Legal disputes can be time-consuming as well as costly, especially in case of small business owners who may have shortage of funds for proper legal representation. The more one is aware of the common legal issues which his business may face, the more he or she could do to avoid them, thus preparing against such issues.
When caught up in a legal case, it may result in a negative effect on the reputation of the business, especially if such a legal dispute comes to public light, it is, therefore important that one ensures that the business is legally sound and that every legal matter, albeit very small, has been taken care of seriously.
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What are various ethical and legal issues in business?
Legal issues in business may arise when one is not within line with certain laws. There are some legal standards which are necessary to be upheld as a business, which are outlined by governmental laws.
Ethical issues are generally not related to a legal matter, but are based on the principles of human ethics, values, as well as the concept of right and wrong. Ethical issues may arise in the business in such scenarios where one tries to cut corners or does not treat the employees or customers with due respect as necessary.
Some common legal issues in business and the ways to avoid them
Legal issues which one is most likely to face shall depend upon the type of industry he or she deals in, discussed hereunder are some of the most common legal issues being faced by majority of businesses-
Not registered the business
A business has to be officially registered as per the process set by law. Otherwise, businesses may face legal problems in the future and would have problems proving their claims. One must ensure if the business is to be registered as a sole trader, a partnership, or a limited company, as per the requirements of business ideals and objectives, thereby registering accordingly. Each structure will have different legal implications, therefore to make sure that one understands such legal issues properly, it is advised to seek guidance from an experienced advocate as necessary.
Employee issues
Appointing employees could be a serious commitment. As one will be responsible for the livelihood of people, there could be various hurdles to jump through if a situation comes where it is required to fire anyone. Therefore, it is important that one is careful about the employees so appointed. Some of the most common employee-related legal issues have been discussed below
- Employee classification- It is important to ensure that the employee classifications (part-time, full-time, contractor) are according to the requirement and are accurate so as to prevent any legal issue.
- Termination- It is necessary to deal with the matters related to employee terminations in a careful manner. Wrongful terminations may often end up with a lawsuit. One would have to draft a notice of termination, explain proper reasons, as well as providing the employee with sufficient notice when terminating the employment.
- Discrimination- In some cases, discrimination and nepotism could be very common in the workplace. Allegations of discrimination could be often based on race, gender, age or even ethnicity. As an employee one must ensure that all the employees are treated equally and are provided with equal opportunities.
- Confidential Information- While hosting meetings with confidential company information, it is important to make sure that the employees present in the meeting sign confidentiality agreements so as to avoid potential issues.
- Health & Safety- Irrespective of the industry one is, it is important to follow the required health and safety guidelines which have been set out for such a particular business.
Intellectual property
A common mistake which is committed by a new business is to not properly protect its intellectual property rights. In case the patents and trademarks have not been properly applied or used, the business may face the event of other businesses stealing the ideas or patenting them.
Legal disputes involving intellectual property can be very complex and may take years to come to a conclusion. Thus, it is advised to be prepared for such instances in advance and properly prepare for them.
Disagreements between the shareholders
Starting a business with a family member or friend may seem as a good idea at the initial stage, with the progress of the business, there will be several issues which one may have to face. There are several instances where an official shareholders’ agreement, which refers to e objectives, official shares, rights and responsibilities of each shareholder, etc., is often not created, and thus when misunderstandings or disagreements arise, such disagreements or issues may turn into a huge legal issue.
Disrespecting the competition
In the present times of globalisation and hyperactive social media, this is a topic which you must be careful of. Though, it may seem as somewhat ‘normal’ to trash talk the competition, such instances could be documented and recorded for all to see and could very well be used as a proof in legal battles. Thus, something innocent could be taken completely out of context and can be used to malign the image of one’s business.
Prioritise being legally sound
In the end if one wishes to prevent any future legal issue or prioritise being a legally sound company, it is advised to appoint an experienced advocate and consult his from time to time, so as to refrain from committing silly but huge mistakes. As in case of legal issues, prevention shall always be better than cure.
Lead India offers you a team of experienced advocates who have been successfully handling cases related to civil law including the corporate law. Thus, if you wish to seek free legal advice online or talk to a lawyer, you may contact us.
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