Business Law for Managers: Mediums and Employment Analysis

This report, prepared for a Business Law for Managers course, comprehensively addresses two key areas: the selection of appropriate business mediums and the determination of employment status. Part 1 evaluates the most suitable business structures (sole trader, partnership, LLP, and private limited company) for three distinct client groups: a group of architects, beauticians, and a musician. The analysis considers factors such as liability, ease of setup, and future growth potential. Part 2 focuses on employment law, specifically addressing whether an individual, Taran, is an employee of Sleek Driving Ltd. The report delves into the legal definitions of an employee versus an independent contractor, examining relevant legislation like the Employment Rights Act 1996 and the Trade Union and Labour Relations Act 1992. It explores common law tests such as the control test, integration test, multiple-factor test, and mutuality of obligation to determine the nature of the employment relationship. The report uses case law to support its arguments and provides a detailed analysis of the given scenario to determine Taran’s employment status.

Running head: LAW FOR BUSINESS MANAGERS
BUSINESS LAW
Name of the Student
Name of the University
Authors Note

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Part- 1
In this paper, the issue to be discussed is what will be considered to be the most
appropriate business mediums for various clients which include:
a) A collection of 20 architects who wish to establish a small business to attract property
developers;
b) Three friends who have just qualified as beauticians; and
c) An upcoming musician with good projections.
To lead a healthy life, people engage themselves in jobs, profession or business among
them business is regarded to be an independent profession. Different business mediums have
been observed all over the works among which small business structure is preferred the most by
the first time investors as it involves small risk and investment in comparison to other business.
Moreover, it is also very easy to run a small business in comparison to a partnership, or Limited
liability partnership or Private Limited Company (Jolly 2015). Though, companies may also
begin by investors for the first time, provided a good legal attorney is needed who knows the UK
corporate laws.
There are a variety of business mediums observed in the UK. Different business mediums
are described differently from one state to another. All business mediums are almost similar
concerning their elementary features. Various goods are created or the services offered by
organizations and the company organizations benefited from the selling of such products or
services (Hillary 2017). However, among different business mediums, following are regarded to
be as main in the UK, such as:

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i) Sole Trader: Minimum setup and regulation are required to start a sole trader and for this
reason, it is known as the easiest and simplest business form for registration purposes. It
is also known as the most popular company developed for new enterprises. The HMRC,
which means ‘HM Revenue and Customs’, registers a sole trader. The owner must bear
full liability for both arrears, taxes and legal action to operate this organization (Scuotto
et al. 2017).
ii) Partnership business: A partnership is regarded to be as a business arrangement in
which two persons or organizations or more than two people or organizes come together
to set up a business. For incorporating a partnership business, the minimum and a
maximum number of partners are 2 and 20 respectively. The shared goal of all partners in
the relationship is to earn profits. All the partners are jointly and separately responsible
for the risks of partnership businesses. The incorporation and start-up are not formal but
it is better to conclude a partnership agreement. Generally, the arrangement deals with
decision-making, responsibilities, allocation of assets and income sharing. In the case of
the partnership business, all business accounts are private and inaccessible to the public
(Timans et al. 2016).
iii) Limited Liability Partnership: A Limited Liability Partnership shall be regarded as a
combination of partnership and a limited company incorporated by following the rules as
laid down in the Limited Liability Partnership Act of 2000. Some of the Company Act
2006 regulations relate in some respects to the LLPs, too. An LLP is registered under the
HMRC and the Companies House. It can be formed with two or more than two members
and the members can be either individuals or organizations. This system is preferred in
areas, such as law and accounting. For operating an LLP, at least two members have to be

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appointed as the designated members for performing the daily organizational activity.
The main advantage of this type of business medium is the liability of the partners is
limited (Rizos et al. 2016).
iv) Private Limited Company: A private limited company is such a business medium under
which shareholders are regarded as the owners of the company and the daily activity of
the business is operated by the directors of the company. This type of business medium is
considered to be an autonomous judicial entity and is distinct from the persons who
regulate it under the law. The same view is also observed in Salomon vs. A Salomon &
Co Ltd [1896] UKHL 1 case in which the court stated that a company itself a separate
legal entity. This is a major benefit for a limited company because shareholders are liable
solely for their contributions and unpaid shares. At the time of dissolution of a limited
company the private properties belong to the shareholders shall not be disclosed. The
Companies House Registry contains documents about the past of filing and current
appointments when the company is incorporated. In a private limited company, one
director above the age of sixteen years needs to be appointed. The minimum and a
maximum number of members are 2 and 200 respectively. A company must have an
Article and Memorandum of Association to set the company objectives. Furthermore, the
registered office of the company must be situated in the UK, its name must comply with
the UK Government’s rules, and it must need to issue at least a share at the time of
company formation. In compliance with the Companies Act of 2006, the annual report
and audits must be issued annually by a PLC so that individuals can review it (Julien
2018). However, in some cases, in which the directors are engaged in some kind of
dishonest and fraudulent activities which could cause harm to the corporation, a distinct

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legal entity concept may be upheld by the courts. In Gilford Motor Co Ltd vs. Horne
[1933] Ch 935 case the same situation had been observed.
Therefore, based on the above-mentioned discussion, the most important business
mediums for the above-listed clients are discussed below:
a) The collection of 20 architects who wish to establish a small business to attract property
developers may incorporate a partnership business rather than a private limited company
as it is easier to incorporate a partnership nosiness instead of PLC. There is less formality
in the process of starting a partnership business, and the responsibility of the partners are
identical. Even if a partner violates his responsibilities, remaining partners may either
individually or together take legal action against that partner. A partnership agreement is
not necessary, but 20 architects may enter into a partnership agreement to avoid future
conflict. Apart from a partnership, they may also start a private limited company as it has
a distinct legal entity and shareholders are solely accountable for their unpaid shares and
contributions.
b) Three friends who have just qualified as beauticians may begin a beauty salon or a beauty
parlour as a partnership business, as there are fewer formalities involved. To prevent
disputes, they may enter into a partnership agreement. Even to avoid unlimited liability,
they can begin an LLP which can be started with two members and more than two
members.
c) An upcoming musician with good projections may begin a sole trader as it includes less
paperwork, rules and minimal set up in comparison to any other business. For such a
business medium, registration is not compulsory, but the key downside is that the
musician is responsible for limitless responsibilities and legal actions.

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Part- 2
Issue
In this paper, the issue to be discussed is whether Taran is an employee of Sleek Driving
Ltd.
Rule
Employment law is regarded to be a law dealing with regulations relating to the
relationship between an employer and an employee. The basis of this partnership is strictly
contractual where one party accepts the offer of the other party. The two parties of an
employment contract are known to be as an employer and a staff. Often some issues arise while
deciding whether an individual is an employee or not. A person, who is not considered to be an
employee is considered to be an independent contractor. In the case of an independent contractor,
the employment laws are not applicable (Freedland and Prassl 2017). Some important UK
regulations, such as the Employment Rights Act of 1996 (ERA) usually does not apply to an
independent contractor, but an employee. This important legislation includes wrongful firing,
notice rights, removal and protection of remunerations. The Trade Union and Labour Relations
Act of 1992 along with the Employment Relations Act, 1999 and 2004 deals with that legislation
which regulates industrial activities, labour unions, its relation with contributors and employers,
and joint agreements. As per the provisions of section 230(1) of the Employment Rights Act,
1996 an employee is such a person who by entering into a contractual agreement of employment
performs its duties under an employer. An express or implied employment contract may be
concluded either orally or in writing (Ljungholm 2018). Nevertheless, the Employment Rights
Act of 1996 cannot define the concept of an independent contractor.

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In the UK, the conception of a worker is different from an independent contractor. There
exists a fundamental difference between the expression of a worker and an independent
contractor. A worker and an independent contractor may receive a contract of service, but
generally, an employer manages its workers. Even, an employer is held vicariously accountable
for the actions of its workers. Furthermore, the allocated jobs of a worker cannot be delegated to
others, although an individual contractor can carry out the allocated job at a fixed price.
Consequently, an employer has no control over the work schedule, how the work was finished
and distribute among others and for this reason, an employer does not hold vicariously
accountable for the activities performed by an independent contractor (Rose 2016).
In addition to the contract of service, a range of examinations is carried out under the
common law to assess an individual’s status of employment. Among various tests, the ‘control
test’ is considered to be the most famous test. It had been observed by the court in Yewens vs.
Noakes [1881] 6 QBD 530 case that the right to use of control or to apply actual control is seen
as a vital factor and as a good indicator of the relationship between an employer and a worker.
On the other hand, if a uniform is required to perform the tasks of an employee as per the
‘integration test’, it will demonstrate that the worker is an employee. It had been ruled by the
court in Stevenson, Jordan & Harrison Ltd vs. MacDonald & Evans [1952] 1 TLR 101 case
that if the job of a person is considered to be an essential part of the organization, then such
person becomes a worker of that organization although the employer has no direct control over
that worker. It is important to keep in mind that both these tests are highly applicable, but not
considered to be as distinct. However, the concept of ‘multiple-factor’ test has been developed in
the Short vs. J. & W. Henderson Ltd. [1945] 79 Ll.L. Rep. 271 case which was again upheld
in Morren vs. Swinton and Pendlebury Borough Council. [1965] 1 WLR 576 case and at

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present, this test is widely regarded as the most popular test of the UK. The test of multiple
factors includes:
 Types of remuneration;
 Skills;
 Number of shift hours;
 Methods of appointment and dismissal;
 Normal shift hours.
As per the various aspects of this test, a person may be considered to be a worker:
i) If the remuneration is given in the form of salaries or wages;
ii) If the tax of the worker has been paid by the employer;
iii) If the place and working time has been fixed by the employer;
iv) If the devices of completing a particular work have been delivered by the employer;
v) If a certain task has been completed by a person; and
vi) If the person is governed by the employer in a straightway (Johal and Anastasi 2015).
Lastly, the concept of ‘mutuality of obligation test’ has been developed in
the Carmichael vs. National Power Plc [1999] UKHL 47 case which indicated that the worker
needs to do those tasks which have been given by the employer.
Analysis
As per the given scenario, Sleek Driving Ltd requires autonomous drivers with a vehicle
and valid driving license. It has been also stated by the company that people can select preferred
shift timings and the obligation to pay the taxes has been vested on the person. This particular
job role is similar to the job role of an independent contractor.

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Taran has contacted Sleek Driving Ltd after having seen the versatility of the job.
Nevertheless, he found the ads to be deceptive several days later. He must work 30 hours a week
at least. In the following week, no work has been given to him if he does not fulfil this task.
Even, he cannot take time off without notifying Sleek Driving Ltd. Moreover, he must also wear
a uniform of the Sleek logo and must present in the meetings so that to know his efficiency. This
particular job role is similar to the job role of an employee.
By applying the ‘control test’ as discussed in Yewens vs. Noakes [1881] 6 QBD
530 case it can be concluded that Sleek Driving Ltd has control over Taran in a straightway.
By applying the ‘integration test’ it can be concluded that Taran is an employee because
he has to wear the dress with the logo of Sleek Driving Ltd.
By applying the ‘multiple factors test’ as established by Morren vs. Swinton and
Pendlebury Borough Council. [1965] 1 WLR 576 case it can be concluded that Taran is an
employee.
In conclusion, by applying the ‘mutuality of obligation test’ as revealed in Carmichael
vs. National Power Plc [1999] UKHL 47 case it can be concluded that Taran is an employee
because the work has been provided to him by Sleek.
Conclusion
Therefore, from the above discussion, it can be concluded that the employment status of
Taran is an employee of Sleek Driving Ltd. despite the task has been paid by him.

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The response is very vital for Taran because he can take necessary steps against Sleek
Driving Ltd for the publication of deceptive advertisement regarding the job and based on this he
can also claim damages for the violation of service contract.
Part- 3
Criteria for granting a patent for a creation under the Patents Act, 1977
A patent is a legal right which may be given by the government to the inventor for
creating something new entitling the inventor to prohibit others from making, using or selling the
creation without the permission of the inventor for a certain period. After the patent protection
has been granted by the appropriate authority, the creation becomes the property of the inventor
and, like all other goods or commercial properties, maybe procured, sold, rented or hired (Love
et al. 2016). As patents shall be deemed to be territorial rights, thus UK patents simply allow
ownership rights in UK and rights of banning others from bringing patented products into the
UK. In the UK, the Intellectual Property Office of the UK is allowed to issue the patent for a new
invention. This exclusive right authorizes the patent inventor or patentee to take legal actions
against those individuals consuming that novel invention without taking permission from the
inventor or patentee (Hellstadius 2015).
The time limit of enjoying this exclusive right is 20 years starting from the date of
applying for the patent almost in all the countries. The owner of the patent does not get any
automatic right from the patent right concerning the use of the novel invention. The patentee or
inventor shall not breach other people’s rights. A person needs to apply to the UK Intellectual
Property Office to acquire a patent. If the invention is recognized as patentable, it is usually
allowed approximately four years after the application is filed but often even before that time. In

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general, a patent is received to prohibit anyone from using the creation. It is considered to be the
inventor’s exclusive right, except it confers rights on someone else. If the inventor of a novel
creation is usually an employee and creates the invention during his work, the employer gets the
privilege to acquire the patent (Trimble 2016). An owner may license a patent or allow others to
use the novel creation. It can also be sold to others. An inventor or patentee cannot avoid the
misuse of the invention without acquiring a patent. Patentability is commonly governed by the
requirements mentioned in the European Patent Convention in the UK. For acquiring a patent
right in the UK, some conditions must be fulfilled by the provisions of section 1(1) of the Patents
Act, 1977, which include:
i) The invention must contain a creative step;
ii) The invention must be novel. Until the day the patent application is made it shall not be
made present in the world; and
iii) In several forms of industry, including the agricultural field, such an invention must be
capable to be produced or used. The meaning of it is that the invention must be in the
function of a device, a product like several new materials, or a manufacturing process or
an operating technique (Sterckx 2017).
Under the provisions of section 1(2) of the Act referred to above, several inventions for
this Act cannot be patented, such as:
 A discovery;
 A literary, dramatic, musical or creative work or any artistic formation;
 A practical theory or mathematical development;
 The demo of data or a computer program (Abbott 2016);

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 A preparation or method to execute a psychological act, playing a game or running a
business;
 Consequently, the creation has to be in the context of an application, a commodity, such
as a novel material, a production or an operating process.
Also, a patent cannot be granted for a variety of plants, a process to treat or diagnose a
human or animal body with the operation, therapy, or treatment.
Advantages or disadvantages of patenting an invention under the Patents Act, 1977
Patents have several benefits and shortcomings under the Patents Act of 1977, which must
be analyzed by an inventor before making an application for patent right. The benefits of patent
rights are:
 A patent right assists an inventor in preventing another person without the authorization
of the inventor from making, producing, selling or trading the invention;
 An inventor may safeguard the invention for a pre-defined time and disadvantage the
competitors; and
 An inventor can entirely use the creation of himself/herself.
In addition to the benefits, the patenting of creation has several shortcomings under the
said Act, such as:
 The inventor or patentee needs to remember that the patent may expire if in due course
and regularly, an annual fee is not paid by the inventor or patentee;
 The application process of acquiring a patent right is very time-consuming and detailed;