Contents INTRODUCTION.......................................................................................................................................3 LO 1............................................................................................................................................................3 Nature of legal system.............................................................................................................................3 LO2.............................................................................................................................................................6 Gig economy................................................................................................................................................6 LO3.............................................................................................................................................................7 Different forms of business organisations...............................................................................................7 LO4...........................................................................................................................................................12 Legal solutions to solve areas of dispute...............................................................................................12 CONCLUSION.........................................................................................................................................14 REFERENCES..........................................................................................................................................15
INTRODUCTION Business law is the body of law that governs and consider as a branch of civil law which deals with both issues of private and public law. The report consists of nature of legal system of UK. Moreover it shows concept of self employed and employed and difference between them and factors that drive the changes between them. It talks about different types of organisations that can be operated in UK and settlement of disputes outside the court along with its ways. LO 1 Nature of legal system The UK consists of four countries: England, Wales, Scotland and northern Ireland. Some laws applied to whole UK and some applies to only two or three countries. Divisions of law: The UK law is divided into two part in which the first is criminal law and other is civil law. Criminal law: This law relates to offences that affect negatively to the society as whole rather than just an individual. This area of the law outlines that what acts of parliament can be acceptable and unacceptable in UK. If an individual breaches criminal law, they get subjected to criminal prosecution by the state (Adams, 2016). The proceedings of criminal law usually brought by the Crown prosecution service in the name of Crown and are heard in Magistrate court or crown court. The offenses that can be treated as breach of criminal law are burglary, theft, criminal damage, assault, murder, money laundering and drug dealing etc. in case the individual is proven guilty, the offender will receive penalty in the relevant legislation and guidelines on sentencing in the form of fines, and prison sentence. Civil law:It is little different from criminal law. It is concerned with the individual’s rights and property which may not be protected by criminal law. This law settles disputes between individuals and organisations, and often involves compensation to the aggrieved party.
This law does not involve imprisonment but may involve compensation if they are liable for it. The civil cases includes family disputes, divorce, children’s issue, breach of promise or contract road traffic accidents, trips and falls, childcare arrangements and employment law. These cases are filed by private parties and either party can appeal in civil case. Sources of law: The four sources of UK law are legislation, common law, European union law and European convention on human rights. Legislation: Legislation is the law created by the legislature. The principle legislature is the UK parliament, based in London. This is the body responsible to pass laws that apply in all the four countries (Adams, 2016). The UK legislation consists of House of Commons and House of Lords. The house of common consists of 650 members of parliament whereas House of lords consists of 800 peers out of which 600 are appointed by the queen on the recommendation of Prime Minister. Common law:It is also known as case law that was developed by courts, judges and similar tribunals. It is one of the many sources of unwritten constitution of UK. It is third branch of law which contrasts with and is on equal footing with statues and are adopted through legislative process and are created by executive branch of government. In this judges are bound to make future decisions which will ensure consistent treatment specially when two parties disagree on what the law is. Common law should be distinguished from statues, which are created by parliament because common law applies to the whole population equally but statues can be made in the favour of one section of society over other section. European Union law: European law is a body of treaties, law and court judgements which operates alongside the legal system of EU’s member states. When there is a conflict arises between national law and EU law, EU takes precedence over national law. The European Commission is responsible for ensuring EU law. This law comprises of – Regulationsare directly applicable to all member states including UK. This means that they do not have to transposed into national legislation.
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Directives, which set down certain results which must be achieved in every member state and time limit need to be established for their implementation in domestic law. Member state need to pass measures to bring their rules into line with the requirements of directives. EuropeanConventiononHumanrights:TheUKissignatorytotheEuropean Convention on Human rights. The human right act 1998, came into effect in October 2000, which enables all the courts in UK to protect the rights discussed in the ECHR. Act of parliament –When the elected members feels like introducing a new bill or making amendments in existing bill, they need to follow a procedure (Adams, 2016). A bill can start in the House of Common or the House of Lords and need to be approved by both the houses before becoming Act of Parliament. The procedure of Act of parliament is – First reading: In this stage the bill is read and then is published formally within both the houses. Second reading: In this stage the main debate in the House of Commons takes place on the general principles of the bill. Committee stage: The bill in this stage is examined in detail and amendments are made in this stage, if any. Report stage: If amendments are made by the committee then a report stage is needed where both the house caste their vote on the amendments. The speaker has the power to select the changes that are need to be debated. Third stage: This is the last stage which involves consideration of the bill’s amendments. It is final opportunity for the MPs to vote on the bill. Proceedings in the House of Lords: After third reading, this stage begins in the House of Commons. If the lords have amendments to the bill then it must be sent back to the Commons and if not then can sent forward to the royal authority. Royal assent: Once the royal assent is received, the bill becomes the law and is referred as Act of parliament.
The bill must be passed by both the houses, lords’ plays secondary role. If the House of Lords rejects the bill that has been passed by House of Commons then the boll may still become law under act of parliament. LO2 Gig economy Gig economy comprise of freelancers and independent contractors who are hired by company on a temporary basis in place of full-time employees.The concept of gig economy is flourishing in UK and large number of people in UK willing working on work part-time basis and the result of gig economy in UK is positive and it provides more efficient services. This notion is growing day by day and is showing prominent rise in progress and advancement of individuals and economy. Employed: A person is said to be employed in a company when he/she fulfills all the requirement of being employed in organization as defined in employment rights act 1986 ad employee protection act 1996. Self Employed: Are workers who are not employee of a company and they do not have any entitlement to any of the employee benefits. Pimlico plumber case summary This case set a milestone for determining the employment status of the employees which directly affected the way workers are recognised under their employment. The status of the employments was transformed in the present culture of gig economy.In case of Gary Smith an independent contractor of the Pimlico plumber. After he fell ill made a claim for sick leaves and paid leaves on the basis of being employed with the organisation. The company was in denial to this fact. In was held in the court that Smith was employed in Pimlico on the basis that Smith have limited power to place someone else for his services, there was an contract between them defining working times of Smith andreferences related with wages and misconducts were made, there was a tight control over Smith to wear branded uniform of company(Adams, 2016). Along
with this he was required to drive the branded van with a tracker in it. With all this conditions he was stated to be employee of Pamlico by the court. Difference between employed and self employed ParticularEmployedSelf employed Employment Status :The person is stated to be employee of organization.Workwithcompany as an independent contractor. Supervisionand Control :Employees carry out their work under the supervision and control of employers as per given instructions of employer under the employment.Theindependent workers do not entertain any control over their job and work as per own terms and condition. Provision of equipment:All equipment and material to perform the job and employment work are provided by employer.The independent worker brings in his material and equipment to carry out the job and activities assigned to him. Employment benefits :An employed worker have right to all the benefits given to an employee includes holiday and leave pay, pension, bonus, workmen compensation, redundancy rightsad more as per the employment protection act 1996(Adams, 2016).Anindependent contractor is not an employee of a company so no employment benefits are available to them. Salary and wages:Employees are given salary as per the rules of national minimum wages and on a regulator time period along with employment benefits.Theself-employedare appointed on a contract basis so the payment for the work is done is decided on lump sum basis and paid out as agreed between company and contractor. LO3 Different forms of business organisations Self employment is most common in many sectors in UK. It is important to understand that all companies do not operate in the same way. There are 3 types of business organisation that can be formed in UK which are :
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Sole trader– It is the easiest way to start a business in UK which means that an individual is the sole responsible to run the business (Adams, 2016). The individual employ other people and owns the business. Under this the individual need to register under self assessment tax which means the owner calculate own taxes. They are easy to form and the owners enjoy sole control of the business profits. Sole traders are easy to form, maintain and dissolve. In this, the owner is responsible for all the risk occurred in the business as well as in the eyes of law, the business and owner are treated as one entity. AdvantagesDisadvantages It is the easiest method to start a business as any person can start business individually for earning profit. The individual is responsible to plan, supervise and make investment decision which leads to fast decision making. The owner enjoys an excellent credit rating among the creditors. As business and sole proprietor treated as one therefore all the assets, liabilities, profit and losses on the part of owner. It leads to tax advantage and does not pay any super tax but taxed as personal income of the owner. It leads to development of personal qualities like self reliance and confidence. It leads to burden of unlimited liability. In case of unlimited liability personal property of the owner are used to pay debts. It faces difficulty in expanding the business at large scale as the resources are limited and workforce is low. The continuity of the business is sometimes difficult to maintain due to uncertainties like sudden death, sickness etc. of the owner. Insoletrader,boththepartieshaveweak bargainingpositioncomparedtolarge business. This form of starting business is unsuitable for developing business as it gets difficult for the owners to meet the requirement of expanding business.
Partnership– Partnership exists when two or more persons come together to run a business together with a view to earn profit. It must run on a commercial basis. It is defined by s45 of the 1890 Partnership Act as a trade, occupation and profession. Partnerships are transparent for tax purposes which mean that each individual is taxed as individual as opposed to the partnership being taxed as separate body distinct from its owners. AdvantagesDisadvantages It is easy to form without any legal formalities. Noformaldocumentsarerequiredandan agreement between the partners can be oral or written and even the registration of partnership is not necessary (Adams, 2016). Thistypeoforganisationenjoyslarge resources as the scale of operation is enlarged to get economies of scale. It enjoys the benefit of ability, experience and talent of partners as everything is done by mutual consultation. Any loss occurs, it is borne by all the partners which reduced the burden on single individual. It leads to lack of harmony as difference of opinion arises between partners which results in lack of management and disharmony. Thepartnershipmayalsoendifasingle partner expires or wrong act is done by one of the partner. Asthepartnershipisnotsubjecttoany regulationandnolegalformationand functioning, the people have less faith in such organisations. The retiring partner also is liable to all the acts donewhenhewasapartnerwhichcreate burden on the individual.
Company-A limited liability company is a company whose liability is limited. When company set ups it allows the owners of the company to keep their assets and finances separately from the business itself. There are 4 types of company in which public limited deals with at least2 shareholders and shares issued of worth£50,000. The private limited companies are similar to public companies which can be run by just one member and cannot trade shares in public. The other one is public limited companies which is created for specific reason and are not so common. AdvantagesDisadvantages Ithaslimitedliabilityascompany’s shareholdersareliableTopayitsdebts therefore the burden is not borne by the owner alone. It has separate legal entity which means that company is different from the owner and will continuetoexistbeyondthelifeofits members. Limited companiesare only taxed on their profits usually at 21 %which helps them in getting tax advantage, To set up the company is quite expensive and consumes a lot of time. The rules governing the accounts and book keeping of limited companies are complex and rigid. Incasethedirectorfailstomeetlegal obligations,they may be heldpersonally liable for the company’s debts. Theprofitsdistributedtoshareholdersare taxable. Steps of company to set up Select the form of company– Among all the 3 types of companies select the best type of company along with analysing advantages and disadvantages of each type.
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Choose a good company name– Select a nice name for the company but there are number of rules that are need to be followedas the name of the company need to be different from the company that already exists (Adams, 2016). The company need to be registered with Companies House. Assembling details to register the company– There is several piece of information which is required in order to register a new company which is company’s name, a UK registered office address where companies house will direct official mail and which will appear on available companyrecordpublically.Thecompany mustprovide at leastone SICcode describing anticipate activities of the business. Company’s director details must be provided along with initial shareholders details. PreparationofMOAandAOA–Thememorandumandarticleofassociation collectively make up the constitution of the company (Adams, 2016). MOA is a short document which tends to include number of standard clause and must be filed with Companies house as part of registering company. The AOA are the rule book of the company defining how the company will be run by the directors on behalf of shareholders. File incorporation with Companies house– After completing AOA and MOA now each document is sent to Companies House for approval. Conduct Board meeting– After getting approval, hold a meeting of the directors to cover some of necessary formalities. Set up registers of company- The law requires each company to set up and then maintain company books which includes register of direct ors, register of Director’s residential addresses, registrar of secretaries, register of members, register of allotment of shares etc. Produce share certificates for first shareholders– In first board meeting, the directors will have authorized the issue of share certificates for shareholders of the company. Duties of director in company: Its the duty of the director of the company to promote the success of the company for the benefit of its members as whole. Director’s duty is to exercise independent judgement and make their decisions.
Director need to exercise reasonable care, skill and diligence. They must not accept benefits from third parties. Salomon vs Salomon :Separate legal entity is the basic trait of company law . in case of Salmon vs Salmon , salmon transferred his business of boot making to sole trader to company (Salmon ltd.) and incorporated with members comprising of himself and family (Adams, 2016). The price of transfer was paid to Salomon by shares, debentures having floating charge on asserts of the company.Later, when the company’s business failed and it went into liquidation, Salomon’s right of recovery against the debentures stood prior to the claims of unsecured creditors, who would, thus, have recovered nothing from the liquidation proceeds. The Court of Appeal, declaring the company to be a myth, reasoned that Salomon had incorporated the company contrary to the true intent of the then Companies Act, 1862, and that the latter had conducted the business as an agent of Salomon, who should, therefore, be responsible for the debt incurred in the course of such agency. LO4 Legal solutions to solve areas of dispute Alternate Dispute Resolution-ADR is an alternative to solve legal disputes outside of the legal court. It is a confidential method for settlement of disputes which was introduced in 1987, under the Legal Services and Authorities Act 1987 (Adams, 2016). The main feature of this kind of settlement is to solve and settle the disputes between the disputed parties by informal and without the need of legal action. The people who are not able to financially fight the legal battle, ADR provides a way to get justice. In recent years the success of ADR procedure has had huge success and has been accepted widely by legal professionals and by common man as well. The Civil procedure rules facilitate the judges to recommend resolution under ADR and also they have the power to terminate cases if they can be resolved by ADR mechanism.
The settlement of different disputes requires different forms of ADR which can be used with the appropriate purpose in accordance with the dispute. The Lord Chancellors have shown faith and confidence and they themselves recommend choosing legal proceedings as last resort to settle the dispute. It is a fast and efficient method for both the parties and the judiciary system to choose ADR and it helps in reducing the pressure on courts from small disputes. This efficiency shows how ADR can be effective mechanism for resolving any legal dispute without legal hearings. There are 3 major ways of ADR- Arbitration-It involves introducing a third party which is known as the arbitrator to settle the disputes between the parties.It can also be considered as a private hearing and the information regarding the parties is also remain confidential to ensure either of the parties are not affected. It is very useful in disputes where privacy is an important factor. The hearing is run under a tribunal process. Under the Parliamentary Act there are more than seventy different types of tribunals utilized for such hearings. It is also useful to have and arbitration in cases where there are technical factors involved which helps in better judgment or settlement of the case. In most cases the contracts formed between parties will contain a arbitration clause which require ADR to be used in case of dispute. In the case Pimlico Plumbers vs Smith this form of ADR will not be useful to settle by involving a third party as there’s no technical aspect or need of confidentiality. Mediation-In this form of ADR there is a mediator in between the parties to communicate between them. The mediator is a third party who helps in identifying the disputes and ways to resolve them by concluding towards agreement between the parties. The parties may or may not communicate face to face and in either case mediator is present as a medium of communication. It is the duty of the mediator to explain the process of mediation to both the parties and he/she does not take side of and individual party and must remain impartial. The mediator also makes decisions or suggests solution towards the disputes. This form of ADR is useful when both parties are comfortable to communicate with each other and want to resolve the dispute informally and while maintaining confidentiality and relations with the parties. In the case Pamlico Plumbers vs Smith this method to resolve the dispute may not be suitable as norms does not match with this case for opting the mediation option.
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Negotiations-This is a common form of ADR used to settle disputes between the parties by the help of their legal representatives or the parties themselves can communicate and negotiate the terms to resolve the dispute and to come at settlement. In this form of ADR the decisions are made by the parties themselves which makes this a flexible and it also gives power to the parties themselves during the negotiations. The flexibility ensures negotiations take place with the willingness of the parties and are voluntarily. The main objective of negotiation is to come on mutual agreement and to settle with mutual satisfaction if possible for all parties involved, although negotiation does not guarantee mutual agreements.The negotiations can be oral or in written form and it is financially more feasible than other forms of settlement. In the case Pamlico Plumbers vs Smith negotiation can be a form to choose to settle the differences and disputes outside the court of law. This form provides confidentiality and freedom to opinions and flexibility in decision making besides this form is best suited for employee employer disputes which conclusively would be helpful in this case. CONCLUSION The report concluded basics of UK’s legal system which includes Civil law, criminal law, European Union law etc. However, the report focused on factors that differentiate between employed and self employed. Later it summarised different types of organisations along with formation of company. At last it summarised different forms of ADR that can be used by companies to solve disputes outside the organisation.
REFERENCES Books and journals Adams, A., 2016.Law for business students. Pearson Longman.