, which protect the employee's from discrimination against each other
on the basis of gender, race or also disability. Even after got entered into an organization and
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become the employee, employers or the business managers have to provided the medical
facilities which got covered into Health and safety at work act 1974. In a summarized
context Employment laws have some support to run the business with utmost care of
workplace and the rights of employers and the employee's like; the act protected the
employee's from discrimination, by providing family and medical leave to both employer and
the employee's and through employment laws the organization able to create the healthy
working environment at workplace. If the employers won't compliance the rule of
employment laws they have to pay the compensation for the damages and losses occurred due
to their personal and selfish behavior (Lansbury, and Bamber, G.J. 2020).
Employment Laws plays major role in their positions to assist the business organizations
but as it has been said above that UK has a perfect place to do business. To make this
statement correct and to proof it some system should be shown which govern all the system
of business organization. There are certain duties and obligation that are owned by the
employer towards it employees. Business sector is very wide and vast and its not easy to
control all the functioning of every business organization. To controlled and to provide the
rules for practicing business activities there is a term known as Corporate Governance which
said to be a system that gives the direction and also control the business activities. An
organization is involves in day to day operation of business which requires effective
management and function to operate the business activities more efficiently. It improves the
quality and efficiency of the organization. The system of corporate governance identifies the
person who has a power and accountability and who can take the decisions. The corporate
governance can be said as a toolkit which enables the management and the board of directors
to deal with the challenges of running organization. It assures the organization about the
appropriate decision-making process and also controlling power so that the interest of
shareholders get balanced. In corporate governance such processes are include which assist
the organization in setting the objectives and also provide the way of social regulatory and
market environment. It perform its functions in such a manner to show concerned about the
practices and procedures which helps the organization to perform in a way to fulfill the
objectives (Maali, Rakia, and Khaireddine, 2021). If the governance body is good then the
organization believes that it provides the infrastructure to improve the quality of the decisions
made by the business managers. There are some ares on which corporate governance aims
like; the explicit and implicit contracts between an organization and the shareholders
regarding to distribution of responsibilities, rights and awards. It adaptive the conflicting
interest of shareholders as per their duties, privileges and roles. It also tell the procedure for
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supervision, control and flows of information in a business organization. It is very essential to
have the strong corporate governance as it helps to bring integrity, leading and positive
approach in the performance of business organization. It also plays the great role in
enhancing the accountability of all the individuals and the team of the organization through
which they did less mistakes. The good corporate governance gives positive messages in a
market that, organization is well managed and it provides various competitive advantages
(Mutia, and Muindi, 2019). The corporate governance refers to laws, regulations, codes and
practices which specify the administration process of an organization. It also determine the
rights and the responsibilities of all the organizational members, skillful employee's, financial
capital. The result and effect of the good corporate governance can be seen when the risk got
controlled and the organization is in the balance conditions. There are various benefits of
good corporate governance like; it brings the efficiency as the task got performed repeatedly,
this also identify the errors quickly, companies reduces the cost by eliminating the waste
from scrap, reuse etc. In a summarized manner it can be said that, corporate governance is a
system which has a motive to bring policies and rules that assist the organization. The good
corporate governance holds the company's accountability while assisting them to make clear
financial, legal and ethical difficulties. It helps in enhancing the competitive spirit of the
company and direct them towards the common goal of the organization. It helps to manage
the activities and productivity of the organization.
Corporate Governance was defined by Sir Adrian Cadbury in 1992 as “the system by
which companies are directed and get controlled”. It would be found in use when the
corporations got failed. The Corporate governance is the moral and ethical responsibility of
the organization in order to hold good position in the competitive market. It helps to brings
positive change within the organization. It aims to bring harmony and peace at workplace. It
includes certain set of rules, legal principles and standards that are made to influence the
behavior and conduct of the employees at workplace. It also prevent conflict and
misunderstanding among employees and employers, and integrates them towards the
organizational goal. United Kingdom is the main member of Commonwealth Nations because
the head of Commonwealth is the Queen. At that time when the British Empire got spread
across different continents, all the countries of that continents were under the British rule and
they adopted the British Company Law. However the many companies in those countries has
developed in those years in reflection to particular social and political and cultural
environments and many of them. In the United Kingdom the Employment law got defined as
“ contract of service”. It is an agreement which provides the common or same obligations to
6

both i.e. to employers and the employee's. Its an area of law which deals with legal rights and
duties of employers and employees. The law got enacted by the UK parliament on 1963, its
an old law and various efforts has been made by the authorities to enact such law which build
the relation between employers and the employee's. The UK Employment Act has mainly
three sources i.e. Common Law, Statute and the European law. The main reasons where the
need of employment act got felt when the workers were not treated in a good manner at
workplace and even they were unable to get their basic rights like; holidays, pay and apart
from that the employers were highly exploited the employees for their own business benefits
like; employers dismissed the employee's unfairly, not provided the medical care and also
remove them after business operation got complete without paying them (El-Bassiouny, and
El-Bassiouny,2018). At the first sight it would be look complex and varied especially by the
business managers. However the Employment laws or the act also provide aiding to the
businesses in a manner to provide the guidelines and become the legal framework for all the
business employers to fulfill their obligations towards their employee's and the act also
protects the business owners as the act keep the employment relationship fair for both parties.
The United Kingdom has at the forepart of corporate governance reforms and especially
by following cadbury in 1992. After that the corporate governance started evolving and the
quality of corporate governance in UK has been improve greatly and also acknowledged
globally (Tariq, and Syed, 2018). Its almost twenty five years when cadbury report was
published and become the evidence of improving the quality of corporate governance in UK.
The compliance of corporate governance also got increased and the developments in UK had
an impact on other countries also related to practices of corporate governance in other
countries (Venturelli, Caputo, Leopizzi, and Pizzi, 2018). It is important for the organization
to legally comply with all the provision which is made by the UK government for the
effective running of the organization. It is mandatory for all the business corporations to
prepare their annual reports and accounts in regarding to the principles of corporate
governance code. It is a foundation stone of every organization and generally framed by the
higher authority of the company There is a report known as corporate report which present
the companies corporate governance position, standards, culture, practices. This report will
gives the idea about the company operations, its functioning, status of the company and its
performance. The role of corporate governance in business operations are important as it
decides the value of the company and the principle role of the corporate governance is to
look out the management of a company in a manner to enhance or maintain the organization
reputation. There is another main role of corporate governance in relation to business
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operations is, it provides the strategies to fulfill the company's operations, improve the
leadership style in implementation of strategies. The corporate governance is beneficial for
the stakeholders who invest their funds in the company by ascertaining the financial
performance of the company in the international market. It leads to employees retention and
reduction in the higher employment turnover as it may affect the performance of the
organization in the competitive market.
CONCLUSION
The above essay concluded the importance of employment law in relation to business
organization. The Employment act builds the healthy relation between the employer and the
employee's and to understand them the value of employment laws. The main purpose of an
employment laws is to safeguard the interest of employees from their employers. Prior to this
employment act various efforts has been made by the UK parliament to bring out such law
which bring trust and sensibility between employer and employee's. The employment act
protects the right of both i.e. of employer and the employee's but the more exploitation was
faced by the employee's then, there are some more rules for the employers which they have to
followed at workplace. Apart from the employment laws there is a system which also govern
the activities of business organization is the corporate governance, it has been described as
toolkit for the business organization it means, it can be taken into use to manage the company
and make the management of an organization effective with the purpose to bring integrity.
The corporate governance has mainly perform six functions or it can be said that the
corporate governance assist the organization in six different ways. First one to maintain the
accountability, bring efficiency, understand the responsibilities, bring transparency and also
helps in making the organization independence.
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REFERENCES
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reporting: A comparative analysis between top-listed firms in Egypt, Germany and
the USA. Management of Environmental Quality: An International Journal.
Johnstone, S. and Dobbins, T., 2021. Employment relations in the United
Kingdom. International and comparative employment relations: Global crises and
institutional responses, pp.29-55.
Lansbury, R.D. and Bamber, G.J. eds., 2020. International and comparative employment
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mediates the relationship between corporate governance and sustainability
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Mutia, A. and Muindi, C., 2019. Impact of Employment Law on Employment
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Tariq, M. and Syed, J., 2018. An intersectional perspective on Muslim women's issues and
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