What is the Difference Between Unethical and Illegal Business Practices?

The difference between the terms ‘unethical’ and ‘illegal’ can become confusing. This guide from DeltaNet International explains the difference between the two in business and gives some examples of each.

What is the Difference Between Unethical and Illegal Business Practices?

Compliance Knowledge Base | Ethics Training

Posted by: India Wentworth Published: Wed, 17 Jul 2019 Last Reviewed: Wed, 17 Jul 2019
What is the Difference Between Unethical and Illegal Business Practices?

In order to understand the difference between something being 'illegal' or being 'unethical', we have to understand what these terms mean. 'Unethical' defines as something that is morally wrong, whilst something being 'illegal' means it is against the law.

In an illegal act, the decision-making factor is the law. For an unethical act, the deciding agent is the man's own conscience. An unethical deed may be against morality but not against the law. An illegal deed is always unethical while an unethical action may or may not be illegal.

Illegal behaviour is much easier to detect because of the clean-cut side to the law. Comparably, unethical behaviour is tough to detect because people can have different opinions on whether something is ethical or not. Ethics can differ from person-to-person, but the law is the law, and everyone must follow the same rules.

Organisations need to be clear with their employees what the difference is, and what they expect in their workforce. This can be detailed in company policy to avoid any confusion.

Understanding unethical business practices

Unethical behaviour, simply put, is failing to do the right thing. In the workplace, unethical behaviour can include any deeds that violate the law like theft or violence, but unethical behaviour can involve much broader areas as well. These unethical actions could be deliberate violations of company policies or using hard-sell sales practices – both of these actions are legal, but they take advantage of human frailties for the personal advantage which means it goes against the ethics of a lot of people. Examples of unethical behaviour can be found in all types of businesses and in many different areas.

Some more examples of unethical business practices are:

  • Deliberate deception – This could mean taking the credit of someone else's work, 'pulling a sicky', sabotaging the work of someone else, or misrepresenting a product all with the aim of getting a sale. These actions are seen as unethical by many because it exploits the trust of others in order to better yourself.
  • Violation of conscience – If your boss forces you to do something you know is wrong, they are the ones showing unethical behaviour, and causing you to violate your conscience.
  • Failure to honour commitments – If your boss promises you something and then goes back on that promise, they have acted unethically. The result of this can be that they have lost your trust and respect, potentially leading to a workforce filled with discontent.

All these examples show how problems can be caused in the workplace even if no laws are broken. The results may not be as serious as prison and fines, but they lead to anger and frustration in the workplace – something that impacts the business badly too.

What is the Difference Between Unethical and Illegal Business Practices?

Understanding illegal business practices

Illegal business practices are much more obvious to label. If it is against the law, it is illegal and unethical, and as a result, hold lead to serious consequences such as prison and heavy fines.

Some examples of illegal business practices are:

  • Discrimination or Harassment – This could be based on age, gender, sexual orientation, or race (just to name a few of many). If you discriminate people unfairly you are breaking the law, and you need to be aware of it in your business.
  • Theft – If your business is stealing, they are breaking the law. This is a simple one and doesn't really need more explaining.
  • Employee Treatment – One way a business can break the law is if it fails to pay its employees the correct way. This can refer to meeting minimum wage, maternity leave, redundancy, and pensions. The way you treat your workers is extremely important, and if neglected then you could be breaking the law.
  • Environmental – It might not be the first thing that comes to mind, but more and more companies are having to pay fines for breaking environmental laws. One example of this was Northumbrian Water being fined £375,000 for pumping raw sewage into the River Tyne.
  • Health and Safety – Almost two-thirds of UK businesses fail to abide by basic health and safety laws, leaving their employees in danger as a result. This worry means that the majority of workers don't feel they are equipped to deal with hazardous situation. Failure to supply workers with information and guidance on health and safety policies could land employers with a hefty fine, or even a prison sentence if the case is extreme enough.

The severity of illegal and unethical business practices cannot be stressed enough. Everyone shares the responsibility for promoting a positive workplace and conducting business ethically and legally.

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