How to protect your business from breaches of the law

Key Points

• Read about four strategies designed to reduce risk of falling foul of the law

As a small business owner, it’s your job to ensure your business is protected from possible risks. This includes making sure you and your employees are following the law.

Businesses in Australia must comply with government rules and regulations. This includes both general legislation and regulations specific to your industry. Breaches of the law are serious and can result in large fines and penalties, even if the breach was unintentional.

Here are four strategies that you might use to minimise the risk of legal violations in your small business.

Understand government regulations

This step may sound simple, but it can be difficult for many small businesses to keep track of all the rules they need to follow. Businesses must be on top of both state or territory and federal legislation, as well as the regulations that govern their specific industry. As these rules change and become more complex, a simple mistake could easily result in an accidental breach.

The Australian government’s business website is one resource for small business owners. It may be a good starting place to explore the rules that apply to your business. You might also consider getting legal advice from a solicitor, accountant, and other professionals who can guide you on different aspects of running a business that is compliant with the law.

Develop a risk management plan

A risk management plan is a simple yet effective way to safeguard your business against breaches of the law. This is simply a list of laws and regulations your business must follow and the steps you can take to ensure you abide by these rules.

Every business is different, so your risk management plan will look different from other businesses’ plans (even those in your industry). However, it may cover areas such as:

• OH&S compliance
• Hiring, firing, and redundancy policies
• Acceptable workplace behaviour

The Australian government’s business website has resources to help you draft a risk management plan for your small business.  A solicitor or consultant may also be able to advise you on steps you can take to avoid legal breaches.

Educate your staff

Everyone at your business is responsible for complying with the law, regardless of their job or position. Your staff should be aware of their responsibilities and how they can help the business remain a safe and compliant workplace.

This training should begin when an employee is first hired. New hire induction should include an overview of relevant laws they must follow, your expectations, and the business’ risk management plan. Scheduling regular refresher courses will remind employees of their responsibilities and update them on any changes to the law or your risk management plan.

Consider insurance

It’s better to prevent a breach from happening, but one could still occur despite your best efforts. Many small businesses consider certain insurance policies as an extra layer of protection. Coverage that you might choose for your business includes:

• Statutory Liability insurance covers costs, fines and penalties that result from unintentional breaches of key legislation in the operation of your business.
• Employment Practices Liability insurance covers employment-related claims against you, such as wrongful dismissal, bullying, harassment or discrimination.
• Management Liability insurance is designed to provide protection to both the business and its directors or officers for claims of wrongful acts in the management of the business.

Insurance can help minimise many of the costs associated with an unintentional breach of the law. Without it, many businesses might not be able to recover financially from the resulting legal fees, fines and penalties.  For more information about the different types of insurance available to small business, visit BizCover.

Managing your risks

Breaching the law is serious for small businesses. Even an innocent mistake could lead to a big problem for you and your business. By taking steps to prevent a breach and minimise its impact, you could protect what you are building and better weather whatever may be ahead!

Next Steps

• Download our risk assessment checklist
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