Law for Business Managers

This report covers the roles and responsibilities of a director in a company, the process of terminating an employment contract, and alternative dispute resolution methods. It provides insights into business law and its impact on the functioning and management of a company.

Law for Business
Managers (LAW011-1)

Table of Contents
INTRODUCTION ..........................................................................................................................3
PART 1............................................................................................................................................3
Case scenario...............................................................................................................................3
Legislative provisions.................................................................................................................3
PART 2 ...........................................................................................................................................5
Case scenario...............................................................................................................................5
Employment contract..................................................................................................................6
Process of dismissal of employment contract.............................................................................6
Whether can Gemma terminate the contract of employment with Charanjit?............................7
PART 3 ..........................................................................................................................................8
Case scenario...............................................................................................................................8
Alternative Dispute Resolution...................................................................................................8
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business law governs all the laws that either directly or indirectly related to the business
activities of an organisation. For the upliftment of the society and economy of the nation,
business plays a very important role. With the help of business, a country generate profits and
revenues which directly impact the economy of the nation and also nation's growth is dependent
on it. To run any business effectively, it is important that they abide with all the rules and
regulations provided by the law in order to function and manage business activities. Business law
provides with rights and duties to be followed by an organisation and its employee for the
functioning and management of the company (Barker, 2018). There are many laws which are
part of business law. They are: law of contract, employment law, company law, alternative
dispute resolution, insurance law, etc. These laws help organisation to work efficiently and
smoothly. This report consist of three different parts. The first part of the report explains about
the roles of a director of the company and laws that regulates the role of directors. The second
part of report explains employment contract and the process in which an employee is terminated.
The third part explains the methods of alternative dispute resolution methods between the parties.
PART 1
Case scenario
The clean Machine limited company has a sole director named: Gemma. This company
supplies protective equipments within the country of Bedfordshire to most of the small scale
businesses. Its the first time that Gemma is a director of the company and is running the whole
business solely. Therefore, she is unaware of the roles and responsibilities of a director and
wants to know them. She also wants to know of all the provisions under law that governs a
director's role.
Legislative provisions
A legal entity indulge in business activities which is formed either by an individual or
group of individuals is called as a company. A company is formed to achieve the set goals of the
company and earn profit. The companies in United Kingdom (UK)are all governed by the
Companies Act, 2006 (Hill and Moll, 2017). Companies are mainly of two types based on the
capital invested, i.e. public companies and private companies. Public company is that which
raises its capital by issuing shares to the public and on the other hand private company do not

make its shares public and there is no involvement of public in the private company. A company
can also be divided on the basis of the liabilities arising in the business i.e. limited or unlimited
company. In limited company, liabilities of the directors are limited to the capital invested by
them and in unlimited company, liabilities of the director are unlimited and all are equally
responsible.
Gemma being the sole director of the clean machine limited company is expected to
perform all her roles and duties as the director. This will help Gemma to function and manage
business activities efficiently. Being a director of the company is a high post which is full of
responsibilities and duties as they are solely responsible for the management of the business
activities. Under sections 171- 177 of the companies act, 2006 there are 7 general duties
provided by by the law to which the director of the company are obliged to. The powers of the
director of any company are mentioned in the association of article i.e. AOA of the company.
The powers of the directors vary on the basis of the business and its activities. Therefore it is
important for a director to know their duties and responsibility to earn profit, learn how a
business is to be managed and to help company grow.
The 7 general duties of any director mentioned under the companies act, 2006 in the UK
are:
 The powers given to the directors of the company are mentioned in the Association of
Article of the company (Burba, 2017). The powers may vary from business to business
as per the structure and functioning of the company. The director should always act in
accordance to those powers specified under the AOA and must not do any act which is
not under his powers.
 The director must always act for the profit and welfare of the company. Actions and work
of the director must always he must always act in good faith for the company. The
decisions of the director must be proper so that it should increase the profit and growth of
the company. The decisions made by the directors shall have good impact on the
reputation and image of the company. It should also be made in accordance to the long
term success of the company.
 The directors judgement and decisions must be related to providing benefi6t to the
company as whole and it must always be futurist. The decision of the director must be not

made under any influence by any third party. It should be his sole decision and must be
for the benefit of the company.
 The director must keep due diligence and care while carrying out business activities. The
director must have Experience, skills, knowledge of the company related issues, etc. as
the qualities to be a deserving director. The director by using all the qualities of a
deserving director must perform his duties with care (Ahmed and Hughes, 2017). This
will help him with the efficient management of the company.
 The director must keep note of the problem which may arise due top the conflict of the
interest. This conflict of interest directly impact the reputation and growth of the
company. Any such conflict destroys companies reputation and make it difficult for the
company to achieve common goals of the company.
 The director while exercising his powers and duties as a director must not give or accept
anything as a consideration or benefit from any third party either directly or indirectly
who have interest in the business. The director must not accept the consideration as it will
hamper the reputation and growth of the company.
 The director of the company must convey the interest of the company in the proposal
made or the transactions offered by some other company. The company shall let the other
company know the true intentions of its interest in the other company. This will maintain
the transparency an trust between the two companies.
Gemma is the director of the Clean Machine Limited company and must follow all the
rules regulations mentioned in the AOA of the company while exercising her duties in the
company as director. She should know all her duties and must work in direction for the benefit of
the company while following all the obligatory duties of her as a director.
PART 2
Case scenario
The director of the Clean Machine Limited company: Gemma, employees a cleaner for
her company named: Charanjit. After observing him for few days she noticed that Charanjit is
always coming late for work and his attitude is very poor towards other employees and also with
the directors. Everyday Charanjit is being constantly reminded of the time on which he is
supposed to report at the office and also he is told to what all places he is supposed to clean.

Instead of telling him and reminding him of his duties, he do not listen. Gemma now wishes to
terminate his contract of employment which was made between him and the company.
Employment contract
All the employees working in any organisation have a contract made for employment
even if there is no signed or written contract made between the parties, it still exist. The
employment contract provides the employees with their duties towards an organisation and
assign responsibilities to which they are abided (Elias, 2018). The contract so made between the
company and the employees is binding on them till the contract comes to an end. This
employment contract is made according to the Employment Rights Act, 1996 (ERA, 1996).
Contravention to any provisions mentioned under this act will affect party contravening it.
Process of dismissal of employment contract
The law of employment is complex and there is constant fear in the minds of employers
when they plan to terminate employment contract of any of the employee. They fear to terminate
because of the notice they might get from the employment tribunal in this regard. The employer
is expected to be just and fair while giving reasons to the employee they are planning to
terminate. An employment contract when comes to an end is called as termination of
employment contract. The procedure or method followed while terminating must be in
accordance with the ERA, 1996. there are different ways in which contract can be terminated and
the company can dismiss an employee. They are: Unfair dismissal of an employee: It is the termination of the employment contract on no
grounds. This dismissal done by an employer is unethical as the company do not give fair
and just reasons for his removal. Constructive Dismissal of an employee: this termination takes place when an employer
knowingly creates such situations that are unsuitable for an employee (Kiersztyn, 2017) .
This force the employee indirectly to resign from their jobs. Situations w3hich affect an
employee are: workload, change in the working environment, etc. Summary Dismissal of an employee: It is the kind of dismissal in which an employee is
told to leave the company without giving any notice period to him or making the
payments of his dues. This dismissal is based on conduct and behaviour of an employee.
Such as: fraud, harassment, etc.

 Frustration: this is a situation where neither an employer nor an employee is held
responsible. The contract comes to an end when there is any difficulty in carrying out
terms of the contract or business activities (Bornstein, 2019). This situation arises in case
a company has a sole director and he dies without leaving anyone to take care of the
business, etc.
 Wrongful Dismissal of an Employee: This is the situation in which an employee is fired
by an employer without giving any due notice. This is the case where an employer
breaches his duties towards an employee.
Under the ERA, 1996 there are two stages given which help in determining whether the
termination or dismissal of an employee was fair and just or not. They are:
1. The reasons given by an employer is considered that whether they were fair and just or
not.
2. On the reasons given by an employer it is determined that whether the reasons were
sufficient enough for the dismissal of an employee.
The reasons given by an employer while dismissal of any employee u8mnder the ERA,
1996 must be valid, just and fair. The reasons must be related to the business and its activities
and should not be personal or an outcome of the grudges. It should be on the basis of an
employees performance, behaviour towards the management or other employees, non
performance of his duties, etc. It the responsibility of an employer to prove that his reasons are
fair enough to dismiss an employee. In case where employee plans to dismiss an employee he
must serve notice of at least one month (Guest and Clinton, 2017). The only case where there is
no requirement of the notice is when there is summary dismissal of an employee.
Whether can Gemma terminate the contract of employment with Charanjit?
In the case scenario given, the cleaner at the Clean Machine Limited i.e. Charanjit, was
not performing the task given to him and was everyday coming late to the office. He was not
performing his duties and responsibilities towards the company even after being reminded of
them several of times. He was told to bring improvement in his work to which he did not pay any
attention to it. His behaviour with the director and other employees of the company is very rude
and poor. This shows that is not not willing to perform his duties and is not bringing the change
in his attitude even after being told about the same.

After looking at all the facts, Gemma may terminate the employment contract with
Charanjit as he is not performing his duties and responsibilities towards the company. His
attitude towards other people at the company is also very rude. He is not changing it either.
Gemma can also terminate his contract without serving him any notice because of his actions,
conduct and behaviour i.e. Summary Dismissal. The reasons of the dismissal would be fair and
just as Charanjit was being warned for his actions and duties many times to which he did not care
to pay attention.
PART 3
Case scenario
Gemma is the director of Clean Machine Limited and the company takes supplies form
the Precious Time Limited with whom they are in contract with. Presently, there are many issues
and problems which are there between both the companies which is affecting there contractual
relationships with each other. After discussing the matter with a friend, Gemma was told by her
that she should sue the Precious Time Limited for its activities. Gemma is not sure of taking the
company to the court and wishes to resolve the matter outside the court as she don't want to ruin
her relations further with the company. Gemma wishes to work with the company in further and
therefore is looking for alternative methods to resolve the dispute without any interference of the
court. There are many options available to Gemma to resolve the dispute with no interference
from the court.
Alternative Dispute Resolution
The process by which parties to the contract can settle there disputes without going to the
court is known as Alternative Dispute Resolution i.e. ADR. There are many benefits and
advantages of this method to resolve the disputes between the parties. They are:
 This method to resolve dispute is very cheap than the proceedings at the court and also is
more flexible (Lo, 2020).
 The process in ADR is faster than those at the court which are too long and lengthy.
 The innocent parties gets compensation from the wrong does as a reward without any
delay.
 The process of ADR is confidential and the secrecy of the matter of the company is
hidden which helps them to maintain their reputation in the market.

The are many ways in which a dispute can be settled between the parties under the
Alternative dispute Resolution method. The important four methods are: Mediation: This is the method in which dispute is resolved between a party with the help
of a “Mediator” (Campolieti and Riddell, 2020). The work of mediator is to take into
account the needs of the parties and find a suitable solution. Mediator only helps the
parties to settle dispute and the decision or suggestion of him is not binding on the
parties. Conciliation: This is the method in which a “Conciliator” solves the problem between
the disputing parties and reach to some conclusion. The conciliator after determining the
facts suggest party. If the parties are not satisfied with the solution given by a conciliator,
the parties may approach the court for the same. Arbitration: This is the method in which an “Arbitrator” is appointed either by the
parties themselves mutually or by the court (Nandan, 2020). The arbitrator makes
decision on the basis of the evidenced produced by the parties. If he is not satisfied with
those evidences he may order party to tell the facts in person. The evidences present must
include all the necessary and related information in detail for an arbitrator to reach
conclusion. The decision of an arbitrator is binding on the parties and they have to abide
by it.
 Ombudsman Scheme: This is the scheme which was announced for protecting
consumers and their rights from the fraud. It is free fro consumers but traders have to
make payment of certain amount. If any direct complain is made by a consumer to the
company and no action is taken within eight weeks then the consumer can complain
under ombudsman. Evidence needs to be submitted to the ombudsman so that they can
start investigation into the matter. After analysing it, they deliver decision.
To resolve the dispute between the Clean Machine Limited and the Precious Time
limited, Gemma may opt for Arbitration method to resolve the dispute. This method will be less
time consuming and the decision will have binding effect on the parties. This method will also
help both the companies to main the secrecy of the matter which caused the dispute and also will
help them by saving its reputation in the market. If Gemma do not wish to opt for arbitration, she
may choose any other method to resolve the matter as the main aim of all these methods is to
resolve the dispute. The aim is also to settle the dispute and make the parties to agree on the

mutual terms and conditions (Charmatz, 2020). The procedure do not really matter as the main
intention of all the method is to make settlement between the parties by making them mutually
agree on the suggestions and decisions made by the person helping them solve the disputes.
CONCLUSION
This is concluded from the above report that, many laws are provided which helps in the
management of the business activities. This report discusses three case scenarios on different
laws related to business. The first scenario explains about the rights and duties of a director of
the company. The second case scenario is about the dismissal of an employee under the
employment contract and the process which is followed by the company. The third case scenario
is about the alternative methods which can be used by the contractual parties to resolve the
disputes between them. All the three case scenarios explains the duties and roles of the director
of the company which they must know in order to run company efficiently.

REFERENCES
Books and Journals
Ahmed, R.A. and Hughes, P.G., 2017. Simulation directors as improvement leaders. Physician
Leadership Journal, 4(1), pp.44-48.
Barker, S., 2018. An introduction to directors duties in relation to stranded asset risk. Stranded
assets and the environment: Risk, resilience and opportunity, pp.221-271.
Bornstein, J., 2019. Employees are losing: Have workplace laws gone too far?. Journal of
Industrial Relations, 61(3), pp.438-456.
Burba, T.M., 2017. To B or Not to B: Duties of Directors and Rights of Stakeholders in Benefit
Corporations. Vand. L. Rev. En Banc, 70, p.147.
Campolieti, M. and Riddell, C., 2020. Does Mediation-Arbitration Reduce Arbitration Rates?
Evidence from a Natural Experiment. ILR Review, 73(1), pp.211-235.
Charmatz, M., 2020. Binding arbitration: Bad for students, bad for schools. Disability
Compliance for Higher Education, 25(6), pp.1-3.
Elias, P., 2018. Changes and Challenges to the Contract of Employment. Oxford Journal of
Legal Studies, 38(4), pp.869-887.
Guest, D.E. and Clinton, M., 2017. Contracting in the UK: Current research evidence on the
impact of flexible employment and the nature of psychological contracts.
In Employment contracts and well-being among European workers (pp. 201-223).
Routledge.
Hill, J.A. and Moll, D.K., 2017. The Duty of Care of Bank Directors and Officers. Alabama Law
Review, 65, p.965.
Kiersztyn, A., 2017. Non-standard employment and subjective insecurity: how can we capture
job precarity using survey data?. In Precarious work. Emerald Publishing Limited.
Lo, C.F., 2020. Past and Future of Mediation for Investment Disputes: The Case for the Asia-
Pacific Regional Mediation Organization (ARMO). Handbook of International
Investment Law and Policy, pp.1-20.
Nandan, D., 2020. Role of Mediator, & What Are Its Advantages and Disadvanatages of
Mediation?. Available at SSRN 3625710.