Third Unit - BECSR

The new Consumer Protection Act was passed by Parliament in

2019. It came into force in July 2020 and replaced the Consumer
Protection Act, 1986.

Given below is a gist of the Consumer Protection Act, 2019:

Enactment August 9, 2019

Date:

Act Year: 2019

Short Title: The Consumer Protection Act, 2019

Long Title: An Act to provide for protection of the interests of consumers and for the
said purpose, to establish authorities for timely and effective
administration and settlement of consumers’ disputes and for matters
connected therewith or incidental thereto

Ministry: Ministry of Consumer Affairs, Food and Public Distribution

Department: Department of Consumer Affairs

Need for the new act:

  The Digital Age has ushered in a new era of commerce and digital
branding, as well as a new set of customer expectations.
Digitisation has provided easy access, a large variety of choices,
convenient payment mechanisms, improved services and shopping
as per convenience. However, there are also associated challenges
related to consumer protection.
 To help address the new set of challenges faced by consumers in
the digital age, the Indian Parliament passed the landmark
Consumer Protection Bill, 2019 which aims to provide timely and
effective administration and settlement of consumer disputes.
Consumer Protection Act 2019 Details:

 Consumer Protection Act, 2019 is a law to protect the interests of

the consumers. This Act provides safety to consumers regarding
defective products, dissatisfactory services, and unfair trade
practices.
 The basic aim of the Consumer Protection Act, 2019 is to save the
rights of the consumers by establishing authorities for timely and
effective administration and settlement of consumers’ disputes.
Rights of the consumers:

 Consumers have the right to information on various aspects of

goods and services. This could be information about the quantity,
quality, purity, potency, price, and standard of goods or services.
 To be protected from hazardous goods and services. Right to
protection against goods and services that can be dangerous to life
and property.
 To be protected from unfair or restrictive trade practices.
 Consumers have the right to access a variety of goods and services
at competitive prices.
 Consumers should have the right to redressal.
Salient Provisions of the Consumer Protection Act 2019
New definition of consumer:

 The new Act has widened the definition of ‘consumer’.

Definition of consumer:

 As per the Act, a person is called a consumer who avails the

services and buys any good for self-use. Worth to mention that if a
person buys any good or avails any service for resale or
commercial purposes, he/she is not considered a consumer. This
definition covers all types of transactions i.e. offline and online
through teleshopping, direct selling or multi-level marketing.
Central Consumer Protection Authority:

 The Act proposes the establishment of the Central Consumer

Protection Authority (CCPA) as a regulatory authority.
 The CCPA will protect, promote and enforce the rights of
consumers and regulate cases related to unfair trade practices,
misleading advertisements, and violation of consumer rights.
 CCPA would be given wide-ranging powers.

 The CCPA will have the right to take suo-moto actions, recall
products, order reimbursement of the price of goods/services,
cancel licenses, impose penalties and file class-action suits.
 The CCPA will have an investigation wing to conduct
independent inquiry or investigation into consumer law
violations.
Consumer Disputes Redressal Commission:

 The Act has the provision of the establishment of Consumer

Disputes Redressal Commissions (CDRCs) at the national, state
and district levels to entertain consumer complaints.
  As per the notified rules, the State Commissions will furnish
information to the Central Government on a quarterly basis on
vacancies, disposal, the pendency of cases and other matters.
 The CDRCs will entertain complaints related to:

 Overcharging or deceptive charging

 Unfair or restrictive trade practices

 Sale of hazardous goods and services which may be

hazardous to life.
 Sale of defective goods or services

As per the Consumer Disputes Redressal Commission Rules, there

will be no fee for filing cases up to Rs. 5 lakh.
E-Filing of Complaints:

 The new Act provides flexibility to the consumer to file complaints

with the jurisdictional consumer forum located at the place of
residence or work of the consumer. This is unlike the earlier
condition where the consumer had to file a complaint at the place
of purchase or where the seller has its registered office address.
 The new Act also contains enabling provisions for consumers to
file complaints electronically and for hearing and/or examining
parties through video-conferencing.
 Consumers will also not need to hire a lawyer to represent their
cases.
Product Liability & Penal Consequences:

 The Act has introduced the concept of product liability.

 A manufacturer or product service provider or product seller

will now be responsible for compensating for injury or
damage caused by defective products or deficiency in
services.
 This provision brings within its scope, the product manufacturer,
product service provider and product seller, for any claim for
compensation. The term ‘product seller’ would also include e-
commerce platforms.
Penalties for Misleading Advertisement:

 The CCPA may impose a penalty on a manufacturer or an

endorser, for a false or misleading advertisement. The CCPA may
also sentence them to imprisonment.
Provision for Alternate Dispute Resolution:

 The new Act provides for mediation as an Alternate Dispute

Resolution mechanism. For mediation, there will be a strict
timeline fixed in the rules.
 As per the recently notified rules, a complaint will be referred by a
Consumer Commission for mediation, wherever scope for early
settlement exists and parties agree to it. The mediation will be held
in the Mediation Cells to be established under the aegis of the
Consumer Commissions. There will be no appeal against
settlement through mediation.
Unfair Trade Practices:

 The new Act has armed the authorities to take action against unfair
trade practices too.
 The Act introduces a broad definition of Unfair Trade Practices,
which also includes the sharing of personal information given by
the consumer in confidence unless such disclosure is made in
accordance with the provisions of any other law.
The Central Consumer Protection Council:

 The Consumer Protection Act empowers the Central Government

to establish a Central Consumer Protection Council. It will act as
an advisory body on consumer issues.
  As per the notified Central Consumer Protection Council
Rules, the Central Consumer Protection Council would be
headed by the Union Minister of Consumer Affairs, Food and
Public Distribution with the Minister of State as Vice
Chairperson and 34 other members from different fields.
 The Council, which has a three-year tenure, will have a
Minister-in-charge of consumer affairs from two States from
each region – North, South, East, West, and NER. There is
also a provision for having working groups from amongst the
members for specific tasks.
Applicability:

 This Act is applicable to all the products and services, until or

unless any product or service is especially debarred out of the
scope of this Act by the Central Government.
Consumer Protection Act 2019 Significance:

Empowering consumers:

 The new Act will empower consumers and help them in protecting
their rights through its various rules and provisions. The new Act
will help in safeguarding consumer interests and rights.

 Consumer-driven businesses such as retail, e-commerce

would need to have robust policies dealing with consumer
redressal in place.
 The new Act will also push consumer-driven businesses to
take extra precautions against unfair trade practices and
unethical business practices.
Inclusion of the e-commerce sector:

 The earlier Act did not specifically include e-commerce

transactions, and this lacuna has been addressed by the new Act.
  E-commerce has been witnessing tremendous growth in
recent times. The Indian e-commerce market is expected to
grow to US$ 200 billion by 2026.
The Act also enables regulations to be notified on e-commerce and
direct selling with a focus on the protection of interests of
consumers. This would involve rules for the prevention of unfair
trade practices by e-commerce platforms.
 As per the notified rules, every e-commerce entity is required
to provide information relating to return, refund, exchange,
warranty and guarantee, delivery and shipment, modes of
payment, grievance redressal mechanism, payment methods,
the security of payment methods, charge-back options, etc.
including country of origin which are necessary for enabling
the consumer to make an informed decision at the pre-
purchase stage on its platform.
 The e-commerce platforms will have to acknowledge the
receipt of any consumer complaint within forty-eight hours
and redress the complaint within one month from the date of
receipt under this Act. This will bring e-commerce
companies under the ambit of a structured consumer
redressal mechanism.
 E-commerce entities that do not comply will face penal
action.
Time-bound redressal:

 A large number of pending consumer complaints in consumer

courts have been common across the country. The new Act by
simplifying the resolution process can help solve consumer
grievances speedily.
 A main feature of the Act is that under this, the cases are decided
in a limited time period.
Responsible endorsement:
  The new Act fixes liability on endorsers considering that there
have been numerous instances in the recent past where consumers
have fallen prey to unfair trade practices under the influence of
celebrities acting as brand ambassadors.
 This will make all stakeholders – brands, agencies, celebrities,
influencers and e-commerce players – a lot more responsible. The
new Act would force the endorser to take the onus and exercise
due diligence to verify the veracity of the claims made in the
advertisement to refute liability claims.
Upholding consumer interests:

 For the first time, there will be an exclusive law dealing with
Product Liability.
 Product liability provisions will deter manufacturers and service
providers from delivering defective products or deficient services.
 The new legislation empowers the National Consumers Dispute
Redressal Committee as well as the State Commission to declare
null and void any terms of a contract while purchasing a product.
This will go a long way in protecting consumers, who are often
subject to contract conditions that favour a seller or manufacturer.
Alternate dispute redressal mechanism:

 The provision of Mediation will make the process of dispute

adjudication simpler and quicker.
 This will provide a better mechanism to dispose of consumer
complaints in a speedy manner and will help in the disposal of a
large number of pending cases in consumer courts across the
nation.
Simplified process for grievance redressal:

 The new Act would ease the overall process of consumer grievance
redressal and dispute resolution process. This will help reduce
inconvenience and harassment for the consumers.
  The enhanced pecuniary jurisdiction and provisions providing
statutory recognition to mediation processes, enabling filing of
complaints from any jurisdiction and for hearing parties through
video-conferencing will increase accessibility to judicial forums
and afford crucial protection in times when international e-
commerce giants are expanding their base.

Consumer Protection Act 2019 Concerns:

State regulation:

 As part of the Consumer Protection Act, 2019, the Ministry of

Consumer Affairs will compile a code of conduct for advertisers
and agencies, a move designed to curb unfair practices and
misleading claims. The planned code will detail penalties for
advertisers and their agencies and publishers if misleading
advertising and false claims are found.
 There have been concerns that this approach would mark a move
from self-regulation to a more federated oversight.
Implementational challenges:

 The existing vacancies at the district commission level would

undermine the effective implementation of the new Act.
Lack of differentiated approach:

 As per the proposed rules for the e-commerce businesses,

companies are not allowed to “manipulate the price” of goods and
services offered on their platforms to gain unreasonable profit or
discriminate between consumers of the same class or make any
arbitrary classification of consumers affecting their rights under the
Act.
 The clause on the manipulation of price by e-commerce companies
appears irrelevant as sometimes, the e-commerce companies would
 want to reduce the price to enhance sales volume. For a country
with market size of around $25 billion, the guidelines should have
taken a deeper view of the e-commerce ecosystem, covering all
prevailing business models between consumers, marketplaces and
sellers.

What is the NCDRC?

The National Consumer Disputes Redressal Commission or the NCDRC
is a quasi-judicial commission established as per the provisions of the
Consumer Protection Act, 1986.

 It was established in 1988.

 Its headquarters is in New Delhi.
 The NCDRC is headed by a retired or a sitting judge of
the Supreme Court.
 The objective of the National Consumer Disputes Redressal
Commission, as well as the respective state commissions and
district fora is to provide speedy, economical and summary
resolution of consumer complaints or disputes.
 Currently, the NCDRC is headed by Justice R. K. Agrawal (former
SC judge) and comprises seven other members.
 The NCDRC is at the apex while it has 35 state commissions and
629 district fora under it.

NCDRC Jurisdiction
Section 21 of the Consumer Protection Act 1986 provides that the
NCDRC can entertain consumer complaints that are valued over Rs. 1
 Crore. As per the 2019 Act that replaced the 1986 Act, the NCDRC
will entertain complaints valued above Rs. 10 Crore.

Also, the Commission has appellate as well as revisional

jurisdictions from the orders of the State Consumer Disputes
Redressal Commissions and the District Fora, as the case may be.
 The Act also provides that any person who is aggrieved by an
order of the NCDRC may appeal against the order in the Supreme
Court of the country within a period of 30 days.
 The State commissions will entertain cases between Rs. 1 Crore
and Rs. 10 Crore.
 The District fora will look into cases up to Rs. 1 Crore.

 Another change made in the 2019 Act is that the complainant can
make the complaint in the place where he/she works or resides
rather than where the opposite party resides or conducts business,
thereby, easing the burden on consumers.
Unethical Issue in business
1. Corporate Social Responsibility (CSR): This involves the ethical
obligations of businesses towards society, including environmental
sustainability, community development, and philanthropy.
2. Fair Labor Practices: Ensuring fair wages, safe working conditions,
and reasonable working hours for employees, as well as preventing
exploitation of labor, child labor, and discrimination in the workplace.
3. Fair Trade: The ethical considerations of trading relationships, ensuring
that producers in developing countries receive fair compensation for
their goods and that trade practices do not exploit them.
4. Ethical Marketing: Avoiding deceptive advertising, manipulation of
consumers, and the promotion of harmful products, as well as respecting
consumer privacy and consent.
5. Corporate Governance: Ensuring transparency, accountability, and
integrity in decision-making processes within organizations, including
issues such as conflicts of interest and insider trading.
6. Product Safety and Quality: Providing accurate information about
products, ensuring they meet safety standards, and taking responsibility
for any harm caused by defective products.
7. Environmental Sustainability: Minimizing the environmental impact
of business operations, reducing pollution, conserving natural resources,
and promoting sustainable practices.
8. Ethical Leadership: Fostering a corporate culture that values honesty,
integrity, and ethical behavior from top management down to all
employees.
9. Supplier Relationships: Ensuring fair and ethical treatment of
suppliers, including paying fair prices, avoiding exploitation, and
promoting ethical sourcing practices.
10. Globalization and Ethical Dilemmas: Addressing ethical
challenges that arise from operating in diverse cultural, legal, and
regulatory environments, such as bribery, corruption, and human rights
violations.

Taking affirmative actions in response to ethical issues in business

involves proactive steps to address and rectify the situation. Here's a
general framework for taking affirmative action:

1. Identify the Issue: The first step is to recognize and understand the
ethical issue at hand. This may involve gathering information, consulting
relevant stakeholders, and considering the potential impact on different
parties involved.
2. Evaluate the Impact: Assess the potential consequences of the ethical
issue on stakeholders, the organization, and broader society. Consider
both short-term and long-term effects, as well as the ethical principles
and values that are at stake.
3. Consult Stakeholders: Engage with relevant stakeholders, including
employees, customers, suppliers, investors, and the community, to
gather perspectives and insights on the issue. This can help in
understanding diverse viewpoints and crafting effective solutions.
4. Develop a Plan of Action: Based on the assessment and stakeholder
input, develop a comprehensive plan to address the ethical issue. This
plan should outline specific steps, timelines, responsibilities, and
resources required to implement the solution effectively.
5. Implement Measures: Take decisive action to implement the plan,
ensuring that appropriate measures are put in place to address the ethical
issue. This may involve changes to policies, procedures, practices, or
organizational culture, as well as providing training and support to
employees.
6. Monitor and Evaluate: Continuously monitor the effectiveness of the
measures implemented and evaluate their impact on addressing the
ethical issue. Solicit feedback from stakeholders and be willing to adjust
the approach as needed to achieve the desired outcomes.
7. Communicate Transparently: Maintain open and transparent
communication with stakeholders throughout the process, keeping them
informed about the actions being taken to address the ethical issue.
Transparency builds trust and credibility, even if the issue is challenging
or uncomfortable.
8. Take Responsibility and Learn: Accept accountability for any
wrongdoing or harm caused by the ethical issue, and take responsibility
for remedying the situation. Use the experience as an opportunity for
organizational learning and improvement, identifying ways to prevent
similar issues in the future.
9. Promote a Culture of Ethics: Foster a culture of ethics and integrity
within the organization, where ethical considerations are prioritized in
decision-making and behavior. This may involve promoting ethical
values, providing ethics training, and rewarding ethical conduct.

By following these steps, businesses can demonstrate their commitment

to ethical principles and values, uphold their responsibilities to
stakeholders, and contribute to a more ethical and sustainable business
environment.
Whistleblowers Protection Act

Recently, the accusations raised against the Infosys Chief Executive

Officer (CEO) and other senior officials have brought back the focus on
whistleblowers’ safety in India.

 In recent years, the number of whistleblowing complaints has risen

in the corporate sector, with Wipro and State Bank of India (SBI)
facing most of them in 2018.
Background

 Whistle blowing is defined as an act of disclosing information by

an employee or any concerned stakeholder about an illegal or
unethical conduct within an organization.

o A whistleblower is a person who informs about a person or

organization engaged in such illicit activity.
 The Law Commission of India in 2001, had recommended that, in
order to eliminate corruption, a law to protect whistleblowers was
necessary. It had drafted a bill as well to address this issue.
 In 2004, in response to a petition filed after the infamous murder of
NHAI Official, the Supreme Court of India directed the Central
government that, ‘administrative machinery be put in place for
acting on complaints from whistleblowers till a law is enacted.’

o The government, in response, notified a resolution in 2004

named, ‘Public Interest Disclosure and Protection of
Informers Resolution (PIDPIR)’.
o This resolution gave the Central Vigilance Commission
(CVC) the power to act on complaints from whistleblowers.
 In 2007, the report of the Second Administrative Reforms
Commission also recommended that a specific law needs to be
enacted to protect whistleblowers.

o The UN Convention against Corruption to which India is a

signatory (although not ratified) since 2005, encourages states
to facilitate reporting of corruption by public officials and
provide protection for witnesses and experts against
retaliation.
o The Convention also provides safeguards against victimization
of the person making the complaint.
 To conform with such regulations, in 2011 Whistleblowers
Protection Bill was proposed which finally became a law in 2014.
 The Companies Act, 2013, as well as the Securities and
Exchange Board of India regulations have made it mandatory for
companies to take notice of all such complaints.
Key Highlights of Whistleblower Protection Act, 2014

 The act establishes a mechanism to receive complaints related to

disclosure of allegations of corruption or wilful misuse of power or
discretion, against any public servant, and to inquire or cause an
inquiry into such disclosure.

o The act also provides adequate safeguards against

victimization of the person making such complaints.
 It allows any person, including a public servant, to make a public
interest disclosure before a Competent Authority. The law has
elaborately defined various competent authorities. For instance,
Competent authority to complaint against any union minister is the
Prime Minister.
 The law does not allow anonymous complaints to be made and
clearly states that no action will be taken by a competent authority
if the complainant does not establish his/her identity.

o The maximum time period for making a complaint is seven

years.
 Exemptions: The act is not applicable to the Special Protection
Group (SPG) personnel and officers, constituted under the Special
Protection Group Act, 1988.
 Court of Appeal: Any person aggrieved by any order of the
Competent Authority can make an appeal to the concerned High
Court within a period of sixty days from the date of the order.
 Penalty: Any person who negligently or mala-fidely reveals the
identity of a complainant will be punishable with imprisonment for
a term extending up to 3 years and a fine which may extend up to
Rs 50,000.

o If the disclosure is done mala-fidely and knowingly that it

was incorrect or false or misleading, the person will be
punishable with imprisonment for a term extending up to 2
years and a fine extending up to Rs. 30,000.
 Annual Report: The Competent Authority prepares a
consolidated annual report of the performance of its activities
and submits it to the Central or State Government that will be
further laid before each House of Parliament or State Legislature,
as the case may be.
 The Whistleblowers Act overrides the Official Secrets Act,
1923 and allows the complainant to make public interest disclosure
before competent authority even if they are violative of the later act
but not harming the sovereignty of the nation.
 o In 2015, an amendment bill was moved that proposes,
whistleblowers must not be allowed to reveal any documents
classified under the Official Secrets Act of 1923 even if the
purpose is to disclose acts of corruption, misuse of power or
criminal activities. This dilutes the very existence of the 2014
Act.
Way Forward

 Suitable legislation must be enacted to provide protection to

innocent whistleblowers and the dilution of the act that is proposed
by the 2015 Amendment Bill must be abandoned.
 Strengthening of the whistleblower protection mechanism will help
in ensuring that the integrity of democracy is protected, cherished
and upheld.

The two types of whistleblowing can be broken down into two main categories

based on the method and audience of the report: internal and external

whistleblowing. Understanding these categories is essential, as each has its own

set of challenges, benefits, and ethical considerations.

Internal Whistleblowing
Internal whistleblowing occurs when employees raise concerns within their

organization, typically to their managers, HR departments, or compliance teams.

 Organizations often prefer this type of whistleblowing because it

allows them to address issues internally before they escalate or
become public.

Companies encouraging internal whistleblowing are more likely to foster

 transparency, as employees feel they can voice concerns without fear of

retaliation. However, challenges can arise if whistleblowers believe their concerns

won't be taken seriously or fear backlash from their superiors. This is

where building speak-up culture becomes crucial, empowering employees to

trust the process.

So, what are the types of whistleblowing? While internal whistleblowing involves

keeping the matter within the company, external whistleblowing takes things to

the next level, involving outside legal authorities or agencies.

External Whistleblowing
External whistleblowing happens when individuals report issues to an authority

outside the organization, such as government agencies, media outlets, or non-

profit organizations.

 This often occurs when internal reporting channels fail, or when the
whistleblower believes that the organization might not handle the issue
properly.

In contrast, external whistleblowing carries higher risks, such as public exposure

of the issue, but it can also bring greater rewards. By bringing misconduct to

light, whistleblowers can drive systemic change and hold powerful organizations

accountable.

However, laws exist to protect whistleblowers who go this route, ensuring they

aren’t retaliated against for their actions. The difference between internal and
external whistleblowing becomes particularly significant when deciding whether

to resolve an issue quietly or bring it into the public eye.

The Two Types of Whistleblowing in

Ethics
From an ethical perspective, the decision to engage in internal vs external

whistleblowing can be a moral dilemma.

On one hand, internal whistleblowing may give the organization a chance to

rectify the issue without public scrutiny. On the other hand, if internal

mechanisms are broken or corrupt, external whistleblowing may be the only way

to achieve justice.

These types of whistleblowing in ethics greatly influence the organization's

culture as well as society’s perception of accountability. It’s essential for

organizations to ensure their internal reporting channels are trustworthy, as

whistleblowers often face difficult ethical challenges when deciding whether to

report internally or externally.

Impact of Whistleblowing on
Organizations
Whether internal or external, whistleblowing can have profound effects on

organizations. When handled properly, internal whistleblowing can lead to early

detection of issues, helping organizations to resolve problems discreetly and

maintain their reputation. However, ignoring or mishandling whistleblowers can

lead to public exposure via external whistleblowing, which often results in greater

scrutiny, legal consequences, and reputational damage.

Whistleblowers, whether they report internally or externally, have an important

role in maintaining organizational integrity. The two different types of

whistleblowers are both influenced by the culture of trust and transparency in

their organizations. Providing safe and effective reporting channels makes the

decision between internal and external whistleblowing easy for employees

knowing they can speak up without fear.

Affirmative actions
Affirmative actions are the preferential treatment
 or positive steps taken to increase the representation of women
and minorities in areas of employment , education and culture from
which they have been historically excluded. Or it can also be
looked as a compensation given
 to the victims who have been mistreated from ages because of
their class, caste, gender, disability, religion etc.
 Affirmative actions is a government(private) program
designed to redress historic injustices against specific groups
by making special efforts to provide members of these group
with access to educational and employment opportunities.
 Reverse discrimination is not a legal term. It is a layman term
which describe it as a discriminatory situation , where
majority feel that they are been discriminated because of the
affirmative actions taken by government to protect the people
who were historically mistreated due to their class , caste,
gender etc.
  Reverse discrimination refers to discrimination against
members of historically majority or ‘advantaged’ group.
 Discrimination has historically been found in employment ,
education and other areas. For eg. Many Co-Ed colleges has
higher population of male as compared to female students.
And if it turns out that female students are more in number or
female students are preferred than male students for
admission then the majority group “male” will treat it as
reverse discrimination.

Preferential hiring is a system under which employers hire

qualified members as per the need of the organisation , in
terms of qualification, gender or ethnicity .
In India all Government organisation’s hiring’s can be
considered as Preferential hiring's as these organisation’s has
to incorporate the policies that seek to redress past
discrimination through active measures to ensure equal
opportunity in employment .
Preferential hiring is undertaken when # there is a
requirement of a designated group. # there is a requirement of
special expertise of designated group members .

8 Ethical issues in business and how to manage them

Human resources (HR) professionals and management figures

may find it challenging to manage ethical issues effectively.
Although there are laws to hold people accountable, unethical
behaviour can still occur in the workplace and an organisation
can also act unethically. As an HR professional or a manager,
learning about the ethical issues a business can face can help
you prepare to manage them effectively if they occur. In this
article, we consider what ethical issues in business are, look at
several examples and discuss how to manage them.
What are ethical issues in business?
Ethical issues in business occur when a decision, activity or scenario
conflicts with the organization’s or society's ethical standards. Both
organisations and individuals can become involved in ethical issues
since others may question their actions from a moral viewpoint.
Complex ethical issues include diversity, compliance; governance
and empathetic decision-making that align with the organization’s
core values. Ethical conflicts may pose a risk for an organization, as
they may imply non-compliance with relevant legislation. In other
instances, ethical issues may not have legal consequences but may
cause an adverse reaction from third parties. It may be challenging
to effectively manage ethical issues when no guidelines exist. For this
reason, as an HR or management professional, you can help develop
policies to guide employees to make the right decision when faced
with moral issues.
Examples of ethical issues in business
It's essential to understand what these issues are to manage them
when they arise in the organisation you work for. Knowing how to
detect and deter these issues before they become problematic can
help you and your colleagues focus on business success and growth
instead of remediation. Here are eight examples of ethical issues that
can occur in a business setting:
1. Discrimination and harassment
Two of the most significant ethical issues that HR professionals and
managers face are discrimination and harassment. The
consequences of discrimination and harassment in the workplace
can negatively impact the finances and reputation of the
organisation. Many countries have anti-discrimination laws to
protect employees from unfair treatment. Some anti-discrimination
areas include:
Age: Organisations and internal policies cannot discriminate against
employees who are older.
Disability: To prevent disability discrimination, it's important to
accommodate and provide equal treatment for employees with
mental or physical disabilities.
Equal pay: Equal pay focuses on ensuring that all employees receive
equal compensation for similar work, regardless of religion, gender
or race.
Pregnancy: Pregnant employees have a right not to be discriminated
against on account of their pregnancy.
Race: Employees should receive equal treatment, regardless of
ethnicity or race.
Religion: Employees' religious beliefs should not affect how anyone
within the organisation treats them.
Sex and gender: An employee's sex and gender identity should not
influence their treatment while working at an organisation.
As an HR professional or senior manager, you can educate
employees on these issues and encourage a positive work culture to
fight discrimination. All employees require an understanding of the
disciplinary consequences of discriminative behaviour. You can
make an effort to hire people with different backgrounds,
characteristics and nationalities to ensure a diverse workforce. It's
also crucial to consider factors such as age, religion and culture
when developing internal policies to be more aware and flexible
regarding employees' needs.
2. Workplace health and safety
All employees have a right to a safe working environment and work
conditions. Some of the most common employee safety
considerations include:
Fall protection: This involves measures to protect employees against
falls, such as guard rails.
Hazard communication: Identify any harmful substances employees
work with and communicate how to handle these hazardous
materials safely.
Scaffolding: The HR department in construction or maintenance
organisations is obliged to guide employees about the maximum
weight numbers structures can handle.
Respiratory protection: If relevant, provide guidelines about
emergency procedures and the standards applicable to the use of
respiratory equipment.
Lockout, tag out: This involves specifying the control procedures for
dangerous machines and hazardous energy sources, such as gas and
oil.
Industrial trucks: It's important to ensure that the required safety
standards for trucks are in place to protect employees.
Ladders: Before using ladders, employees must be given an
understanding of the weight that the ladder can support.
Electrical wiring methods: Create procedures for electrical and
wiring tasks. For example, these guidelines can specify how
employees can create a circuit to reduce electromagnetic
interference.

 Machine guarding: It's important to provide operation

guarding instructions for items such as guillotine cutters,
power presses, shears and other devices where applicable.
 General electrical regulations: Developing general electrical
regulations for employees is critical for safety in work
environments that require the frequent use of electrical
equipment. For example, employees should never place
conductors or equipment in damp or wet locations.

Health and safety guidelines don't only cover physical harm to

employees. It's also important to consider psychosocial risks, work-
related stress and mental health issues. Factors such as high work
demands, job insecurity, effort-reward imbalance and low levels of
autonomy can contribute to health-related behavioral risks.
Related: How to become a health and safety inspector in 6 steps

3. Whistle-blowing or social media rants

Using social media has become widespread, making employees'
online conduct a critical consideration in their employment status.
The consequences of punishing employees for inappropriate social
media posts remains an ethical issue and the implications of a
negative social media post may influence the treatment of the
employee. When an employee's social media posts result in a loss of
business or give the organization a negative reputation, you may
decide to fire them. This is why it's helpful to specify inappropriate
social media behavior in company policies to ensure employees
know what to avoid. As an HR professional or management figure,
you cannot penalize employees who become whistle-blowers to
regulators or authorities. This is also the case for employees who
raise awareness of workplace violations online unless it reduces the
amount of business the organization receives.

Ethics in accounting practices

Laws require organisations to maintain accurate bookkeeping

practices. Unethical accounting practices are a serious issue,
especially for publicly traded companies. The legislation specifies
financial report requirements aimed at protecting shareholders and
consumers. All organisations have to keep accurate financial records
and pay taxes to attract investment and business partners regardless
of the size of the company.

5. Corporate espionage and nondisclosure

Many organisations are at risk that current and former employees

may steal information, such as client data, for use by competitors.
Stealing an organisation's intellectual property or illegally
distributing private client information constitutes corporate
espionage. This is why it can be helpful to require mandatory
nondisclosure agreements. As an HR professional or manager, you
may also wish to set strict financial penalties for violations to
discourage these types of ethical violations.

6. Technology and privacy practices

Developments in an organisation's technological security capabilities

may pose privacy concerns for both employees and clients. You can
monitor employees' activity on their work computers and devices
provided by the company. As a manager or HR professional, you
can use this method of electronic surveillance to ensure productivity
and efficiency if it doesn't violate the employee's privacy.Electronic
surveillance includes monitoring Internet connections and tracking
keystrokes, content or time spent using the keyboard. When
implementing these types of surveillance, you can act ethically by
being transparent about it with employees. To ensure that employee
surveillance doesn't become an ethical issue, it's helpful to
encourage all levels of employees to consider the benefits of the
surveillance system.

. Nepotism or favouritism

As a hiring manager or HR professional, you may want to employ

an acquaintance or family member because of your connection to
them. Even if you adhere to recruitment policies to ensure a fair
process, some employees may still consider this as nepotism or
favouritism. Favouritism occurs when managers treat some
employees better than others for no professional reason. This can
reduce productivity and job satisfaction in other employees, which
may negatively impact the entire organisation.

8. Environmental responsibility

Many organisations are increasing corporate social responsibility

activities. You can help create policies that ensure the organisation
you work for acts in a responsible way towards employees, the
community and the environment. If you work for a large company
in the oil or farming sectors, you have a more significant corporate
social responsibility because of the organisation's significant impact
on the environment. If you work for a smaller organisation, you may
wish to reduce the company's impact on air and water quality.
How HR and management professionals can manage ethical issues
As an HR or management professional, you can address ethical
issues by evaluating management systems to identify methods to
become more responsible. This can involve reviewing the company's
policies and processes to ensure it covers ethical issues in the work
environment. You can help set environmentally friendly goals and
decide on actions that may help with the transition. You can then
monitor progress towards these goals regularly. Daily actions your
team can take to identify and deter ethical issues include
communication and enforcing a robust code of ethics for decision-
making. You can ensure it continuously complies with relevant
legislation relating to these ethical issues. You can also collaborate
with accountants to ensure transparency and honesty when
compiling financial reports for the company.

Consumerism refers to the social and economic ideology that

 encourages the acquisition of goods and services in ever-
increasing amounts. It is driven by the belief that personal
well-being and happiness are closely connected to the
consumption of material possessions and experiences.
Consumerism has several key aspects:

1. Materialism: Consumerism often equates personal worth

and social status with the possession of material goods. The
pursuit of material wealth and possessions becomes a central
focus of individual and societal goals.
2. Advertising and Marketing: Consumerism is fueled by
advertising and marketing campaigns that promote the
consumption of goods and services. These campaigns often
create desires and aspirations for products and experiences,
encouraging individuals to purchase beyond their basic
needs.
3. Mass Production and Consumption: Advances in
technology and globalization have led to mass production
and widespread availability of consumer goods, making them
more accessible and affordable to large segments of the
population.
4. Disposable Culture: Consumerism fosters a culture of
disposability, where products are designed to be quickly
consumed and replaced. This leads to increased waste
generation and environmental degradation.
5. Debt and Overconsumption: Consumerism can contribute
to excessive debt as individuals may finance their
consumption through loans, credit cards, or installment plans.
Overconsumption can lead to financial stress and negatively
impact personal finances.
6. Impact on Society and Environment: Consumerism has
broader societal and environmental implications. It can
exacerbate inequality by widening the gap between the
affluent and the marginalized. Additionally, the production
and consumption of goods contribute to resource depletion,
pollution, and climate change.
7. Alternative Movements: In response to the negative
aspects of consumerism, there are growing movements
advocating for sustainable consumption, minimalism, and
ethical consumerism. These movements promote conscious
and responsible consumption practices that prioritize
environmental sustainability, social justice, and well-being
over material accumulation.

While consumerism has contributed to economic growth and

prosperity in many societies, it also raises important ethical
and environmental concerns. Balancing the benefits of
consumption with its social and environmental costs is a
significant challenge for individuals, businesses, and
policymakers alike. Promoting awareness, education, and
responsible consumption habits can help mitigate the
negative impacts of consumerism and foster a more
sustainable and equitable society.

Insider trading refers to the buying or selling of a security

(such as stocks, bonds, or options) by someone who has
access to material, non-public information about the security.
This privileged information could include details about a
company's financial performance, pending mergers or
acquisitions, significant legal issues, or other developments
that could affect the security's value.

Here are some key points about insider trading:

1. Legal Perspective: Insider trading is illegal in most

jurisdictions, including the United States, under securities
laws. The Securities and Exchange Commission (SEC) in the
U.S. prohibits insider trading and actively pursues cases of
illegal trading activity.
2. Regulatory Agencies: Regulatory agencies, such as the
SEC in the U.S., monitor financial markets and investigate
suspicious trading activity to detect and prosecute insider
trading violations.
3. Types of Insider Trading:
 Legal Insider Trading: This refers to transactions in a
company's securities by individuals such as corporate
officers, directors, and employees. They are required to
report their trades to regulatory authorities but must
comply with strict disclosure and reporting
requirements.
 Illegal Insider Trading: This involves trading securities
based on material, non-public information obtained in
violation of a duty of trust or confidence. This could
include corporate insiders, as well as outsiders who
receive inside information improperly, such as through
corporate espionage or hacking.
4. Consequences: Individuals found guilty of insider trading
may face severe penalties, including fines, disgorgement of
profits, civil lawsuits, criminal charges, and imprisonment.
Companies may also face reputational damage and legal
repercussions if their employees engage in insider trading.
5. Market Integrity: Insider trading undermines the integrity
and fairness of financial markets by giving certain individuals
an unfair advantage over other investors. It erodes trust in
the market and can harm investor confidence.
6. Detection and Prevention: Regulatory agencies employ
sophisticated surveillance techniques, such as data analysis
and market monitoring, to detect patterns of suspicious
trading activity that may indicate insider trading. Companies
also implement internal controls and policies to prevent and
detect insider trading within their organizations.

Overall, insider trading is considered unethical and illegal

because it gives some investors an unfair advantage over
others and undermines the integrity of financial markets.
Strict enforcement of securities laws and regulations is
essential to maintaining market fairness and investor
confidence