The 30 Day MBA (35 page)

Advertising and descriptive standards

Any advertising or promotion you undertake concerning your business and its products and services, including descriptions on packaging, leaflets and instructions and those given verbally, have to comply with the relevant regulations. You can't just make any claims you believe to be appropriate for your business. Such claims must be decent, honest, truthful and take into account your wider responsibilities to consumers and anyone else likely to be affected; if you say anything that is misleading or fails to meet any of these tests then you could leave yourself open to being sued.

The five bodies concerned with setting the standards and enforcing the rules are:

• The Advertising Authority (
  www.asa.org.uk
  > Advertising Codes) for printed matter, newspapers, magazines and so forth and the internet.
  
• Ofcom (
  www.ofcom.org.uk
  ) is responsible for ensuring advertisements on television and radio comply with rules on what can and cannot be advertised, including any special conditions such as the timing and content of material aimed at children.
  
• The Financial Conduct Authority (
  www.fca.org.uk
  ) has the responsibility to see that financial promotions are clear, fair and not misleading.
  
• The Office of Fair Trading (
  www.oft.gov.uk
  > Business advice > Advertising) is responsible for ensuring that advertisements are not misleading or making unfair or exaggerated comparisons with other products and services and to help consumers find businesses that have high standards of customer service.
  
• Trading Standards (
  www.tradingstandards.gov.uk
  > Help and advice > Business guidance) covers anything such as quantity, size, composition, method of manufacture, strength, performance, place of manufacture, date, brand name, conformity with any recognized standard or history.
  

Complaints, returns and refunds

Customers buying products are entitled to expect that the goods are ‘fit for purpose' in that they can do what they claim, and, if the customer has informed you of a particular need, that they are suitable for that purpose. The goods also have to be of ‘satisfactory quality', that is, durable and without defects that would affect performance or prevent their enjoyment. For services, you must carry out the work with reasonable skill and care and provide it within a reasonable amount of time. The word reasonable is not defined and is applied in relation to each type of service. So, for example,
repairing a shoe might reasonably be expected to take a week, while three months would be unreasonable.

If goods or services don't meet these conditions, customers can claim a refund. If they have altered or waited an excessive amount of time before complaining or have indicated in any other way that they have ‘accepted', they may not be entitled to a refund, but may still be able to claim some money back for a period of up to six years. Trading Standards (
www.sogahub.tradingstandards.gov.uk
) provides a summarized guide to the relevant laws in clear plain English.

Distance selling and online trading

Selling by mail order via the internet, television, radio, telephone, fax or catalogue requires that you comply with some additional rules over and above those concerning the sale of goods and services described above. In summary, you have to provide written information, an order confirmation, and the chance to cancel the contract. During the cooling-off period customers have the unconditional right to cancel within seven working days, provided they have informed you in writing by letter, fax or e-mail.

There are, however, a wide range of exemptions to the right to cancel, including: accommodation, transport, food, newspapers, audio or video recordings and goods made to a customer's specification. The Distance Selling Hub (
http://dshub.tradingstandards.gov.uk
) operated by the Trading Standards Authority publishes a guide for business on distance selling.

Protecting customer data

If you hold personal information on a computer on any living person, customer or employee for example, then there is a good chance you need to register under the Data Protection Act. The rules state that the information held must have been obtained fairly, be accurate, held only for as long as necessary and held only for a lawful purpose.

You can check if you are likely to need to register using the interactive tool on the GOV.UK website (
www.ico.org.uk/notify/self/question1.html
).

Consumer credit licence

If you plan to let your customers buy on credit, or hire out or lease products to private individuals or to businesses, then you will in all probability have to apply to be licensed to provide credit. If you think you may need to be licensed, read the regulations on the website of the Office of Fair Trading (
www.oft.gov.uk
> Business advice > Offering credit > Credit licensing).

Employment legislation

Employing people full or part time is something of a legal minefield, starting with the job advert and culminating with the point at which you decide to part company. Three comprehensive sources of information on the legal aspects of employment are:

• Acas (
  www.acas.org.uk
  > Advice and guidance > Publications) is a link to free leaflets provided by the Advisory and Conciliation Service, who should know a thing or two about employment law.
  
• TheSite.org (
  www.thesite.org
  > Work & Study > Working > Workers' Rights) is a site run by YouthNet UK, a charity that helps young people have access to high-quality, impartial information as an aid to making decisions. It covers everything to do with work, including drug testing at work. While the site's centre of gravity is young people, the law as described applies to employers.
  
• WorldEmploymentLaw.com (
  www.worldemploymentlaw.com
  ) provides up-to-date labour law covering some 14 countries including the United States, China, India, Brazil and Russia.
  

Advertising the job

As with any advertising, you are governed by the laws on discrimination and equal opportunities. That means that any reference to gender, age, nationality, sexual orientation or religion is not permitted. You can still describe the job and the ideal candidate in terms of their experience, knowledge, attitude and qualifications. For tips on the sentences you can use, visit VizualHR.com (
www.vizualhr.com
> Employers guide to HR > Recruitment). The basic information, tips about the applicant, the organization, the job and the job package are free and very adequate; you have to subscribe for fuller information.

Contracts of employment

Employers are required to give employees a contract of employment within two months of their starting work. The contract has to contain all the obvious things such as where the job is to be, what the responsibilities are, pay, holiday entitlement, as well as details on sick pay, pension, period of notice and the grievance and disciplinary procedure.

GOV.UK has guidance on creating a written statement of employment at
www.gov.uk/employment-contracts-and-conditions
. The law requires that all workers have a statutory right to at least four weeks' paid annual leave, pro rata for part-timers; that you pay the statutory minimum wage, dependent on the age of the employee; that they work within the working time limits (48 hours a week); and that parents are entitled to periods of
paid leave when they have children (up to 52 weeks for women and 26 weeks for new fathers).

Employment records

Employers must maintain records on employees, keeping note of absences, sickness, disputes, disciplinary matters, accidents, training, holidays and any appraisals or performance reviews. If you have an unsatisfactory employee and want to dismiss them, this information will be vital. OyezWaterlow (
www.oyezwaterlow.co.uk
> HR Paper Forms) has a record keeping system priced at £78.95 ($123.76/€88.69).

Software such as that provided by Vizual Management Solutions (
www.time-attendance.co.uk
) will cost several times that of the paper version and for most small businesses will add little value. If you can write a simple database program using software such as Access then that is worth exploring. If you keep records on a computer you will need to be mindful of the Data Protection Act as it applies to employee records. You can get that from the Information Commissioner's Office (
www.ico.gov.uk
> For organizations > Data protection guide).

Safety at work

Employers have a ‘duty of care' to ensure that anyone working for you is working in a safe environment and is not exposed to possible health and safety hazards. You need to make an assessment of risk and working conditions covering everything from fire exits to ensuring that ventilation, temperature, lighting and toilet facilities meet health and safety requirements. The Health and Safety Executive (
www.hse.gov.uk
) has ready-made risk assessment forms and a basic guide to health and safety at work.

CASE STUDY

Societé Générale, the French bank, reported a trading loss of €4.9 ($6.8/£4.4) billion on 24 January 2008 after liquidating €50 ($69.7/£44.5) billion in what the bank says were unauthorized futures positions taken by a relatively junior trader, Jerome Kerviel. The bank claims that Kerviel forged documents and e-mails to suggest he had hedged his positions. But Kerviel insists that his bosses at SocGen, as the bank is generally known, must have been aware of his massive risk taking, and turned a blind eye as long as he was making money for the bank.

Kerviel plans to file a complaint for unfair dismissal and extract compensation from his employer based around three points of defence. First, Societé Générale appears to
have terminated his contract without a face-to-face meeting, as is required by French labour laws.

Second, the bank's losses may only have occurred while unwinding Kerviel's positions in January 2008, during what was an unprecedented period of global stock market turbulence. This situation makes it unclear exactly how much responsibility Kerviel bears for the total losses.

Third, he had no obvious motive and seems to have made no personal profit from his trades. In fact his behaviour has made him a folk hero in France, with over 150 Facebook groups showing an interest in his fate.

His chances of success in an unfair dismissal case look at least fair. In April 2007, Laura Zubulake, 44, won £15.5 ($24.3/€17.4) million from UBS in New York after a male executive said she was fired because she was ‘old and ugly and she can't do the job'. Three years earlier, Elizabeth Weston received a £1 ($1.6/€1.12) million settlement from Merrill Lynch over a colleague's ‘lewd' comments over a Christmas lunch.

Although Kerviel's actions put him at the top of the ‘rogue trader' list, he is unlikely to head the unfair dismissal stakes. That title is likely to go to six women, five female employees in New York and one at the London office of German-owned bank Dresdner Kleinwort Wasserstein (DKW). They are suing for £800 ($1,254/€900) million over allegations that the company refused to promote them and discriminated against them by allowing after-hours trips to strip clubs for male colleagues and humiliating sexual banter in the office.

Unfair dismissal

Although it's the handful of cases usually brought by City workers that grab the headlines, some 53,000 unfair dismissal claims are filed with tribunals each year: in the UK alone just under half of those are won by the employee, with the average claim being settled for £5,000. Employers who have been through the process say that it's the stress and administrative burden rather than the settlement itself that is of greatest concern. You can find a list of fair reasons for dismissing an employee on CompactLaw (
www.compactlaw.co.uk
). Also Iambeingfired (
www.iambeingfired.co.uk
> Claim Evaluator) is worth examining as it gives the employee's side of the argument. The Claim Evaluator Tool takes an employee through a series of questions to see if they have a case for unfair dismissal, which could be useful as MBAs are often high on the casualty list during restructuring or after acquisitions. The site also has comprehensive information on all aspects of employment law that impinge on the likelihood of being dismissed.

Intellectual property

The holy grail of competitive business strategy is to have a product or service with sufficient unique advantage to make it stand out from others in the market. It is equally important that such an advantage cannot be easily copied. In other words, there is a barrier to entry preventing others from following the same path to riches. The advantage can be anything – the business name (Body Shop), a catchy slogan (Never knowingly undersold – John Lewis), some technological wizardry (Dolby Noise Reduction), an instantly recognizable logo (Google) or even a jingle such as that used by Microsoft's Windows operating system during start-up.

The generic title covering this area is ‘intellectual property', usually shortened by MBAs to IP, and it splits down into a number of distinct areas. Businesses spend a lot of time and money creating and protecting IP, so you need at least an appreciation of the legal issues involved. The case above is an example of how things can go wrong from the outset.

The MBA Information Resource Centre at the end of the book provides world contact points for Intellectual Property matters, as well as the information at the end of this section.

Patents

A patent can be regarded as a contract between an inventor and the state. The state agrees with the inventor that if he or she is prepared to publish
details of the invention in a set form and if it appears that he or she has made a real advance, the state will then grant the inventor a ‘monopoly' on the invention for 20 years. The inventor uses the monopoly period to manufacture and sell his or her innovation; competitors can read the published specifications and glean ideas for their research, or they can approach the inventor and offer to help to develop the idea under licence.