Legal Guides

We use plain and simple English to give you an overview of the most common areas of law.

Legal obligations for small businesses

With laws and regulations constantly altering, it’s hard enough for some of the biggest businesses to keep on top of the changes, never mind the smaller and more local businesses.

The roles of employees in smaller businesses can often merge into one – the manager is also the website developer who is also the accountant while the supervisor is also the events coordinator and the receptionist – so who has the time to keep up to date with all the growing and ever-changing legal obligations?

It is important to understand the legal obligations that apply to your business and their consequences should you not follow them – that is why we have outlined some laws that smaller businesses might be unaware of.

Intellectual property laws

Intellectual property (IP) law protects copyrights, patents and trademarks to ensure that individuals or companies cannot use your IP and claim it as their own.

IP counts as your company’s products, its designs and its brand name. Should your business steal the intellectual property of another company, for example their trademark or their designs, you would be in violation of their rights and therefore face trademark infringement charges. Professional indemnity insurance can cover your company should someone inadvertently duplicate the IP of someone else.

Licensing software

Smaller businesses sometimes overlook the licensing software laws that apply to them.

It is essential that your company uses only licensed versions of software to comply with the law whilst decreasing the risks of cyber attacks on your network. The cost of ensuring your software is licensed and legitimate massively outweighs the risks of legal prosecution and online attacks.

Employers’ liability insurance

Although small businesses often offer more casual and flexible working contracts for their employees, the company is still legally obliged to have employer’s liability insurance. This insurance not only ensures your business conforms to the law, but it also covers compensation claims made by employees regarding their health and property.

Failing to take out employers’ liability insurance could result in your business facing a fine of £2,500 for each employee for every day they are without cover.

Health and safety assessments

All businesses, regardless of size, must assess the risks that the workplace poses, as well as demonstrating ways to manage and reduce such risks. These regular assessments protect both employees and the public from any harm that could be avoided.

The obligations of smaller businesses do, however, differ in the way that these risks are audited – businesses with fewer than five employees do not have to record the risk assessments carried out.

As an employer, it is your responsibility to identify any hazards in the workplace, evaluate the risk, decide which precautions you will take as a result and then review the risk regularly. Hazards can be anything from as small as draws being left open to serious dangerous such as the handling of hazardous chemicals.

Although it can be difficult as a small business to keep up to date with all the changing regulations and laws, it is important that you do so in order to protect your company, your employees and the general public and therefore optimise your business and the effective way in which it operates.

This article was written and contributed by Fletcher Day

DISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances. It is merely a general comment on the relevant topic. If specific advice is required in connection with any of the matters covered in this article, please speak to Fletcher Day directly.

Published on 9th October 2018
(Last updated 20th October 2021)