Business Law and Ethics: Historical Structure of UK Employment Law and Formation of Company

This report covers the broad historical development of employment law along with the new initiatives taken in the formation of company as per the UK commercial law. It discusses the fundamental features of the formation of the Company in the UK. The report concludes that the employment law of UK is beneficial for employees. Such laws are amended as per the need of time.

Business Law and
Ethics

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Discuss the broad historical structure of UK Employment Law and indicate who you think UK
Employment Law favours – either employers or employees.......................................................1
Discuss the fundamental features of the formation of the Company in the UK .........................4
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business law is a body of rules and regulations which govern conduct of persons while
dealing commercial matters. Such law covers the agreements, conventions and domestic &
international legislation. It is also known as commercial law, company law or mercantile law.
Business law is wider in nature which cover various law such as IPR, contract law, company
law, employment law etc. Employment law or labour law are those laws which govern the
relationship among government, employer and employees (Akhtar, 2020).
This report cover two major types of business law, employment law and company law. On the
other hand, company law is a set of rules and regulations which govern the relation, rights and
conduct of person in organisation, company and businesses. This report will cover the broad
historical development of employment law along with the new initiatives taken in the formation
of company as per the UK commercial law.
MAIN BODY
Discuss the broad historical structure of UK Employment Law and indicate who you think UK
Employment Law favours – either employers or employees
The history of employment law is quite interesting in UK various political parties broken
while formulating the employment law in UK. Here the historical structure of employment law
from 1970 to 2016 discuss with the help of certain Era's which are mentioned below:
The era of collective bargaining (1970 – 1974)
From period 1970 to 1974 considered as the period of collective bargaining. As the
employment law in UK practice form 1800 but there was no specific law laid down for it. First
time in 1906 the issue regarding rights of employees was raised for resolving such problem trade
dispute act was enacted to resolve the disputes arises between employers and employees. After
that no major law was enacted in this direction by any government of UK (Borselli and Miguel,
2020). The major changes occurred after the formation of conservative government in the UK
which enacted the laws of employments in the interest of employers but focusing on the
collective bargaining. The major laws enacted in this era are as follow:
 Equal pay Act 1970: This act provides equal right of wages to both employers and
employee. This act prevent the discrimination on the basis of gender and marital status.
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This act provides individual's same rights which contractual pays and benefits are
provided to opposite gender in the similar employment.
 Industrial relation Act 1971: It is an important act of 1970's as it was in the manifesto
of the conservative party. The purpose of enacting this act was to stabilizing the industrial
relations through bargaining power and responsibilities of trade union with the help of
courts. From this act first time the concept of compensation in case of unfair dismissal
was introduced.
 Health and safety work Act 1974: This act considered as important act which
specifically made for workplaces. It provides the rights of safe and healthy working
environment to the employees by the employers at the workplace.
Period of 1974 – 1979: The major political changes was taken place in this year the
labour party came into majority which form their government in UK. This government
concentrate on the principle of collective bargaining which the earlier government was failed to
implement successfully. The legislations enacted in this period are as follow:
 Sex Discrimination Act 1975: This act prohibits employers to make discrimination
between employees on the basis of gender and marital status (Bryson, 2018). It laid down
specific provisions regarding the employment, education, training, harassment and many
more.
 Employment Protection Act 1975: This act emphasis on the establishment of body
which regulate and promote the industrial relations. The UK employment provides wide
range of protection to secure the rights of employees to provide them safe and healthy
working environment.
Period of 1979 – 1996: In this period, the conservative party came again in majority. In
this period various legislation was laid down in the favour of employees by adopting the
principle of collective bargaining. Some of major legislation relating to employment was enacted
mention below:
 Transfer of Undertakings (Protection of Employment) Regulations 1981: This
regulation ensures the rights of employees, their employments terms and condition in
case of transfer of undertaking, business transferred to new employers.
 Trade union and labour relations (consolidation) Act 1992: This act considered as
important legislative piece which provide legal frame work of collective bargaining. It
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also governs the right and responsibility of trade union and secure the right to strike of
employees.
 Employment right Act 1996: This act codified the rights of employees such as
redundancy payment, unfair dismissal, protection of wages, parental leave, suspension of
work, zero-hour contract, termination of employment and many more.
Period of 1997 - 2010: In this period, labour party formed their government under the
leadership of Tony Blair. This period also recognised as period of new labour. Various
productive legislation was enacted in this period which focus more on employees and collective
bargaining.
 Protection from harassment Act 1997: This act protects the employees from all kind of
harassment, any persistent conduct and stalking which affect and distress another person
at the place of work. As per this act it is the duty of employer to provide secure working
environment by taking appropriate steps against the stalking and persistent conduct.
(Johnston, 2019).
 National minimum wages Act 1998: This act ensures the fair wages to the employees as
per market rate. In UK wages are given as per minimum hourly rate which are varied
from age to age. The current per hour market rate for the age group of 21 years and above
is 8.36 pound, 18 years and above 6.56 pound, for 16 years and above is 4.62 pound.
 Maternal paternity leave regulation 1999: This act provides leave of 52 weeks as
maternity leave to women. In 2010, additional paternity leave regulation enforced which
provide leave of 26 weeks of maternity leave can transfer to their partner.
 Equality Act 2010: This act enacted with the intension to protect employees against
discrimination at work place and replace older act with anti-discrimination law which
provide more rights to the employees.
After 2010 there was no major amendment made in the employment law. But in 2022 one
important case P & O Ferry made an important change in the employment law. In this case the
owner of P & O company dismissed their 800 employees via video recording. The matter was
taken into employment tribunal it was held that company should provide redundancy
compensation as company dismissed their employees without giving notice of 90 days.
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From the above discussion and after P & O ferry case it can be conclude that employment
law favourable to employees more as several governments change from 1970 to 2010 but while
making legislation related to employment all parties emphasis on the interest of employees more.
Discuss the fundamental features of the formation of the Company in the UK
Formation of company is a foremost step for operating the business transactions. The
company law of UK covers vast range of rights. It not only protects the rights of the promoters
and directors, but, also secure the rights of shareholders, employees, stakeholders and creditors.
In UK a company incorporated under the companies act 2006.
there are various features of incorporation which are mentioned below:
 Separate legal entity: Company's incorporated under the company law. So, it is
reorganised specially by the law and identify as a separate legal body.
 Perceptual succession: As per UK company law company never end, no matter
shareholders, officers and directors come and go, until unless company going to wind up.
 Common seal: It is a metallic seal which is considered as the signature of the company
affixed by the directors of the company for binding the obligations undertaken in the
documents.
 Transferability of shares: It means the transfer of the title of the share between the
transferor and transferee. It is done to attract the general public to come and purchase
their shares. In case of private company, there is no transferability of shares whereas the
public company transfer their share to the common people to take part in their
management
The company is divided further in two parts public and private company the details of
them are mentioned below:
Public company: As per UK company law it is publicly traded company which can sell
their shares or debentures to common public. Such companies started as private limited
companies later on by re registered as PLC in order to raised the capital. Such company required
minimum two directors and a company secretary ( Lacave and Urtiaga, 2021). For becoming
PLC the company must have the share capital of £50,000 or more out of which 25% of it must
have paid up capital for commencing the trading. And all these PLC are listed in the stock
exchange.
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The advantage of public company are easily raise the capital from public, transferability
of shares, having various growth opportunity, sharing of risk and many more. On the other hand
the disadvantages of public company are they have onerous regulatory requirement, maintain
high level of transparency, issues related to ownership and control and many more.
Private company: such types of company are very common form as per UK company
law it incorporated directly by registering in companies house under companies act 2006. it
considered as distinct legal entity from its shareholders and directors. Private company further
divided into several parts such as:
 Private company limited by shares in which the liability of members of company are
limited to its shares.
 Private company limited by grantee in which liability of members of company are limited
to its guarantee.
 Private unlimited company in which the liability of the members of the company is
unlimited.
The advantages of private limited company are limited liability, professional status, tax
efficient income, protection of company's name and many more. On the other hand the
disadvantage of private company are fulfilment of several legal requirements, company should
registered into HMRC, for establishing and closure of company required to registered in
companies house and inform to HMRC.
Difference between public and private company
Public company Private company
 Public company must have minimum
share capital of £50,000.
 company can raise capital by selling
their shares in public.
 Such company required minimum two
directors and one company secretary
(Railton, et.al, 2022).
 There is no minimum requirement
prescribed for private company.
 While private company are not
permitted to trade in stock market.
 In private company there is no such
requirement an individual can act as
director and there is no requirement of
company secretary.
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There are other forms of company which are prevalent in the UK such as sole trader and limited
liability partnership company under companies act 2006 which discus below:
Sole trader: It is considered as one of the traditional form of business which provide
employment to the individuals by fulfilling certain legal requirements before the HMRC. In such
types of business individual manage the whole activities of the organisation. The sole trader bear
all the profit and loss by themselves. The disadvantage of sole proprietorship is that they have
unlimited liability and they are required to payoff the debts from their personal assets.
Pros of sole trader Cons of sole trader
 Sole proprietorship is easy to set up.
 The profit arises from sole trader are
enjoyed by solely.
 Sole proprietor themselves take
decision related to their business
without outsiders interference.
 Such businesses have limited source of
raising capital for their organisation.
 Sole traders having unlimited liability,
they have to pay all the debts from their
personal assets. (MacNeil and Esser,
2022).
 As the business of organisation manage
by the person singly due to this they
have heavy workload.
Limited liability partnership: It is a body corporate having separate legal personality.
These companies are similar like limited companies. Such companies are registered under
companies act 2006 for operating their business. The partners of the limited liability partnership
are members of the company having limited liability (Scott-Patel, 2019). For the formation of
such company minimum two members are required. The tax provision on LLP are same as
partnership and the structure of these companies are simple in nature.
Pros of LLP Cons of LLP
 The LLP not required minimum
prescribed capital for commencement
of their business. The contribution of
 In case of non compliance of income
tax and MCA annual return are liable
for penalty.
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partners in the LLP by providing
tangible and intangible assets to the
firm.
 Such company are required minimum
two members for formation of LLP.
 The fee of registration of LLP in
companies house is very low as
compare to private company
 compulsory auditing, and dividend
distribution tax are not applicable on
them.
 They have difficulty in raising the
funds from angel investors, venture
capitals etc. cannot be invest as
shareholders.
 They have to paid higher income tax as
compare with other types of company.
CONCLUSION
It is concluded from the above report that the employment law of UK is beneficial for
employees. Such laws are amended as per the need of time. In this report the development of
employment law is discuss from 1970- 2016. This led to change in tenure of political parties
which laid more emphasis on employment law. Further more this report mentioned about the
types of company with its merits and demerits. As incorporation of company is a foremost step
towards the separate legal entity having the features of common seal, perceptual succession with
transferability of shares.
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REFERENCES
Books and Journals:
Akhtar, Z., 2020. Low Skilled Jobs, Free Movement Migration and Employment in the
UK. Labor Law Journal, 71(3), pp.144-153.
Borselli, A. and Miguel, I. F., 2020. Corporate law rules in emergency times across
Europe. European Company and Financial Law Review, 17(3-4), pp.274-317.
Bryson, J. R., 2018. Divisions of labour, technology and the transformation of work: worker to
robot or self-employment and the gig economy?. In Handbook on the Geographies of
Regions and Territories. Edward Elgar Publishing.
Johnston, A., 2019. Market-led sustainability through information disclosure: the UK
approach. Cambridge Handbook of Corporate Law, Corporate Governance and
Sustainability (Cambridge University Press, 2019).
Lacave, M. I. S. and Urtiaga, M.G., 2021. The law and economics of comparative corporate law.
In Comparative Corporate Governance (pp. 56-72). Edward Elgar Publishing.
MacNeil, I. and Esser, I. M., 2022. Capital Markets and Corporate Governance
Standards. Forthcoming as a chapter in Iain MacNeil and Iris Chiu (eds.) Research
Handbook on Global Capital Markets Law (Edward Elgar 2022).
Railton, C., Jefferson, L. and Taylor, J., 2022. A Qualitative Study to Explore the Employment
Experiences and Perspectives of Women Living with Multiple Sclerosis in the
UK. Employee Responsibilities and Rights Journal, pp.1-26.
Scott-Patel, K., 2019. UK Employment Law-A Good Plan for Workers?. Int'l. In-House Counsel
J., 12, p.1.
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