Business Structures and Equality Law

This assignment analyzes the advantages and disadvantages of various business structures, focusing on limited liability companies (LLCs) compared to partnerships. It explores key factors influencing this decision, such as tax benefits, liability protection, and growth potential. The assignment further examines the legal obligations of employers under the Equality Act 2010, emphasizing the creation of a fair and inclusive work environment free from discrimination, harassment, and victimization.

Business law

TABLE OF CONTENTS
Introduction......................................................................................................................................3
Part B...............................................................................................................................................3
Comparative assessment of partnership and company................................................................3
Duties of employer in accordance with the Employer Act 2010.................................................6
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
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INTRODUCTION
Business law is developed to promote fairness in commercial industry of the UK. In this
law, provision regarding general duties of different business organizations is provided which is
required to be comply by all entities (Gill, 2005). Present report is focused on the comparative
assessment of partnership and company for the selection of suitable form for start up of business.
For this aspect, advantages of limited liability company will be explained on the basis of
commercial environment of UK. Further, description of employer duties will be provided by
considering provisions of Equality Act 2010. This provisions will be linked to the previous case
precedents for the better understanding of subject matter.
PART B
Comparative assessment of partnership and company
Limited liability company can be termed as private company having separate legal
identity from its owners. This form of incorporation limits the amount of liability undertaken by
the shareholders or members of the organization (Limited company or partnership: which is
best?, 2005). On the other hand, partnership is form of business in which two or more person
operate together in order to earn profits. All partners are responsible for the action of one another
due to characteristic of mutual agency. In addition to this, partners have unlimited liability
towards the obligation of business. Selection of limited liability company for incorporation of
business is beneficial for the individual due to following reasons: Limited liability: The major advantage of limited liability company is provision of
financial security for the members. In accordance with the characteristics of company,
members are only liable to extend to dues remaining in contribution of capital. Due to
this aspect, members will not be held responsible for the payment of dues beyond this
obligation (Shehzad, 2009). On the contrast, in partnership, owners have unlimited
liability towards the obligation of business. By considering this aspect, debt of business
will be paid from their personal assets in situation where assets of the business are not
sufficient. In accordance with the case of Salomon v A Salomon & Co Ltd [1896] UKHL
1 creditors of the insolvent company are not entitled to sue shareholder for the
outstanding debts.
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 Separate legal entity: Limited liability company has separate legal identity from its
members. Due to this characteristic, existence of company is not affected by retirement or
joining of members. In addition to this, life of company is beyond the life of its members.
This aspect provides security to the employees and members of the business. This
security is not provided if business is incorporated as a partnership entity (Becker, 2010).
It is because; partnership dissolves with the retirement, death or insolvency of any
partner. For this aspect, case of Macaura v Northern Assurance Co Ltd and Lee v Lee’s
Air Farming Ltd can be considered. In this case, court had considered separate legal
entity as evident. Due to this decision former member was not entitled for claim on
having rights of the property of business. It is because; court had said that business assets
are not personal assets of the member due to which members are not entitled for the claim
on same. Taxation and tax advantages: Limited liability companies are obliged only to pay taxes
on their profits usually at the rate of 21%. This rate is comparatively lower than tax
obligation rate of partnership entities as taxation rate in this form can be increased up to
40%. In addition to this, members of the company have various tax advantages if they
start business in form of company (Kelly and et.al., 2013). They can pay themselves in
accordance with the minimum wage level. Further, they can take advantage of personal
allowance level i.e.£6,475. These allowances are tax free because members are required
to pay taxes if income exceeds this amount. Profitability- In form of limited liability company, profit is distributed in form of
dividend. On this income, only 10% tax is charged by the government. In addition to this,
dividend income is free from national insurance. Due to this aspect, members are
required to pay less taxes on the income taken by them from profitability of business
(Gillies, 2004). However, in partnership form, partners are required to pay taxes on their
profit and salary through self assessment form. Due to this aspect, they are entitled for the
charges of national insurance. By considering this aspect, comparatively their net profit
after tax is lower than companies. Business and personal property: For the purpose of tax planning, members and directors
of limited liability company can make use their personal property such as car for
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commercial activities. With this approach, they will be able to make their taxable profit
lower by deducting fuel and repair costs. Further, company will not be required to
purchase separate assets for the business (Emerson, 2009). In this manner, there will be
two way benefit to the business i.e. reduction in tax liability as well as capital
expenditure. Similar to the car, if personal building is used by director then cost of this
property such as heating, lightening and other expenses will be considered for allowed
expenses. These expenses in partnership entities are considered as notional cost and due
to this aspect it is treated as disallowed expenses. Ownership and control: Generally in limited liability companies, directors and members
are similar persons. By considering this aspect, it can be noticed that ownership and
management power is in similar hands. As a consequence, decisions of the business can
be easily made without any contraventions and disputes (Adams, 2010). In addition to
this, decision will be made by balancing personal and business interest. Quick decision
will also assist them in availing good opportunities for higher growth and profitability. Company name: Formation of limited liability company is done after registration name
of company. This name has legal protection due to which it cannot be infringed by the
competitors. This benefit is not provided in form of partnership entity. Through the
protected name, company will be able to create separate image in the market (Twomey
and Jennings, 2010). Further, by making use of Company Name Search tool members can
ensure that selected name is not similar or resembling to the name of any existing
organizations. Shareholders rights to employees: Owners of the company can provide shares to the
employees in order to enhance their level of motivation. This approach will not affect
controlling rights and employees will be motivated to provide good performance as their
efforts will reward them in for the of dividend and capital appreciation. In addition to
this, their objectives will be aligned with the objectives of company. Business image and processes: Company provides better reputation and profession touch
to the business in comparison to the other form of business incorporation. In this manner,
owners of the company can start up in more proper manner. Limited liability company
has standard legal provisions which make business proceeding more systematic. Further,
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formation of company is cost and time effective (Rush and Ottley, 2006.). However, it
requires little more efforts in comparison to partnership.
By considering above evaluation it can be said that there are various benefits of start up
of business as a limited liability company. Owner of the entity can take tax advantages, make
reduction in their personal obligation and can earn good profitability (Limited company or
partnership: which is best?, 2005). In accordance with this, individual is recommended to start
new business as a limited liability company instead of selecting form of partnership.
Duties of employer in accordance with the Employer Act 2010
In present era, employers are required to comply with legislatory provisions developed by
British parliament. Due to this aspect, they are required to integrate employment and business
practices with this legislatory norms. In situation where they failed to do so, they will be held
liable for heavy penalties and legal claims. In order to prevent these obligations, employers are
required to act in accordance with the provisions of Equality Act 2010. This Act is compiled
legislation of all previous Acts linked to the unfair biasness and discrimination. In accordance
with the provisions of this Act, following action should be taken by employer to comply legal
provisions and to prevent expensive claims related to it: Fair recruitment: Employer are required to recruit candidates by considering their
qualification instead of factors covered in protected characteristics. They should not
provide preference or avoid individuals on the basis of unfair factors such as race, age,
gender or religion (The Equality Act 2010 – guidance for employers, 2010). In order to
prevent racial discrimination, they are obliged to consider overseas qualifications
equivalent to the qualifications of UK. In recruitment process, qualified disable people
must be provided with the fair opportunity. Job adverts: Advertisement for employment practices must be fair and just. In a
commercial advertisement there must not be reflection of discrimination. In this aspect,
stating preference for gender will be considered as unlawful sex discrimination until and
unless there is legal permission to employ a man or woman for the particular job (Gill,
2005). In addition to this, provided advertisement by employer must not be inclusive of
age limits unless employer must have justifiable objectives.
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 Work policies and environmental practices: Employer are required to develop
appropriate norms and policies for the employees. In addition to this, employment
policies must be in accordance with the provisions of law. It is because; if work policies
will contradict fundamental human rights or any other legal provisions then employer
will be required to pay heavy penalties (Jones, 2013). For this aspect, they are required to
pay fair to the workers in accordance with the norms of minimum wages. Further,
appropriate leave policies should be designed by considering norms of maternity leave,
sick leave, paternity leave and others. Redundancy policies: Employer should adopt fair policies for the redundancy of
employees. For this aspect, there should be appropriate process in which justifiable notice
must be served for the termination of employee. In addition to this, employee should be
provided with the fair opportunity for their defence (Padhi, 2012). Termination process
must be supported by proper reason. Further, these aspects must not be affected by
provisions of protected characteristic else employer will be liable to provide damages for
the same. Appropriate adjustments for disable people: In accordance with the provisions of
Equality Act 2010, employer is required to make reasonable adjustments for the qualified
disabled people. In this aspect, they are required to make changes in their standard
employment norms. In addition to this, disable employees are required to be provided
with extra flexibility in work norms so they can operate accordingly (Rush and Ottley,
2006). Employer is also required to assure that no bullying or harassment has been
conducted in workplace. Career development: training, promotion and transfer- By providing development
opportunities employer can boost up the morale, productivity and loyalty of employees.
This factor will help them in employee retention and also it will add value to the human
resources of business (Twomey and Jennings, 2010). For this aspect, employer can
design training programs. However, employers are to do this without unlawful
discrimination along with making reasonable adjustments if necessary. Furthermore, they
are required to consider induction, coaching and day release.
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 Salary and monetary compensation: There should be fair measures for the determination
of salary and other monetary compensation of the employees. Discrimination in the
payment of workers due to the factors of protected characteristics is completely not
accepted by court of law (The Equality Act 2010 – guidance for employers, 2010). Due to
this aspect, employer is required to assure the employees are paid on the basis of their
qualifications not on the basis of protected characteristics.
 Facilities at work place: Employers are required to assure that following facilities are
easily accessible to the employees of organization:
▪ Accessibility to the computers, mobile phones and other technology
▪ Washing and toilet facilities
▪ Parking area
▪ Facilities for breastfeeding mothers
▪ Other reasonable facilities in accordance with their workplace. Health and safety provisions: Employers are required to comply also with the norms of
Health and safety Act. According to the provisions of this Act, they should provide
training to the employees prior they make use of hazardous equipment in order to prevent
risk of injury (Adams, 2010). Further, proper arrangements should be made at workplace
for the possible emergency in order to reduce chances of injuries. By the compliance of
these norms, employers will be able to provide better environment to the workers. Fair opportunities for growth: Employer has moral and legal responsibility to provide
fair and equal chances of growth to all the employees. In this aspect, promotions and
appraisals must be measured by performance of employees instead of considering
unjustifiable factors such as race and gender (Kelly and et.al., 2013). This aspect will not
only prevent possibility of claim but also motivate employees to provide effective
performance. It is because; if growth and appraisals of employees will be affected by
protected characteristics then they will not be encouraged to provide effective
performance.
 Strict action against victimization and harassment: Employers are required to take strict
action against the any activity linked to the harassment and victimization. In situation
where failed to do this act, then they will be held equally responsible for the act of faulty
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party. In accordance with the Employment Act they are required to provide safe
environment to the workers of the company and for this aspect they should make proper
arrangements. Indirect discrimination is also considered as misconduct by the employer
thus they are required to ensure that none of the member or employee is engaged in such
kind of action.
By considering above description it can be said that employer is liable to provide fair and
secure work environment to the employees. Contractual terms of employment contract must be
supported by the legal provisions. They should be consider the convenience of employees along
with the profitability of business. With this approach they will be able to create win-win
approach for them as well as employee (Gillies, 2004). It is because; they will be able to create
good brand image of the company and can motivate employees for better work performance.
Further, by the application of above described aspects they will be able to prevent liability
regarding payment of expensive claims for the non-compliance by law.
CONCLUSION
In accordance with the present study conclusion can be drawn that formation of new
business as limited liability company will be more beneficial in comparison to partnership. It is
because, in this form individual has tax advantages, protection from infringement, benefit of
limited liability and opportunities for better success and growth. These factors persuade selection
of partnership in comparison to limited liability company. By considering the provisions of
Equality Act 2010, employer is required to provide appropriate work environment to the
employees by preventing factors such as discrimination, harassment and victimization. In
addition to this, they are required to make justifiable work policies in order to prevent possibility
of expensive legislatory claims.
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REFERENCES
Books and journals
Adams, A., 2010. Law For Business Students. 6th ed. Pearson Education Lt.Beatty, J. F., 2012.
Legal Environment. Cengage learning.
Becker, G. S. 2010. The economics of discrimination. University of Chicago press.Palmer, C. R.,
2014. Common law environmental protection: the future of private nuisance, Part I.
International Journal of Law in the Built Environment. 6 (1/2). pp.21 – 42.
Emerson, W. R., 2009. Business Law. Barron's Educational Series.
Gill, J., 2005. Business Law for the Entrepreneur. Arima Publishing.
Gillies, P., 2004. Business Law. Federation Press.
Jones, L., 2013. Introduction to Business Law. Oxford University Press.
Kelly, D. and et.al., 2013. Business Law. Taylor & Francis. Rush, J. and Ottley, M., 2006.
Business Law. Cengage.
Padhi, K., P., 2012. Legal Aspects of Business. PHI Learning Pvt. Ltd.
Rush, J. and Ottley, M., 2006. Business Law. Cengage.
Shehzad, N., 2009. Business Law: A Guide for Entrepreneurs (1st edition). International Journal
of Law and Management. 51(1). pp.53 – 54.
Twomey, D., and Jennings, M., 2010. Business Law: Principles for Today's Commercial
Environment. Cengage Learning.
Young, H., 2010. Equality Act 2010. Routledge.
Online
Limited company or partnership: which is best? 2005. [Online]. Available through:
<http://www.accountingweb.co.uk/topic/business/limited-company-or-partnership-
which-best>. [Assessed on 21 December 2015].
The Equality Act 2010 – guidance for employers. 2010. [Online]. Available through:
<http://www.acas.org.uk/media/pdf/8/a/Equality-Act-2010-guide-for-employers.pdf>.
[Assessed on 21 December 2015].
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