Law for Business Managers: Role of Sole Director, Termination of Employment Contracts, Dispute Resolution

This document provides an overview of the role of a sole director in a company, the provisions for termination of employment contracts, and dispute resolution outside court. It explains the responsibilities and duties of a director, the process of terminating an employee, and the mechanisms for resolving disputes. The document is relevant for students studying business law and management.

LAW FOR BUSINESS MANAGERS

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
PART 1............................................................................................................................................1
Role of sole director of company.................................................................................................1
PART 2............................................................................................................................................3
Explanation of provision made regarding termination of employment contract........................3
PART 3............................................................................................................................................5
Brief explanation of provision related with dispute resolution outside court..............................5
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business law is field of study which define all the essential provision which is related
with incorporation, succession, and winding up of business. It is branch of study which help in
provides knowledge regarding all the provision related with social security compensation,
contracts and relationship between director with companies or other people. In order to
understand this concept this report has been formulated. This report define role and
responsibilities of director when they run one person company, provision and procedure related
with termination of contract of employee. It also consists way director use for solve their dispute
outside the court. All these information has been define in systematic manner.
MAIN BODY
PART 1
Role of sole director of company.
Director: According to the section 154 of Companies Act 2006, director is a person
appointed for the purpose of run and direct companies operation in effective manner by
performing his duties and responsibility.
As per provision of companies act it is essential for every company which is registered
under this act , to appoint at least one director which manage all the law and affairs of companies
as in the book of law company is artificial person and it is not possible that it act according to
themselves thus companies needs to appoint director which took responsibility to take all the
decision and supervise each operation of company.
There is no specific definition is defined in the act however director is person who
appoint for look and manage al the essential external and internal affairs of company on the
behalf of companies owner (Basuil and Datta, 2017).
Sole director: This term define as director appoint for company when there will be only
1 director or person serve at given specific time period.
In this case study Gemma established Clean Machine Limited it is newly set up company
in which Gemma is the only director as she is the owner of the company. According to the
section 154 of Companies Act 2006 following are the role and duties which Gemma needs to
fulfill to act as director:
1

Director as agent: Person being appointed as director act as an agent of company as its I
artificial person and not act behalf of their own manner. Thus director are appo8inted as agent
and they need to work in good faith and fulfil all the responsibility and role which an agent play
for their role for their principle. However they are not personally liable for any kind of loss or
misshapenness event.
Director as employee: Being as employee it is responsibility of director that they need to
work accordion in good faith and to achieve target of their company.
Director as officer: Being as officer director have some specific power to inspect
account and financials statement of companies, supervise the whole structure and working
process of company. They have right to terminate any of working employee and took decision
on the behalf of company. Being as officer it is their responsibility to direct, influence and
motivate their employer as well as communicate their stockholder regarding company in good
fever.
Director as trustee: They play role of trustee for companies property & money.
Fiduciary relation has been established between director and company ans being as trustee of the
company it is the responsibility of them to safe or protect assets and resource of organization
(Bowler, Indridason, Bräuninger and Debus,2016).
Organize committee meeting: It is essential role of director that they ned to organize committee
an meeting for the purpose of take future business decision. They need to organize first meeting
within 30 days of incorporation of company. Director is responsible foe organize 2 meeting
within 120 days and in case of one person company or small companies director need to organize
1 meeting in half or calender year.
Act as per requirements of articles : It is responsibility and duty of directors that they
need to work according to the rule , regulation and norms which defined in articles in ethical
manner.
Act in good faith: In order to run company in systematic manner and maintain dignity
within the internal environment, it is the responsibility and role of director that they need to work
and fulfil their responsibility in good faith. They need to take decision in good faith without
discrimination or on the basis of favouritism.
Work for best interest of company: This is consider as one of the important role of
director as they need to play their role in such manner which help in success and help in leading
2

towards growth of the organization. As they are the person who represent the whole company on
behalf of their shareholders.
Avoid undue business advantage:Being as director it is it is responsibility of personal
that they not make any secret profit and enjoy undue advantage. As per companies act, if they
made any secret profit they need to pay fine, penalties or may be discharge from the position of
companies director.
Avoid internal coherence: Director is a person who has knowledge regarding each and
every small detail regarding company. Thus they need to work in such manner which help in
control any kind of issue arises
Gemma is run one person company in which she is they director and owner of the
company. Thus being as director of Clean Machine Limited she need to work as director of one
person company Clean Machine Limited and fulfill the role and duties which define under
section 154 on the companies act 2006. As per theses provision Gemma need to formulate their
article as well as memorandum of association and organize board meeting within 30 days of the
incorporation of her company. In order to maintain the requirement of organization it is her role
to act as trustee (Chams and García-Blandón, 2019).
Agent, and managing partner of her company. It is her duty that she work in good faith
and ion or to successes her organization and increse4 its capital need not to take decision
according to favoritism or work in ethical manner in order to fulfilling norms of companies act.
It is her role to recognize the overall structure performance and future outcomes of organization
and on the basis of that she needs to work in good faith and need to not take undue advantage of
become sole director of the company. It was her role to distribute power, inspect financial
account and took decision regarding further business operation activities by organize meeting.
PART 2
Explanation of provision made regarding termination of employment contract.
Termination of employment: Procedure of departure of an employee from a job is
known as termination of employee. Termination is voluntary process which may be decision of
employee to stop working in specific organization or it may be on the side of employee.
Generally termination of employment contract is signed or approve by human resource
3

department of organization. However as director personal also have right to terminate their
employee. Following are the procedure of dismissal of employee
Process of dismissal
Investigation regarding valid reason of dismissal: This is essential point in order to
terminate employee. Employer must have valid reason which define that particular person is not
good or work in good faith for organization. They need to have prof or valid document which
showcase that the decision regarding termination of employee is right and in fever for the
corporation. Only than the procedure of termination of employee succeeded. Other wise in many
case due to the person Clean Machine Limited dispute of employer or director and employee
they write termination letter which is not lawful as per the norms of constitutions. Thus in order
to reduce these kinds of issue director needs to have specific and valid prof for terminate
employee.
Initial letter: Before given letter of termination it is the duty of manager that they give a
warning letter to employee. In which they can clearly or specific mention regarding the issue
company face due to lack of interest of employee towards the work. Within this letter all the
issue related with employee are specificity mention and time period is also given to employee so
they can cover up their mistakes. This period is generally 1 month or 15 days.
Dismissal meeting: In this step meeting is hire in order to listen point of view of
employee. Company give chance to hear point of view and reason of being conduct of
misbehaviour within the organization (Clark, 2018).
Reconvene to communicate outcome: On the basis of hearing convenience or point of view of
employee, director after that took decision whatever they took or terminate employee. They need
to communicate with employee regarding or about the decision took for their misconduct.
Right to appeal: On the basis of hearing the decision employee have right to appeal
regarding decision taken by directors a Clean Machine Limited and he can sue on the
organizations regarding the decision they took for employee termination.
Confirmation in writing: This is the last step of process in which official letter of
termination is circulated to the employee .On this letter reason, time duration and and all the
valid information has been specifically define. The date mention in this letter will be the last day
of employee their organization.
4

Process of termination of employee is not easy as it is complex procedure if organization not able
to define the valid reason of termination then court may fine penalties and as well as charges
upon the company .
In case of Clean Machine Limited, Gemma is one and only director of the company. She
obverse many of times that organizations cleaner Charanjit not work in proper of effective
manner. Even though after giving him reminder regarding his work he is not able to improve his
performance. Due to this premise of company is not clean and messed up. Charanjit not able to
work in effective manner and clean the area allocate to Clean Machine Limited. Thus Gemma
took decision to terminate Charanjit for his post.
The decision taken by Gemma regarding termination of Charanjit is valid and lawful . As
she is being appointed as director of Clean Machine Limited and being a one and only director
as per the provision of Companies Act 2006 director have power to terminate any employee .
Thus she will have right to terminate Charanjit if she has valid reason. In this case even
though given Charanjit many times of reminder about the work she is not able to work in
effective and ethical manner and fulfil his work responsibility which may negative capacity on
the environment of working premises. It is unlawful and adversely impact of n the rate of success
of operational business activities of Clean Machine Limited (Corten, Steijvers and Lybaert,
2017).
Thus Gemma being appointed as director of the company has right or power to terminate
employee if they are not work in good faith of organization. Thus Gemma by fulfilling and
recognize the overall process of termination of employee took decision regarding terminate
Charanjit the good faith of their company as it is beneficial for organization and lawful act as
per the provision of companies memorandum.
PART 3
Brief explanation of provision related with dispute resolution outside court.
At present time scenario due to revolution of technologies competition rate in market
goes high which directly become the main cause of increase the rate of competition as well as
dispute. Many issue arises between companies due to regarding their operations. Government of
UK take decision regarding that it took many time or years to solve dispute arises between 2 or
more then of two companies thus in order to solve dispute or graveness they formulate new
5

mechanism or act which known as Arbitration Act 1996 in which Arbitration and cancellation
court has been established.
The main purpose of dispute resolution is to save time, cost of both companies ans well
as government of UK also.
Arbitration is part of alternative dispute resolution . Arbitrator is the outsider who is not
relative or known of both parties. Decision taken by arbitrator is bind by both companies. At
present time scenario due to revolution of technologies competition rate in market goes high
which directly become the main cause of increase the rate of competition as well as dispute.
Many issue arises between companies due to regarding their operations. Government of
UK take decision regarding that it took many time or years to solve dispute arises between 2 or
more then of two companies thus in order to solve dispute or grievance they formulate new
mechanism or act which know as alternative dispute resolution act (O'Brien, 2018).
Organization use it as many of dispute arises due to the commercial international
business transactions. Arbitration can be divided to many categories. Organizations generally
face disputes due to their commercial transaction and business operations. By using these courts
or formas they are able to solve dispute arises between these companies. Constitution of
Bedfordshire formulate rules and policies regarding in which they can easily solve or manage
their dispute however when both companies are not able to main or decide regarding decision of
the dispute they need to focus on how effective they can work in effective way. Arbitration
award are generally given as compare to court decision and it is enforceable and flexible run
business organization activities through which they can manage and run their business in
effective manner (Fuente García-Sanchez and Lozano 2017).
Dispute resolution mechanism is easy way to solve dispute as these are enforceable by
law. In this arbitrator are the outsider and they have knowledge regarding the market as well as
have experience in solving issue of corporate business sector thus in these are effective and
easily able to solve problems arise between organizations.
On the basis of decision taken by these courts they universally accepted and outsider have
quality and capabilities as well as skills regarding with solve the dispute thus decision taken by
theses court are universal acceptable parties have no issue regarding the decision taken by
arbitrator.
6

Conciliator is also a part of solving disputes outside the court. It is different from
arbitration process as in case of arbitration both parties appeal and their point of view in specific
or particular court and then take decision in from of both parties.
On the other side in the method of conciliation, the conciliator is the person who meets
both parities separately and listen their appeal and point of view and on the basis of that take
final decision regarding their dispute.
Companies have option they are not satisfied with the decision which taken under the
dispute resolution mechanism then they can choose court for the purpose of fair decision
regarding their issue.
However at present time scenario most of organization choose these mechanism in order
to speedily solve issue arise between commercial parties (Kaal and Calcaterra, 2017).
In this case study Gemma run their business as one person company and deal with
Precious Time Limited. This organization supply raw material to Clean Machine Limited,
through which they can easily operates their operations in order to run company in effective
manner. However due to some reasons dispute arise between theses organization regarding
quality of raw material which Precious time supply to Gemma 's company.
Gemma does not want to broke relation with Precious time Limited as according to her
point of view dealing with this organization will be beneficial for the upcoming future operation
as their organization will be achieve its goals by using material supply by this company as they
provides them material at low price In order to solve dispute between Clean Machine Limited
and Precious Time Limited, Gemma will be use dispute resolution mechanics as she is not
wanted to go court because she is aware about the fact that going on court will not find speedily
solution of this issue and it is completely wastage of time as well as court also and the relation
also broke if they go court for solve this dispute. Gemma needs to go arbitration court. As they
are the outsider and they give guarantee regarding took fast decision and these decision will be
beneficial for both companies.
On the basis of using dispute resolution mechanism Clean Machine Limited able to solve
their dispute without going court. Decision is also acceptably by both companies as arbitrator is
outsider and they does not have any fiduciary relation with any company thus they took decision
on the basis of good faith. This decision help in also maintain reiteration between both o
companies and on the basis of that they Gemma can able to focus on further business activities as
7

she save time as well as money required for going to the court. Using this mechanism is useful
ans beneficial for companies as their decision is fairly acceptable and companies able to
understand their fault and accept their mistake in order to maintain their positive goodwill within
the market (Parker Marasi, James and Wall, 2019).
CONCLUSION
From the above analysis it has been concluded that personal can able to successfully lead
their organization in market when they have proper knowledge regarding each and every aspect
and provision of law. As there will be many acts, regulation and amendments are formulate
which showcase and define how company regulate, power,authorities, roles and responsibility of
personal have when they become director of company. Having knowledge regarding how to
regulate company help in managing dispute as well as useful in influence and motivate employee
so the rate of termination has been decline. Companies act define all the provision in which
director may appoint for regulate company but the also have right to terminate employee if they
not work in ethical manner as well as their are various way through which they can resolve their
dispute. Director by using arbitration court able o solve their issue without going to court.
8

REFERENCES
Books and journals
Basuil, D. A. and Datta, D. K., 2017. Value creation in cross-border acquisitions: The role of
outside directors' human and social capital. Journal of Business Research. 80 pp.35-44.
Bowler, S., Indridason, I. H., Bräuninger, T. and Debus, M., 2016. Let’s Just agree to disagree:
dispute resolution mechanisms in coalition agreements. The Journal of Politics, 78(4),
pp.1264-1278.
Chams, N. and García-Blandón, J., 2019. Sustainable or not sustainable? The role of the board of
directors. Journal of cleaner production. 226. pp.1067-1081.
Clark, G. E., 2018. Coercion and contract at the margins: Deportable labor and the laws of
employment termination under US capitalism (1942–2015). Law & Social Inquiry.
43(3). pp.618-646.
Corten, M., Steijvers, T. and Lybaert, N., 2017. The effect of intrafamily agency conflicts on
audit demand in private family firms: The moderating role of the board of
directors. Journal of Family Business Strategy .8(1), pp.13-28.
Fuente, J. A., García-Sanchez, I.M. and Lozano, M.B., 2017. The role of the board of directors in
the adoption of GRI guidelines for the disclosure of CSR information. Journal of
Cleaner Production.141, pp.737-750.
Kaal, W. A. and Calcaterra, C., 2017. Crypto transaction dispute resolution. The Business
Lawyer. 73(1). pp.109-152.
O'Brien, T., 2018. Beware the legal ramifications of impulsive, contradictory termination
decisions. College Athletics and the Law.14(10). pp.1-3.
Parker, J. M., Marasi, S., James, K.W. and Wall, A., 2019. Should employees be “dooced” for a
social media post? The role of social media marketing governance. Journal of Business
Research. 103. pp.1-9.
9

10