LAW011-1: Business Law Assignment on Business Mediums and Employment

This coursework assignment addresses key aspects of business law in the UK. Part 1 analyzes the suitability of various business mediums, including sole trader, partnership, private limited company, limited liability partnership, and public limited company, for different client scenarios: a group of architects, beauticians, and a musician. Part 2 examines the employment status of an individual, Taran, in relation to Sleek Driving Ltd, delving into employment law principles, including employment contracts, the distinction between employees and independent contractors, and relevant legal tests such as the control test, integration test, multiple-factor test, and mutuality of obligation test. The assignment applies these legal concepts to determine Taran's employment status based on the provided scenario. The assignment utilizes relevant case laws and legal frameworks.

Running head: COURSEWORK PROBLEM
COURSEWORK PROBLEM
Name of the Student
Name of the University
Authors Note

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Part- 1
For leading life appropriately, various things have been done by people all over the
world, such as business, service, and profession. Business is considered to be an independent
profession. In the UK, many people lead their lives by making revenues from business
organizations. It is helpful for the first time investors to run a small business because small
business involves a small number of risks and comparatively it is easy to run a small business
rather than a partnership, or LLP, or Private Limited Company (Spence, Schmidpeter and
Habisch 200). However, companies can also start by the first time investors provided that a good
legal advisor knowing the UK company laws is needed. In this paper, some citizens of the UK
want to start their business organizations. This paper mainly focuses on the discussion of
different business mediums observed in the UK and the most applicable business medium for
UK clients.
There exists a range of business mediums in the UK. The definition of different business
mediums varies from one nation to another. The basic features of all the business mediums are
almost the same. Different products have been produced or services have been provided by the
organizations and by selling these products or services the business organizations make a profit
(Antony, Kumar and Madu 2005). In the UK, numerous kinds of business organizations have
been seen. Among them, the following business mediums are considered to be the main in the
UK, namely:
 Sole Trader: To starting a sole trader minimal setup and regulation are needed. It is
considered to be the most common business set up for new businesses. For starting this

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type of organization registration is not mandatory. For running this organization the
owner has to bear unlimited liabilities to all arrears and lawful actions (Grant et al. 2014).
 Partnership Firm: In case of partnership firms, for risks of partnership firms, all partners
are collectively and individually liable. This is to say, a lawsuit may also be filed
severally or jointly against one or more partners. Incorporation and start-up are free from
formalities, but a contractual arrangement is preferable. The agreement generally covers
the matters of decision-making, positions, asset distribution, and sharing of profit. Like a
sole trader, the affairs of the company accounts all are private and not publicly available
(Ward and Rhodes 2014).
 Private Limited Company: A private limited company is regarded as an independent legal
body and is distinct from those individuals who control it under the law. This represents
an important benefit for a limited company as shareholders are only responsible for their
contributions and unpaid shares. The time when a limited partnership is dissolved, the
private assets of the shareholders cannot be disclosed. This is one of the most common
corporate structures in the UK due to limited obligation, probable tax benefits and
simplified activity as a limited company. At the time of incorporation of the company, the
Companies House Registry publishes records about the filing history and present
appointments. It offers restricted companies a degree of openness that is perceived to be a
major advantage in the industry. One director above the age of sixteen years must be
appointed in a Private Limited Company. Besides, this company needs to have a
registered office in the UK, its name needs to observe with regulations of the UK
government, and at least a share needs to be issued while incorporating a private
company. As per the Companies Act, 2006 it is the responsibility of a PLC to file the

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annual report and returns periodically. These documents must be provided to people at
large for inspection.
 Limited Liability Partnership: A Limited Liability Partnership is considered to be a
combination of a partnership with a limited company established under the Limited
Liability Partnership Act of 2000 and the rules made according to that Act. Numerous
provisions of the Companies Act 2006 are also applicable to LLPs in certain ways.
Limited liability is often provided to the Limited Liability Partnership that is operated
similarly to a conventional relationship. The goals of LLP are typically profit-driven. In
fields like law and accountancy, this arrangement is preferred. For running such an
organization minimum two partners need to be appointed as the designated member of
the LLP. These partners will be held accountable for the daily operation of the
organization (Franks and Sussman 2005).
 Public Limited Company: Public Limited Company or PLC operates in their own right
following their private counterparts. Responsibility of the members is limited to their
contribution and their interest in shares. The shares of a PLC can be sold to the public as
opposed to a private limited company and are also used to collect finances. In comparison
to private companies, the operational costs of running a PLC are noticeably higher and
the device is usually designed for bigger businesses. At least Shares worth £ 50,000 needs
to be issued before an organization can be listed as PLC. Besides, at least two directors
must be appointed for fulfilling the lawful requirements (Moore, Slack and Gibbon
2009).
Now based on the above discussion, the most appropriate business mediums for the
below mentioned clients are discussed below:

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a) A group of 20 architects who wish to establish a small business to attract property
developers may start a partnership business because it is easy to start a partnership
business than a private limited company. The procedure to open a partnership business
involves fewer formalities and the liability of the partners are equal. Even if any partner
violates any of his duties the other partners can take legal actions against that person
either individually or jointly. Entering into a partnership agreement is not mandatory but
to avoid conflicts in future 20 architects can enter into an agreement. They can start a
private limited company as well because it has a separate legal entity and shareholders
are only responsible for their contributions and unpaid shares.
b) Three friends who have just qualified as beauticians can start a beauty parlour or beauty
salon as a partnership firm involves fewer formalities. They also can enter into a
partnership agreement to avoid conflicts.
c) An upcoming musician may start a sole proprietorship of selling musical instruments. A
sole proprietorship involves fewer formalities, minimal setup and regulation than any
other business. Registration is not mandatory for starting this type of organization but the
main disadvantage is that the musician has bear unlimited liabilities and legal actions.

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References
Antony, J., Kumar, M. and Madu, C.N., 2005. Six sigma in small-and medium-sized UK
manufacturing enterprises: Some empirical observations. International Journal of Quality &
Reliability Management, 22(8), pp.860-874.
Franks, J. and Sussman, O., 2005. Financial distress and bank restructuring of small to medium
size UK companies. Review of Finance, 9(1), pp.65-96.
Grant, K., Edgar, D., Sukumar, A. and Meyer, M., 2014. ‘Risky business’: Perceptions of e-
business risk by UK small and medium sized enterprises (SMEs). International Journal of
Information Management, 34(2), pp.99-122.
Moore, G., Slack, R. and Gibbon, J., 2009. Criteria for responsible business practice in SMEs:
An exploratory case of UK fair trade organisations. Journal of Business Ethics, 89(2), pp.173-
188.
Spence, L.J., Schmidpeter, R. and Habisch, A., 2003. Assessing social capital: Small and
medium sized enterprises in Germany and the UK. Journal of Business ethics, 47(1), pp.17-29.
Ward, M. and Rhodes, C., 2014. Small businesses and the UK economy. Standard Note:
SN/EP/6078. Office for National Statistics.

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Part- 2
Issue
In this paper, the issue to be discussed is the employment status of Taran. Whether Taran
is an employee of Sleek Driving Ltd.
Rule
Employment Law is considered to be such a law which deals with the regulations
concerning the association between an employer and a worker. The foundation of this
relationship is purely contractual where an offer from one party is accepted by the other. An
employment contract consisting of two parties are known as the employer and the worker.
Sometimes, certain difficulties occur while determining whether an individual is a worker or not.
An individual, who is not regarded as a worker is recognized as an independent contractor. The
employment laws do not apply to an independent contractor (Freedland and Prassl 2017). Certain
significant legislations of the UK, such as the Employment Rights Act (ERA) of 1996 generally
applicable to a worker but not to an independent contractor. This vital statute deals with the
unlawful termination, rights of notice, dismissal, and safeguard of wages. Besides, Trade Union
and Labour Relations Act of 1992, the Employment Relations Act, 1999 and 2004 deals with the
law regulating industrial actions, trade unions, its relation with participants and employers, and
shared negotiation. According to section 230(1) of the Employment Rights Act, 1996 a worker is
a person who has worked under an employer by entering into a contract of employment. An
employment contract either express or implied may be made verbally or in writing (Böheim and
Mühlberger 2009). However, the definition of an independent contractor cannot be provided by
the Employment Rights Act, 1996.

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The conception of an employee and an independent contractor is not identical in the UK.
The terms employee and an independent contractor have two fundamental distinctions. A
contract of service is available to an employee as well as an independent contractor, but an
employee is managed by an employer. Besides, for the actions of an employee, an employer is
held vicariously responsible. Further, the assigned tasks of an employee cannot be distributed
among other employees, whereas an assigned task can be performed by an independent
contractor at an agreed price. Therefore, an employer does not have any control over the working
hours, how the job was completed and can be disseminated among others (Donnelly 2011).
Furthermore, an employer is not vicariously answerable for the actions of an independent
contractor.
Besides the contract of service, common law implements numerous tests to determine the
employment status of an individual. The ‘control test’ is regarded as the most famous test in this
regard. In Yewens vs. Noakes [1881] 6 QBD 530 case it has noted by the court the right to
exercise control or the application of effective control is considered to be a critical factor and a
tough predictor of an employer-employee relationship. According to the ‘integration test’ if a
uniform is necessary to perform the duties of a worker, then it can indicate that the worker is an
employee. In Stevenson, Jordan & Harrison Ltd vs. MacDonald & Evans [1952] 1 TLR
101 the court held that an individual becomes an employee if his job is an important part of his
company even though the employer does not have direct control over that employee. It must be
kept in mind that these two measures are highly relevant but are not regarded as to be
independent (Conway and Coyle‐Shapiro 2012). Short vs. J. & W. Henderson Ltd. [1945] 79
Ll.L. Rep. 271 case the conception of ‘multiple-factor test’ has been evolved, which was further
established in Morren vs. Swinton and Pendlebury Borough Council. [1965] 1 WLR

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576 case and currently, this test is widely considered as the UK’s most preferred test. The factor
includes:
 Number of shift hours;
 Normal shift hours;
 Skills;
 Methods of appointment and dismissal;
 Types of remuneration.
According to this test, an individual may be considered as an employee:
I. If the tools have been delivered by the employer;
II. If the tax has been settled by the employer;
III. If a definite work has been accomplished by an individual;
IV. If the payment has been given in the form of wages or salaries;
V. If the place and duration of work has been set by the employer; and
VI. If the individual is controlled by the employer directly (Harpur and James 2014).
Finally, in Carmichael vs. National Power Plc [1999] UKHL 47 case discussed the
‘mutuality of obligation test’ which stated that the employee must do his tasks and the employer
must give work.
Analysis
In this given scenario, Sleek Driving Ltd needs self-employed drivers having own vehicle
with valid driving license. The company also stated that individuals will be capable to select

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preferable shift hours and the duty to pay tax vested on him. This job role has similarity with the
job role of an independent contractor.
After seeing the flexibility of the job role, Taran has contacted with Sleek Driving Ltd.
However, certain days later he observed that the advertisement was misleading. He has to work
for a minimum of thirty hours a week. If he fails to perform this duty, no work has been provided
to him in the next week. He is not allowed to take time off without informing Sleek Driving Ltd.
Moreover, he also needs to wear a uniform consisting of the logo of Sleek and must attain the
meetings to know his performance. This job role has a similarity with the job role of an
employee. However, the tax has been paid by Taran.
By applying the ‘control test’ as mentioned in Yewens vs. Noakes [1881] 6 QBD
530 case it can be said that Sleek Driving Ltd has direct control over Taran.
By applying the ‘integration test’ Taran is an employee as he wore the dress with the logo
of Sleek Driving Ltd.
By applying the ‘multiple factors test’ as confirmed by Morren vs. Swinton and
Pendlebury Borough Council. [1965] 1 WLR 576 case it can be said that Taran is an
employee.
Finally, by applying the ‘mutuality of obligation test’ as mentioned in Carmichael vs.
National Power Plc [1999] UKHL 47 case it can be said that Taran is an employee because his
duty is provided by Sleek.
Conclusion

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Therefore, it can be concluded that maybe the tax is paid by Taran, but his employment
status is that he is an employee of Sleek Driving Ltd.
The answer is important because based on this Taran can take legal actions against Sleek
Driving Ltd for publishing misleading job advertisement and also can claim compensation for
violating the contract of service.

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Reference
Böheim, R. and Mühlberger, U., 2009. Dependent self-employment: workers between
employment and self-employment in the UK. Zeitschrift für ArbeitsmarktForschung, 42(2),
pp.182-195.
Conway, N. and Coyle‐Shapiro, J.A.M., 2012. The reciprocal relationship between psychological
contract fulfilment and employee performance and the moderating role of perceived
organizational support and tenure. Journal of occupational and Organizational
Psychology, 85(2), pp.277-299.
Donnelly, R., 2011. The organization of working time in the knowledge economy: An insight
into the working time patterns of consultants in the UK and the USA. British Journal of
Industrial Relations, 49, pp.s93-s114.
Freedland, M.R. and Prassl, J., 2017. Employees, Workers, and the'Sharing Economy': Changing
Practices and Changing Concepts in the United Kingdom.
Harpur, P. and James, P., 2014. The shift in regulatory focus from employment to work
relationships: critiquing reforms to Australian and UK occupational safety and health
laws. Comp. Lab. L. & Pol'y J., 36, p.111.