Company Law and Employment Law

This document discusses the legal precedent of Salomon v A Salomon & Co Ltd and different business structures. It also explores the importance of an employment contract and its terms.

Company Law and Employment Law
Running Head: Company Law and Employment Law
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Student’s Name
Module Name : Business Law
Module Number : 4002

Company Law and Employment Law
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Contents
Part A...............................................................................................................................................2
(a) Legal Precedent of Salomon v A Salomon & Co Ltd 2
(b) Business Structures 3
Part B...............................................................................................................................................6
Bibliography....................................................................................................................................9
Case Laws 9
Books/Journals 9
Other Sources 9

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Part A
(a) Legal Precedent of Salomon v A Salomon & Co Ltd
In the area of corporation law, Salomon v A Salomon & Co Ltd [1896] UKHL 1, [1897] AC 221,
is one of the significant cases. The same is significant as it has provided an important
characteristic of corporations and set a legal precedent. It is known to everyone that a company is
an artificial person and therefore cannot do acts by itself. Members ands directors are the people
who take the decision on behalf of a company. In the subjective case, a person named Salomon
has transferred his business and developed a company. Later on, the same has provided a loan to
the company and received the debentures of the same. Here this is to mention that the whole
shareholding was with Salomon and his other family members2. At the time of liquidation of the
company, Salomon, being a secured creditor claimed his shares in the assets over and above rest
of the creditors. In the final decision of the case, it has been given that claim of Salomon is valid
and his sole ownership will not make any impact on his right as a creditor. The legal precedent of
this case is the separate legal status of the company. According to this precedent, an artificial veil
exists between the company and its owners/members. Therefore, to say that in this case it has
been established that a company is a separate an independent entity from any of the person that is
related to the company3.
1 Salomon v A Salomon & Co Ltd [1896] UKHL 1, [1897] AC 22
2 Jose Maria Lezcano, Piercing the Corporate Veil in Latin American Jurisprudence: A comparison with the Anglo-
American method (Routledge 2015)
3 Andy Gibson and Douglas Fraser, Business Law 2014 (Pearson Higher Education AU 2013)

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(b) Business Structures
To,
Mr. David,
Sub:- Basics of Business Structures
A person can carry his/her business by using various business structures. All these structures
have their certain positive and negative outcomes. Before starting a business, one is advised to
choose the business structures so wisely. The reason behind the same is that structure of business
impact on the performance and success of the business. It is not necessary that a business
structure, which is gainful for the one person, will lead the same positive impact on the business
of another person. Moving the focus towards various business structures, this is to state that
mainly three types of business organizations are there, namely sole proprietorship, partnership,
and Companies. All the three types of business structures are discussed below.
1. Sole proprietorship: - As the name implies, this business structure consist the sole
ownership of a person and this person has the full control of the affairs of the business. In
a legal sense, this business organization has no separate status and existence from its
owner. This is to believe that it is the easiest form of business as very few legal
formalities are there to do.
2. Partnership Business: - It is a business structure where two or more than two people join
their hands to earn profits and to distribute the same among them4. In order to earn such
4 Jean Murray, ‘what is a partnership? How does it work?’ (the balance small business, 29 October 2018)
<https://www.thebalancesmb.com/what-is-a-business-partnership-398402> accessed 04 January 2019

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profits, they do the business and try to achieve the common objectives. Nevertheless
similar to a sole proprietorship concern, a partnership business also does not have
separate legal status from its partners.
3. Limited Private Company:- A private limited company is a company which is owned by
limited shareholder and there is no involvement of the public. Being a corporate entity, it
carries a separate legal status.
Difference between partnership and Private Limited Company
Many of the difference are there between these two forms of businesses, the same are mentioned
as hereunder:-
Separation of ownership and control: - In case of Partnership, partners are the owners as
well as managers of the business. Whereas in case of Private Limited Company, there is a
difference in ownership and control of the business as shareholders are real owner and
directors are the managers of the company.
Liability of Manager:- As a partnership firm does not have a separate legal status from its
partners, therefore, they are personally liable for the acts of the firm. In case of private
limited company, directors cannot be held personally liable for the acts of the company
because of the separate legal status of a company.
Legal formalities: - In case of a private limited company, there are more legal formalities
in comparison to partnership firm related to incorporation, dissolution, and other acts. It
is a disadvantage of a limited liability company.

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Transfer of shares: - In case of partnership firm, a partner is not entitled to share his/her
share to another person without the consent of rest of the partners, whereas a shareholder
of a private company can do so5.
Limitation of Liability: - Partners of the partnership firm has unlimited liabilities towards
the debts of the firm. In case of private limited company, a shareholder is only liable up
to the amount of his share.
By looking up to the aforesaid points, this is to mention that both of these kinds of the
organization has a huge difference based on various factors.
5 Legaladda.myonlineca.in, ‘Partnership Firm Vs Private Limited Company’ <
https://legaladda.myonlineca.in/partnership-firm-vs-private-limited-company/> accessed 04 January 2019

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Part B
As the name itself provides, an employment contract is a legal document, which set out the
rights, duties, and responsibilities of both of the parties such as employer and employee6. The
duties and obligation of the parties mentioned under the subjective legal document are the
promises of one party that the same is required to perform in favour of another party. In this
manner, this legal document has a form of contract. A contract of employment is a significant
document from ever, however, to say that the importance of the same has increased after the
development of employment and labour laws7. This is to mention that the relationship between
employer and employee do not only depend on the terms mentioned under an employment
contract. The terms mentioned under a contract are the expressed terms. In addition to these
terms, some other terms are also there which are not expressly written in an employment contract
but regulate the behavior of employer and employee. These terms are known as implied terms.
Now, in the given case, two people namely Jack and Jill wish to develop a contract of
employment with a new member of staff. The following report is focused on various terms,
which are advised to include in the contract.
Tenure of the contract: - Article 38 of UAE labour law states that every employment
contract must have a validity period and the same can be for a maximum of 4 years.
Working hours: - This is an important term for every employee. While developing an
employment contract, the employer should decide the working hours of an employee.
An employee will be liable and entitled to work during the stated working hours only.
6 Anders Etgen Reitz, Labor and Employment Law in the New EU Member and Candidate States (American Bar
Association 2007)
7 Patrick Elias, 'Changes And Challenges To The Contract Of Employment' (2018) 38 Oxford Journal of Legal
Studies.

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According to Article 65 of the UAE Labour Law, the maximum working hours for a
private sector employee will be 8 hours per day (or 48 hours a week)8.
Leaves and vacations: - Which days will be an official leave or holiday for an employee
is another important term of an employment contract. However, the term varies from
organization to organization, yet while determining the holidays, employment laws of the
nation are required to have a look upon.
Wages/Salary:- An employee work in an organization for the salary or wages. An
employment contract must consist the amount of wages/salary that an employee will be
entitled to receive.
Training and development:- During the period of employment which training will be
required to be attended by the employee and who will pay the expenditure, an
employment contract should include all these terms.
Safety at the workplace:- In this term, an employer is advised to inform the employee
about the safety measures that the same would be required to use during the working.
Sometimes, the nature of employment carries dangerous activities and employees
required to follow certain instructions. It is to advise that an employer should include all
such instructions in the employment contract.
Other benefits:- Many of the times, in addition to the wages/salary, an organization gives
other perks to its employees. Such benefits include insurance, bonus, and other
appraisals. An employment contract must include all these benefits and rewards.
8 Mohre.gov.ae, ‘Title Four (Working Hours and Leaves)’ < https://www.mohre.gov.ae/en/laws-legislation/labour-
law.aspx> accessed 04 January 2019

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End of service benefits:- At the time of retirement or resignation from the organization,
the employee gets some benefits such as the balance of Provident fund or retention
money. An employment contract should state all such end of service benefits.
The condition of dismissal: - There are many events where the behavior of an employee
becomes rude or negative or the same behave in a manner, which is not suitable for the
culture of the organization. This negative behavior includes the conducts of theft,
harassment, and fraud. An employer is advised to states all these conditions where an
employee would be held responsible for the dismissal.
Applicable Legislations: - An employment contract should address the legislation under
which a matter will be decided if nothing related to the same isnot mentioned under the
employment contract.
Jurisdiction: - This term of the contract let the employer and employee know that in cases
of disputes between employer and employee, what will be the jurisdiction of the same.

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Bibliography
Case Laws
Salomon v A Salomon & Co Ltd [1896] UKHL 1, [1897] AC 22
Books/Journals
Elias P, 'Changes And Challenges To The Contract Of Employment' (2018) 38 Oxford Journal of
Legal Studies’
Gibson A and Fraser D, Business Law 2014 (Pearson Higher Education AU 2013)
Lezcano J M, Piercing the Corporate Veil in Latin American Jurisprudence: A comparison with
the Anglo-American method (Routledge 2015)
Reitz A E, Labor and Employment Law in the New EU Member and Candidate States (American
Bar Association 2007)
Other Sources
Jean Murray, ‘what is a partnership? How does it work?’ (the balance small business, 29 October
2018) <https://www.thebalancesmb.com/what-is-a-business-partnership-398402> accessed 04
January 2019
legaladda.myonlineca.in, ‘Partnership Firm Vs Private Limited Company’ <
https://legaladda.myonlineca.in/partnership-firm-vs-private-limited-company/> accessed 04
January 2019

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Mohre.gov.ae, ‘Title Four (Working Hours and Leaves)’ < https://www.mohre.gov.ae/en/laws-
legislation/labour-law.aspx> accessed 04 January 2019