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Four Legal Traps That Could Harm Unsuspecting Small Businesses

Four Legal Traps That Could Harm Unsuspecting Small Businesses

While laws may be made with good intentions, the fact still remains that complying with them can be a real challenge for large businesses, let alone small ones. Yet, as the saying goes, “ignorance is no excuse”. To help small-business owners be better informed, the team at Fletcher Day has listed four legal traps into which small businesses could fall.

“Free Software”

There’s lots of free and “freemium” software out on the Internet, and unless you have really good IT policies in place, then your employees may decide to download it to help with their work. You may think that the problem here is malware, and that having good security software in place will protect you from harm. Malware certainly can be a problem, but in reality it is highly unlikely to be an issue with mainstream software.

What can, however, most definitely be an issue is your employees using software for business purposes when they have downloaded it on a personal license. In other words, a lot of free/freemium software is only free for personal use. Businesses need a license. The good news is, it may not cost much, and it will definitely cost less than the potential consequences of using unlicensed software.

Intellectual Property Laws

Intellectual property is a huge field, and can be very complex, but the key points are as follows. Original content is protected by copyright and the copyright automatically belongs to its creator, unless the creator explicitly assigns it to someone else or it is used under legal exemption, like for academic research (it is highly likely that business purposes would qualify for an exemption). Other forms of intellectual property, like trademarks and patents, have to be registered with an appropriate body for which fees are usually payable. If one company infringes on another’s IP, then there can be serious consequences, so IP laws need to be treated with great respect.

Health and Safety

In simple terms, you have a legal obligation to take reasonable steps to keep your employees safe. If you have fewer than five employees, you do not (currently) have to create a written risk assessment. However, it may be to your advantage to do so partly so you have documentation to show in the event of being challenged about an incident at work, and partly because it is often useful to document important information. Though all health and safety is the subject of many jokes, it really is important and being neglectful of it not only has significant legal consequences, but also consequences for your public reputation.

The Issue of Insurance

Some forms of insurance are mandatory, and the rules about what policies companies need to have can and do change. In some cases, local authorities may have their own rules. It is advisable to make a point of checking every 6 months so that you have sufficient cover. This will also give you the opportunity to look at non-mandatory insurance and decide whether or not it is right for your business. For example, even though insurance against cyber attacks is not currently mandatory, it may still be a good investment.


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by Katie Eaton // Katie Eaton is a marketing consultant for Fletcher Day, a full service commercial law firm based in Central London.

Opinions expressed by contributors are their own.