Legal Framework and Solutions for Kango: A Business Report

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Legal Framework and
Legal Solutions
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Contents
Introduction................................................................................................................................4
Task 1.........................................................................................................................................5
Circumstances of Task 1........................................................................................................5
Nature of Legal System..........................................................................................................5
Principle Elements of Legal System......................................................................................5
Evaluation of Effectiveness of English Legal System...........................................................5
Law making process...............................................................................................................6
Figure 1.1...............................................................................................................................6
Figure 1.2...............................................................................................................................7
Laws that may affect operations of business..........................................................................7
Task 2.........................................................................................................................................8
Circumstances of Task 2........................................................................................................8
Gig Economy.........................................................................................................................8
Comparison between self-employed and employed..............................................................8
Table 2.1.................................................................................................................................9
Status of Couriers of Kango...................................................................................................9
Impact on Business................................................................................................................9
Task 3.......................................................................................................................................10
Circumstances of Task 3......................................................................................................10
Evaluation of Organisations.................................................................................................10
Pros of registering the business as Limited Liability Company..........................................10
Task 4.......................................................................................................................................12
Circumstances of Task 4......................................................................................................12
Alternate Dispute Resolution (ADR)...................................................................................12
Table 4.1...............................................................................................................................12
Comparison between litigation and methods of ADR.........................................................12
Table 4.2...............................................................................................................................13
Effect to ADR......................................................................................................................13
Conclusion................................................................................................................................15
References................................................................................................................................16
Books/Journals/Articles.......................................................................................................16
Case Laws............................................................................................................................16
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Online References................................................................................................................16
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Introduction
In the present scenario, Kango (K) is an organisation, which deals with clients and restaurants
by delivering meals. The Kango is established business of Jay and Alex, which is located in
Ealing of London suburbs. After being successful in Ealing. Jay and Alex are planning to
expand the business in other suburbs of London but there are several issues, which are faced
by them. There are several complaints filed by the customers and It suppliers have filed a
litigation against them. Hence, this report delivers the information of legal framework of the
UK’s legal system and provide legal solutions to deal with the conflicts.
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Task 1
Circumstances of Task 1
The first task is to serve the operations staff with the knowledge of principles of the English
Legal System to the operations staff and this part of the task evaluates the effectiveness of the
law system. The section of this report elaborates the law making process precisely and it
further deliberate the legislation, which may affect the functions of K’s business.
Nature of Legal System
The English Law system has been adopted by England and Wales. The English legal system
mainly comprises of Civil and Criminal Law. Both the laws have individual branch of courts.
Civil suits are initiated in the County Courts and appeal of which can be done in Court of
Appeals (Civil Division). Depending upon the nature of the offence, the criminal proceedings
are carried on in Magistrate’s Court or in the Crown’s Court and appeal of which can be done
in the Court of Appeals (Criminal Division). The Supreme Court has the absolute authority
and precedents delivered by it has to be followed by all the inferior courts (Wills, 2017).
Principle Elements of Legal System
 Statutory Legislation that includes Acts, by-laws and regulations.
 Where there is no specific regulation in the Statute then such conflict is resolved by
applying Common Law.
 Law of Equity prevails.
 Principles of Natural Justice is followed while deciding a case.
 Although, the Constitution is not codified but there is clear separation and delegation
of powers.
 Legislation, Judicial Precedents, European Law and International conventions are the
fundamental sources of English Law System (Wilson, et. al., 2018).
Evaluation of Effectiveness of English Legal System
Notwithstanding with several criticism faced by the English system regarding its reluctance
in reforming its system but the civil judiciary system has been effective and there has been no
influence of external factors on the Judiciary System. The civil and criminal courts are
working effectively in enforcing the laws. In the recent times, the crime rate has also been
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controlled effectively. However, the legal system needs major reforms for enhancing its
effectiveness.
Law making process
The Law making process of the UK is initiated with a proposed document, called “Bill”, the
bill can be of two types:
Figure 1.1: Types of Bills
The bill is first introduced in the House of Commons and then with the forward backward
flow of bill within House of Commons and Lords, finally by obtaining the Royal Assent, a
bill becomes Act/Law (Darrenumney.com, 2019).
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Figure 1.2: Making of Law
Laws that may affect operations of business
There are number of legislation that may influence the business of K, but major legislation
that may have significant influence on K’s business are:
 Contract Law: Contract is a legal agreement that is used in the day-to-day operations
of every business. The terms of Contract imposes liability on both the signatories of
the contract. Although, a contract can be expressed or implied, written or oral, but for
evidentiary purposes the contracts is generally formed in the written form. The
Contract Law is regulated by the Common Law in England and Wales.
 Company Law: The Company Act 2006 regulates Companies incorporated in the UK.
The Act describes the types of company, as well as it states the rights of the
stakeholders of the company (Mason and Harrison, 2015).
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Task 2
Circumstances of Task 2
Kango has designated its couriers as self-employed but there are number of articles which
claimed that the couriers of the K are not self-employed rather employed. The courier
services that are working for Kango, are required to wear uniforms designed by K.
Additionally, the couriers need to sign a contract that obligates them to follow the code of
conduct. This part evaluates the status of K’s couriers by drawing out the comparison
between self-employed and employed employees.
Gig Economy
Gig economy connotes to the economy where the workers are paid based on performing gig.
With the introduction of this economy, workers are facilitated with flexible working hours
and these employees are available in short notice. The major example of the gig economy is
Uber. Although, these employees are provided with employee benefits but there several
government policies that aims at protecting the rights of the workforce (Grimshaw, et. al.,
2017). For instance, Good Work Plan assures the contractors to have a stable contract after
completion of 6 months of working.
Comparison between self-employed and employed
Employed Self-Employed
Freedom and Risk They need to work
according to schedules but
they do not have to bear
risk.
Enjoys freedom but has
significant risk involved.
Expenses The expenses are borne by
the employers.
Paid by themselves.
Social-Benefits 13% of the salary is
contributed to the Social
Security that aims at
assuring that the social
status of the employee is
taken care of.
They pay 20% of the net
income for obtaining the
social insurance.
Paid Leaves Enjoys benefits of Leaves are not paid.
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unemployment and paid
leaves.
Illness/Accidents No loss of income. Loss of Revenue.
Position Cannot control the business
and has to abide by the
terms of employment
contract.
Responsible for monitoring
the business are in-charge
for operations of business.
Table 2.1: Comparison between self-employed and employee
Status of Couriers of Kango
As designated by Kango, the status of the couriers are self-employed, but it has been
challenged with the publication of number of articles claiming that the couriers are not self-
employed. As stated under the recent famous cases of Pimlico Plumbers vs Gary
Smith or Uber vs Aslam & Others, the Court has set out the standards which defines the
status of the employees. In both the cases, the Court decided that the contractors are
employed and not self-employed and hence must be provided with the benefits of
employment.
The Couriers wore the Uniform which was engraved with the brand name of Kango and were
asked to follow the code of conduct. Hence, after applying the rules stated by the Court in the
case of Pimlico Plumbers vs Gary Smith, the status of the couriers of Kango is not self-
employed, rather employed.
Impact on Business
Here, for evaluating that how the status of couriers may affect the business of K, the case of
Uber vs Aslam & Others is referred, The Uber controlled the route that is followed by the
taxi-drivers and set the charges and hence, it was decided by the court that the taxi-drivers
were not self-employed. It is with the case of couriers of K, the couriers has to follow the
code of conduct. Moreover, with the above discussion, it is quite clear that the couriers are
employees and hence are liable to enjoy benefits given by the Employment Rights Act 1996.
Kango has to abide by the rules of Employment Law and have to furnish employment
benefits to K.
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Task 3
Circumstances of Task 3
The business is facing issues and hence as per accountant’s advice, Jay and Alex are
considering registering the business as Limited Liability Company. The task is designed to
evaluate if registering the business as Limited Liability Company can be treated as alternate
business solution. The evaluation can be done by focusing on the advantages of a registered
Limited liability Company.
Evaluation of Organisations
 Sole Trader: In this kind of business organisation, single person is liable for managing
and monitoring the business operations. The sole-trader alone undertakes unlimited
liabilities and can raise funds by investing his own money or by applying for loan in
his own name. In case of any issue related to the business, sole-trader has to himself
has to borne the liability.
 Partnership: In such kind of organisations, two or more persons carries on a common
business with the objective of reaping profits. Partners invest in the business as per
the decided share capital. The partners also undertake unlimited liability but the
advantage of this kind of organisation that the risk can be shared among the partners.
The con is that two or more persons manage the business; hence, there are
circumstances where there may be delay in making decision.
 Limited Liability Company: This kind of organisation do not imposes any personal
liability to its owners. The liability of the shareholders are limited to the un-paid
amount of shares and the assets of the owners are free from risk. The investment is
made in the organisation with raising public funds. The main advantage of the
company is that huge investment can be made and there is no personal liability.
Directors and executives is responsible for the management and monitoring the
operations of company (James and Hodgkinson, 2015).
Pros of registering the business as Limited Liability Company
Following are reasons why K must consider the advice of the accountant and how registering
Kango as Limited Liability Company can be treated as business solution.
 Personal Liability is Limited
 Flexibility in transferring of ownership
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 Flexibility of Management
 Business gains perpetual life
 Tax Advantages
 Can sue and can be sued with its own name
 Facilitates dual relationship
 Privilege of borrowing huge funds
 Equity Funding
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Task 4
Circumstances of Task 4
The IT suppliers of the company are in the prolonged dispute with K. Because of which, the
litigation was initiated but K is reluctant of initiating the legal proceedings as it consumes
time and lot of money is invested in carrying out the litigation process. The report describes
and differentiates the methods of Alternate Dispute Resolution with the process of Litigation.
In the last, it suggests how K can give effect to the discussed ADR methods
(Hoganlovells.com, 2019).
Alternate Dispute Resolution (ADR)
Mediation, negotiation, arbitration and conciliation are the methods through which a dispute
can be resolved when someone does not want to initiate the litigation. The methods of ADR
are expeditious and cost-effective. It facilitates the parties with more creative solutions and
the parties to the dispute can resolve the dispute at the place and time of their choice. The
parties are sometimes is enforced by law also to resolve the dispute with the process of ADR.
Methods of
ADR
Arbitration Conciliation Negotiation Mediation
Third Party Adjudicator Evaluator or
Facilitator
Facilitator is the
neutral party
Facilitator is the
neutral party
Proceeding’s
Nature
Parties are bind
legally
Parties are not
bind legally
Parties are not
bind legally
Parties are not
bind legally
Formality level Formal Informal Informal Informal
Confidentiality
Level
As proposed by
law
As proposed by
law
Trust is the
basis of
confidentiality
Trust is the
basis of
confidentiality
Table 4.1: ADR Methods
Comparison between litigation and methods of ADR
K does not want to initiate the process of litigation; hence, the comparison is made between
the litigation process and ADR for evaluating the effectiveness of ADR (Wang, 2014).
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