Business Law Case Study: Director's Role, Dismissal & Resolution

This case study provides an analysis of several business law issues. Part 1 examines the legal duties and responsibilities of a sole director, using the scenario of Gemme and her company, Clean Machine Limited, to illustrate the importance of understanding Company Law 2006. Part 2 delves into the process of employee dismissal, presenting a scenario involving Charanjit, an employee of Clean Machine Limited, and outlining the legislative provisions related to fair and unfair dismissal under UK employment law, including the Employment Rights Act 1998. It discusses various forms of dismissal, fair reasons for dismissal, and the importance of following a fair dismissal procedure. Part 3 explores alternate dispute resolution methods, without providing a specific scenario. The study highlights the importance of legal compliance and fair practices in business management. Desklib offers a platform to explore similar solved assignments and past papers for students.

LAW FOR BUSINESS
MANAGERS

Table of Contents
INTRODUCTION ..........................................................................................................................3
PART 1............................................................................................................................................3
Role of sole director...............................................................................................................3
PART 2............................................................................................................................................5
Process of dismissal................................................................................................................5
PART 3............................................................................................................................................8
Alternate dispute resolution....................................................................................................8
CONCLUSION .............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business is the most important method through which companies and the countries earn
the maximum revenue. It provides all the rules that are being governed to carry a successful
business. As to carry a successful business their implies all the strategies, laws and norms which
are needed to be fulfilled. The most important laws that are used for the business is Partnership
act, Contract law, Employment law and Company Act. Employment is one of the important law
which provides all the rights that are carried in very business. It has all the legal obligations and
rights between the employee and the manager (Yasan, 2018). The companies while indulging in
any business makes a legislation, with the partnership and also with all the dealings being bled in
the companies. In this report, there are three case scenarios which deal with director's role,
process of dismissal and alternate dispute resolution.
PART 1
Role of sole director.
Case Scenario
Gemme started a new company which she named as Clean Machine Limited, and she is
the sole director of that company. She deals with providing protective equipments in all over
small town of Bedfordshire. As this is completely a new business for her and she is the sole
director of that company, she is unaware about the legal duties and the responsibilities of the sole
director in context of company law.
Legislative Provisions
Company is a separate legal entity which holds all the power by itself. It is basically a
sole body and has all the perpetual succession that the person dealing with it can change the
making. The main element is that as the person being working in a company or holding a
company can change and go but the company will remain their forever (Cauffman, 2019). All the
legislation being made in the company law will have to be followed by the company.
Companies mainly pertains two types that implies public company and private company,
Public company has all the open market shares that means it is open for the individual to invest
in that company for certain shares in the market. On the other hand private company implies that
their will be a varies rights of the people and it provides that they do not need any investor to
work under. Companies also has two types of liabilities, which are Limited liability in which the

directors can pertains their rights to a limited area and extent. Unlimited liability implies all the
rights which has no obligations and the director can make it share with the basic record and area.
Company Law 2006, deals with the culture and the rules that led to be followed like
corporate finance that applies all the areas where a company can share its funds in debts, equity
etc. from the shareholder. Corporate governance means all the rules embodied for the employers
and the directors that are led to be followed.
In an area where a company is being running by a sole director it covers all the areas and
responsibilities to that same person, As the sole director will have to take all the decisions by
their own and has to run the business in a proper way with the increasing changed with the new
dimensions. But with that all the debts and the liabilities will arise with the sole director for
working in all means (Hayes, 2018). Thus this company law 2006 provides all the duties and
rights which are owned by a sole director which will help Gemme to understand that better they
are as follows:
 Sole directors have to maintain all the records and make a proper book about all the
companies work and employees detail.
 The sole director should have all the knowledge of their work and they should work in a
proper manner with all efficient information about the company.
 It is the duty of sole director that they should create friendly environment in the company
and also make their employee comfortable in the area as that helps them to increase the
confidence with the employees.
 The directors should avoid all the matters which can raise conflicts between the parties
that means if their arises any dispute in the organisation it is the duty of the sole director
that they have to take all measures to solve it.
 The sole director has in a right in case if there is a confusion in their mind about the
upcoming strategies and techniques then they can hire an advisory committee for the
company which will help them in knowing what is good for the company. But the most
important elements is that the director will have to make the final decision.
 The director has to be transparent with their employees that means that the person acting
as a sole director will have to tell about their strategies and targets with the company. It
implies that the sole director cannot ,make any profit region for their company or for
personal benefit.

 The sole directors can not be allowed to promote the interest of the third party that means
that all the business and the dealing will undergo to the directors and they are not allowed
to make any undue benefit from the third parties. Thus, all the benefits were being made
in order to make the growth of the company.
 All the transactions which are being made b y the sole director were needed to be
disclosed by the company and they are majorly being allowed to make further access in
the resulted way that means all the transactions made by the sole director for their own
benefit will have to be disclosed and to the leading or concerned authority with the
business (Gaspar, 2019).
Thus, these are certain rights and duties of the sole directors that are to fulfilled by
Gemme in order to make her business smooth and profitable. So, for running the clean machine
limited Gemme will have to use all these obligations and duties and maintain good relation with
the employees.
PART 2
Process of dismissal
Case scenario
Gemme have employed Charanjit as the cleaner in the company Clean Machine Limited.
She have observed that he is continuously late for the work and also his attitude is poor towards
her and towards other employees. Gemme have to oversee the work of Charanjit and also remind
him to clean all the areas properly. Now Gemme wants to terminate the contract of employment
of Charanjit.
Legislative provisions relating to dismissal
Every business organisation have certain number of employees who work day and night
for the success of the company. Employees are the asset of the organisation so it is important to
protect them from exploitation. The employment law is a vast field which have many legislations
under one umbrella which is designed to provide legal rights to the employees (Goldberg and
Wilkinson, 2018). The people who are at work in the country United Kingdom have a minimum
charter of the employment rights which are found in many Acts, regulations, equity and common
law.

Every person who is at work is entitled to have a contract of employment which states the
rights, responsibilities and duties of the employees toward its job role. This contract exist
between employer and employee which may be in written or oral form. The terms of the contract
may be express or implied. The employer is bound to provide the employee, a contract of
employment within 2 months of starting the work.
The employer may terminate the employment contract on many grounds which is
discussed below-
 When the notice is served by either employer or employee.
 When there is a mutual agreement between the parties to terminate the contract either on
expiry of term or on fulfilment of the purpose.
 When the employment contract is for fixed period of time.
 When the employer dismiss the employee and terminates the contract of employment
(Strickland, 2019) .
The employment law provides the right to the employee to not get unfairly dismissed if
he/ she have been employed for more than two years. It is a statutory right which prohibits unfair
dismissal. Provided that there must be no discrimination. The employer shall not be liable for the
dismissal when-
 The employer follows a fair procedure.
 The reason for the dismissal is the one which is designated in the legislation as the fair
reason.
There are many types of dismissal in the legislations of UK which are unlawful. One of
them is lawful which is the fair dismissal. It is when the employer dismisses the employee on the
fair reasons and also the process of dismissal is fair and the employer must act fairly during the
process of dismissal. The unlawful dismissal includes firstly the constructive dismissal which
occurs when the employee resigns due to the fact that employer have breached the employment
contract. For example cutting down wages without the agreement, workload being increased
unfairly and many other. Second form of dismissal is unfair dismissal which occurs when the
reason for the dismissal is unfair. Third is wrongful dismissal which occurs when the contractual
terms are broken in the process of dismissal, for instance dismissing any employee without
serving proper notice (Botes, 2017).

In relation to fair dismissal, the reason for the dismissal must be fair and valid. These
include-
 When the employee commits any misconduct or gross misconduct like theft,
discriminatory behaviour, harassment and many other.
 When the employee is incapable to perform its job role effectively. It may be due to ill
health or the poor performance.
 When the employer requires fewer employees which is known as redundancy.
 When the employee breaches the statutory restriction. For instance breaking the law.
 Any other substantial reason. For example expiry of contract of fixed term, when
employee does not agree to the changed terms and conditions or conflict of interest
between employer and employee (de Flamingh and Connolly, 2019).
Even when the reason of the dismissal is fair, it is important that the employer must act
reasonably during the process of dismissal. There is no legal definition for reasonableness but the
tribunal must take into account whether the process was fair or not. The tribunal shall consider
the following-
 The reason was fair or not.
 Proper investigation was carried out or not when appropriate
 relevant procedure was followed or not.
 Whether employee was given chance of the appeal and many other.
When an employer fairly dismiss the employee, it is bound to serve the notice to the
employee. Normally the contract of employment states the notice period but in case, it is not
stated, the notice period shall be for the statutory time period which is mentioned below-
 A notice of 1 week when the employee have been employed for a period of 1 month to 2
years.
 A notice of 2 weeks when the employee is employed for at least a period of 2 years.
 A notice for more than 2 weeks when the employee is employed for more than 2 years
and shall continue for the maximum of 12 weeks period. It shall be each week notice
period for per year of employment.
Section 98 of the Employment Rights Act, 1998 provides two stage test tyo determine
whether the dismissal is fair or not which includes-
 The employer must show that it has fair reasons to dismiss the employee.

 The tribunal must see that the employer have act reasonably in treating the reason
as sufficient and fair (Singer, 2018).
In the present case scenario, Charanjit's attitude towards the employer and the other
employees is not good and he is continuously late for his work. Moreover, he does not perform
its job role adequately as Gemme have to regularly over see his work. He is subject to poor
performance so Gemme have fair reasons to dismiss Charanjit and also terminate his contract of
employment. The procedure for the fair dismissal must be followed by Gemme is discussed
below-
 The employer must initially set out the grounds of action which have led to the dismissal.
The grounds must be fair which does not lead to unfair dismissal.
 Then the employee must be given a chance to appeal against the said decision.
 The employer must invite the employee for the meeting and set out its final decision and
communicate it to him/her.
PART 3
Alternate dispute resolution
Case scenario
Gemme have entered into a contract with the Precious Time Limited, a company which
supply materials to the Clean Machine Limited. There has been many problems between the two
companies from the past few time for number of reasons. Gemma have been advised by her
friends to take the matter to court to solve the dispute but she wants to resolve the issues by suing
other methods.
Legislative provisions in context to alternate dispute resolution
Litigation is the most common form of dispute resolution which is prevailing around the
world. It is a time consuming process which involves huge cost for solving the dispute. Other
than the court proceedings, there are other dispute resolution mechanisms which are called the
alternate dispute resolution which is a speedy disposal mechanism to solve the dispute. It
involves less time and cost as compared to litigation (Kariuki, 2020).
The alternate dispute resolution is stated under the Civil Procedure Rules of 1986. there
are many methods of dispute resolution. Alternate dispute resolution embraces many options to
resolve the dispute which includes the following-

 Arbitration- It is the most common form of dispute resolution where an arbitrator is
appointed who hears facts of the case from the parties and after listening to the arguments
of the parties and the evidence on record, pass an award which is binding on the parties.
The parties are free to choose the arbitrator and the place and time of arbitration
proceedings. It has the case validity and relevancy as that of the litigation. The decision
is called the award. In case, any party does not obey to the award of the arbitration then
the court may intervene and order the party to abide the award. Mediation- It is the best form of dispute resolution where an independent mediator is
appointed who after considering the facts of the case and evidence on record, provide
suggestions to the party so that they can solve their dispute. The mediator just provide the
suggestions to the party and its suggestion is not binding on the parties. They have a
choice to either accept it or refuse the adhere it. The mediator appointed is unbiased and
independent and hear both the parties either individually or collectively and after hearing
their opinion and facts, the mediator provide suggestions. Mediation can take place in any
form like face to face, facilitative, evaluative and shuttle (Exon, 2017). Conciliation- in this, the conciliator is appointed to solve the dispute between the parties.
An independent and unbiased conciliator is appointed which can be maximum three in
number. The parties are free to choose the conciliator and the time and place of the
conciliation. it offers speedy disposal of case to the parties. The conciliator, after hearing
the facts of the case and evidence on record, provide suggestions to the parties and the
parties have a choice to either go with the suggestion or provide their own suggestions
which shall be called settlement. The parties sign the settlement which is the final
decision and the parties are bound to obey the settlement.
 Negotiation- It is also a common form of dispute resolution where an independent
negotiator is appointed who after listening to the facts of the case, provide suggestions to
the parties. It is aimed to provide amicable solution so the parties where both parties are
at win- win situation and no party looses anything. The suggestion of negotiator is not
binding on the parties (Oseni and Omoola, 2017).
In the present case scenario, Gemme may opt for the process of arbitration which can
help Gemme in solving her dispute with the Precious Time Limited. This provides binding
decision to the party which will help in having a relevant decision. Arbitration will help parties

to have speedy disposal of the case and also there will be flexibility to choose the independent
and unbiased arbitrator.
CONCLUSION
It is concluded from the above report that business law is like an umbrella which have
many legislations under this that help in regulating the working of the businesses in the country.
Companies which been incorporated under the companies act of 2006 are bound to follow the
rules and laws of it. There are many roles or duties which the sole director plays for the benefit
of the company so that it can prohibit the legal consequences. Moreover the employment law is a
vast field which have several legislations under it. The employment rights act provide the
process of dismissal of the employee and the termination of the contract of employment. It is
further concluded that there are many alternate dispute resolution apart from litigation which can
be used by the parties. It offers speedy disposal of cases and the process is also time and cost
effective.

REFERENCES
Books and Journals
Botes, J., 2017. New Year's resolutions for employers: employment law. Without
Prejudice. 17(2). pp.10-11.
Cauffman, C., 2019. Civil Law Liability of Parent Companies for Infringements of EU
Competition Law by Their Subsidiaries. Available at SSRN 3331083.
de Flamingh, J. and Connolly, J., 2019. Employment law: Workplace surveillance and
improperly obtained evidence. LSJ: Law Society of NSW Journal. (61). p.74.
Exon, S.N., 2017. Ethics and Online Dispute Resolution: From Evolution to Revolution. Ohio St.
J. on Disp. Resol.. 32. p.609.
Gaspar, A.M., 2019. Theoretical and practical issues related to dissolution and liquidation of
companies. Conferința Internațională de Drept, Studii Europene și Relații
Internaționale. 7(VII), pp.626-634.
Goldberg, J. and Wilkinson, G., 2018. Perceptions of the amendments: employment law. Without
Prejudice. 18(4). pp.46-46.
Hayes, H., 2018. Is Time Really up for Sexual Harassment in the Workplace: Companies and
Law Firms Respond. Perspectives. 26. p.3.
Kariuki, F., 2020. Traditional Dispute Resolution Mechanisms in the Administration of Justice
in Kenya. Francis Kariuki,'Traditional dispute resolution mechanisms in the
administration of justice in Kenya’in ES. Nwauche (ed.) Citizenship and Customary
Law in Africa, Centre for African Legal Studies, pp.33-68.
Oseni, U.A. and Omoola, S.O., 2017. Prospects of an online dispute resolution framework for
Islamic Banks in Malaysia. Journal of Financial Regulation and Compliance.
Singer, L., 2018. Settling disputes: Conflict resolution in business, families, and the legal system.
Routledge.
Strickland, B., 2019. Employment law a labor of love for Brooks-Williams. Wisconsin Law
Journal.
Yasan, M., 2018. The Essentials of the New Legal Regime of Private Limited Companies in
Turkish Company Law. Annales Universitatis Apulensis Series Jurisprudentia. 21.
p.425.