5 common legal issues faced by small businesses

By Emma Miller

Legal woes have brought down many a small business. For a small business owner, it is essential to sit down with a legal team and make sure you understand the laws that will protect both the employee and the business. Of course, that rulebook would need to be in accordance with the labor law and all other applicable laws, hence the legal team.

Knowing the rights of the employer and the employee leads to a better relationship and minimizes the need for any legal actions. Similarly, your dealing with customers will go more smoothly if you are aware of and abiding by consumer protection laws and similar matters. Here are five legal issues that happen commonly in small businesses.

Faulty products

It is quite possible to have a couple of faulty products out of the multitude your business produces. But what is crucial is your reaction when a fact like this has been presented to you by your customer. If you ignore the problem without putting some thought into it and checking the quality, you might end up with a lawsuit if more than one customer encounters the same problem. This could be detrimental to both your budget and your reputation. The best approach in this situation is to, first and foremost, check if the complaint is grounded and whether there have been more of them regarding the same product. If you establish that indeed the issue is with your product, you need to apologize to your customer and offer to compensate them. Pushing problems under the rug makes one seem guilty, so being open is what will enhance your reputation and save you from any legal actions.

Unlawful termination

It often happens that one of the two parties, either the employee or the employer, are not fully acquainted with labor laws, or the company’s rules and policies. If employers don’t follow the law to the book, it can lead to a lawsuit. Employees are sometimes dismissed based on reasons they shouldn’t be, such as ethnic discrimination, age, gender, and not to mention reporting illegal and faulty procedures. On the other hand, employers need to follow all necessary steps of the termination procedure. These steps include properly notifying the worker, an exit interview if that is your company’s policy, as well as all the necessary documentation. There is nothing pleasant about contract termination, but the procedure still needs to be respected and followed through with civility.

Safety at work

This topic would naturally be more prominent in a working environment where the nature of work is by itself hazardous. For example, construction workers need to have proper protective equipment and regular breaks during working hours to rest. Those who work with chemicals need to have gloves, goggles and all sorts of items to protect them in everyday work, as well as if something unexpected happens. Not following safety protocol can lead to personal injury at work, which is a one-way ticket for a court appearance for the employer. Even the office can be a place where such protocols are not respected, and a good personal injury lawyer would easily win the case involving slipping and injuring at work because of the employer’s negligence regarding working conditions.

Social media blunder

With the introduction of many digital channels to voice our opinions and desires, people have become reckless about their choice of words. They stopped taking responsibility for what they write and record as if only their acquaintances are watching, and the truth is, everybody is watching, including their employers. Posting images from the workplace that might show a product that is still kept in privacy is a big no-no, as well as inappropriate remarks about the company or the employer. Likewise, the employer also cannot use private photos of employees without their consent. Both parties need to be mindful of their actions and make comments behind closed doors, and not for the whole world to see. Sure, everyone’s got an opinion, but the relationship towards work needs to be professional at all times.

Copyright infringements

When introducing a new product, it is vital you make sure that it is original in its entirety. There are a lot of instances of accidental infringements since one party didn’t know that the same patent already existed. Also, sometimes it happens that companies in countries with big markets sometimes ‘borrow’ ideas they come across on the internet, which belong to smaller businesses in less developed markets since those small businesses didn’t protect their patents. All in all, a thorough checkup is vital to make sure everything is in order and to avoid any legal actions as a consequence. Since legal language can be incomprehensible to those who do not practice law, it is best to leave such verifications in the hands of professionals.

As responsible adults, when deciding to enter a professional relationship with another person or a business, it’s crucial that such a decision is a well-informed one. Both parties need to know their rights and obligations and follow a determined set of rules. However, since everyday work life can be quite different, it is vital that we start thinking in the right manner.

Emma Miller is a digital marketer and blogger from Sydney, Australia. After getting a marketing degree she started working with Australian startups on business and marketing development. Emma writes for many relevant, industry related online publications and does a job of an Executive Editor at Bizzmark blog and a guest lecturer at Melbourne University. Interested in marketing, startups and latest business trends.

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