Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What foundational purpose does employment law serve?

1. To generate profits

2. To establish basic rules for employer-employee relationships

3. To regulate corporate financing

4. To create a strict hierarchy within companies

The correct answer is: To establish basic rules for employer-employee relationships

Employment law primarily serves to establish basic rules for employer-employee relationships, creating a framework that regulates various aspects of these interactions. This legal foundation covers a wide array of topics, including hiring practices, workplace safety, discrimination, wages, benefits, and termination processes. By providing clear guidelines, employment law helps ensure that employees are treated fairly and that employers can operate within a set of standardized expectations. This not only promotes equity within the workforce but also helps mitigate conflicts and misunderstandings between employers and employees. While the generation of profits is a goal of businesses, it is not the foundational purpose of employment law. Instead, employment law facilitates a fair working environment that can, in turn, support business success. Regulating corporate financing and creating strict hierarchies within companies are also not the primary aims of employment law. These aspects are typically addressed through different legal frameworks or organizational policies, which serve separate purposes unrelated to the foundational principles of employment law.