University Assignment: UK Legal System and Business Law - BLA

This assignment delves into the intricacies of the UK legal system and its implications for businesses. It begins by outlining the primary and secondary sources of law in the UK, including statutes, common law, and EU laws, as well as commentaries and legal journals. The assignment then explores the process of law-making in the UK Parliament, highlighting the roles of the government and political parties. It further examines the impact of statutory and common law on businesses, covering crucial areas such as company law, employment law, and contract law. The assignment also addresses the legal requirements and standards that organizations must adhere to, referencing legislation, regulations, and standards like UK GAAP. Furthermore, it analyzes the differences between sole traders and Limited Liability Companies (LLCs) concerning national insurance and tax implications, providing insights for business owners. It also explores the legal rights and responsibilities of directors, the application of the Equality Act 2010, and the implications of redundancy and data protection laws. The assignment concludes by examining the working time regulations and the rights of employees regarding overtime. This assignment provides a comprehensive overview of the UK legal landscape and its practical applications for businesses and employees.

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Business Law Assignment
Legal Systems
20-Nov-17
(Student Details: )

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Contents
Task 1...............................................................................................................................................3
Q.1...............................................................................................................................................3
Q.2...............................................................................................................................................3
Q.3...............................................................................................................................................4
Q.4...............................................................................................................................................5
Q.5...............................................................................................................................................5
Task 2...............................................................................................................................................6
(a).................................................................................................................................................6
(b).................................................................................................................................................7
(c).................................................................................................................................................8
(d).................................................................................................................................................9
References......................................................................................................................................10

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Task 1
Q.1.
In UK, the principal source of law includes the statutes, which are the legislations or the
acts of the parliament; the common law, which are the laws which have been made through the
principles which have been established in the cases over time; and the laws of the European
Union, in context of the treaties and the directives issued (In Brief, 2017). The secondary sources
of laws are the commentaries which are referred to and include law journals, legal
encyclopaedia, textbooks, and parliamentary and non parliamentary documents (SOAS, 2017).
Q.2.
The laws in UK are passed by the Parliament, which are the result of the proposals made
by the government. These proposals are aimed at addressing a particular issue or shaping the
society. The agenda of the government is informed by the general election. Upon being a part of
the government, the political parties bring the events to the attention of the minister. And based
on the consideration of different factors, the laws are formed (UK Parliament, 2017).
As has been stated earlier, the common law and the statutory laws are the two sources of
law in the nation. The statutory laws are originated from the Parliament, thus the government
contributes in their making. An example of statutory law is the Employment Rights Act, 1996,
where the act is divided into chapters, and each chapter has its own provisions. It is formed
through a consultative or a green paper, followed by draft proposals or the white paper, and
before becoming the act, it remains a bill, and this transition from bill to act is made through the

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Royal Assent (In Brief, 2017). The statutory laws are applied by the courts based on the principle
of statutory interpretation.
The common laws are the cases which are used as the law owing to the judicial decision
making. A judgement of the case covers its factual description, the legal position, i.e., the ratio
and the decision. This ratio becomes the binding precent for such courts which are below the
hierarchical level of courts of England and Wales. However, the system does have flexibility in
context of the ability of overruling the judgment of a lower court, or distinguishing one case
from another. Thus, on the basis of the analysis of the entire case, the common law is applied in
the courts (In Brief, 2017).
Q.3.
The legal system of the nation is quite a comprehensive and detailed one, where every
aspect of it is detailed from the formation of an act, to its amendments or its end through being
repealed. The amendments or the repealing of acts is done owing to the reforms and
developments in the particular area of the act or in the changed judgments. Changes are also
anticipated in the present context owing to Brexit. Once the terms of the same are confirmed, the
laws of the EU would no longer be applicable in UK. This would also help in giving away with
the problems which are often faced in the nation due to clash between the EU norms and the
norms of the nation, and in the issue of parliamentary sovereignty. A leading example of the
changes reforms leading to changes in the part of the legal system of the nation, i.e., in the act
was the amalgamation of the different anti-discriminatory acts of UK in a single legislation, i.e.,
the Equality Act, 2010 (Elliot & Quinn, 2017).

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Q.4.
Irrespective of the jurisdiction in which the business works, there are certain similar laws
which apply on the businesses and impact them in specific manner. For UK, the statutory laws
relating to companies and employment, in addition to the common law in line with contract law
play a crucial role. The companies in UK are incorporated, governed and even ended through
winding up based on the Companies Act, 2006 and its related regulations. Where this is not
followed, different consequences can be raised which relate to the company or even the ones
who run the business of the company, i.e., its directors. Hence, the company laws have to be
strictly followed to avoid any civil or criminal liabilities (Hannigan, 2015).
When it comes to the employment laws, the situation is similar. Businesses have to avoid
any instances of discrimination on the basis of age, gender, race or any other criteria towards any
employee or potential employee (Hardy & Butler, 2016; Gennard & Judge, 2005). For instance,
in Kwele-Siakam v The Co-operative Group Ltd UKEAT/0039/17/LA, liabilities were raised
against the company for racial discrimination based on provisions of Equality Act, 2010
(Employment Cases Update, 2017a). Nearly every business activity requires a contract to be
drawn which makes it more important for the companies to properly follow the common law
provisions of contract law. This means that the companies have to properly drawn out the terms
of the contract, ensure the same is not breached and do not use any vitiating factors in the same,
which could result in liabilities for the business (Andrews, 2015).
Q.5.
The work of the organizations is to be conducted on the basis of certain requirements
drawn out by the government, regulatory bodies or the professional bodies. These are biding

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based on their jurisdiction, work being conducted, applicability and different other factors. The
legislations are the acts which have to be followed by the business and these legislations are
supported by their regulations which cover the detail of the requirements covered under a
specific section of the legislation. For instance, Equality Act, 2010 is to be followed in context of
employment law by the organizations, which is accompanied by regulations like Equality Act
2010 (Disability) Regulations, 2010 and Equality Act 2010 (Specific Duties) Regulations, 2011
(Hepple, 2014). Standards are the minimum requirements which have to be met for undertaking
certain activities. For instance, UK GAAP covers the financial reporting standards which have to
be followed by the organizations (Deloitte, 2017).
Task 2
(a)
There are various forms of conducting business in the nation and the two key forms
include sole trader and Limited Liability Company (LLC). A transformation from sole trader to
LLC requires some key points to be taken under consideration. Within the nation, the two
business forms have differences in national insurance, and tax bands and rates. When it comes to
the limited companies, the National Insurance of both employer and employee becomes payable
on the salaries and bonuses of the directors. The national insurance charge is high in comparison
to the one paid by a sole trader, where for 2017-18, Class 2 national insurance contributions are
paid at £2.85 for each week and for Class 4 the contributions on profits are paid over £8,164
(MadeSimple, 2017).

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When it comes to the taxation issues, there is considerable change in between sole trader
and companies. A sole trader has personal allowances of £11,500, which shows that this much
sum can be earned before any income tax is paid. For 2017-18, the taxation remains 20%, 40%
and additional 45% based on income limits of £33,500, between £33,501 and £150,000, and over
£150,000. When it comes to the companies, the rates are different and the losses can be carried
forward which cannot be done in sole trader, and these can be set against future profits or against
the profits of previous years. For sole trader, these have to be set off for the same tax year only
(MadeSimple, 2017).
Higher tax liabilities and national insurance burden should only be undertaken where
Andrew is sure of good returns in business. Where Andrew decides to go out of UK for setting
up this company, the tax rates and the insurance scheme would change again. Thus, there is quite
a difference between sole trader and LLC when it comes to national insurance and tax purpose
and it is advised to Andrew to keep these points in mind before incorporating the business as
LLC.
(b)
A director in UK has the entitlement to get the pay which they have under the drawn
contract. So, where a contract is formed between the company and the director to give certain
service where the director would be paid certain salary or other benefit, they become entitled to
such pay. This can be approved through an ordinary resolution (Company Law Club, 2017). In
this context, it is a standard to disclose the remuneration of the directors before the company as
this would help in setting clarity in the mind of the different stakeholders regarding the standards
followed, particularly for the employees. Where the company struggles to survive, different

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measures like restricting can be adopted to better the situation of the company and when all these
fail, the company has to be wound up.
Thus, it is advised to Thomas that he would be entitled to the pay which is covered under
his service agreement and to disclose the same to maintain the faith of the employees. Also,
Thomas should make constant efforts to ensure that the company does not lead to its winding up.
(c)
The Equality Act, 2010 makes it unlawful to discriminate on the basis of the sex/ gender
of the person (Sargeant, 2013). This is in addition to the Equal Treatment Directive 2006/54/EC
which continues to apply in UK for now, where equal opportunity has to be given to both males
and females for employment and occupation opportunities (Official Journal of the European
Union, 2006). Where this is not done, the employer can be held liable for discrimination.
Rajaratnan v Care UK Clinical Services Ltd UKEAT/0435/14/DA saw the appeal of indirect sex
discrimination being upheld with costs (Employment Cases Update, 2017b).
Where an employee is dismissed from employment owing to the need of the employer to
reduce their workforce, it is referred to as redundancy. When an employee is made redundant,
they are required to be given redundancy pay, a notice period, consultation with employer,
options of moving to another job and time period for finding an alternative job. Where this is not
done, a claim for unfair dismissal can be made by the employee (UK Government, 2017a).
The Data Protection Act, 1998 puts an obligation on the employees to keep the personal
data of the employees safe and secure (UK Government, 2017b). The same has to be used in a
limited, fair, lawful manner where adequacy and relevancy is applied. The personal information
of an employee cannot be held longer than is absolute necessary (UK Government, 2017c). After

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ten years of dismissal of Paul, this information should not have been held by the company and
yet they held it. To make the matters worse, they leaked this information, which contravened the
Data Protection Act.
Thus, for hiring Paul instead of his wife on the basis of man being stronger than woman,
TMT would be liable. Also, for not giving the Paul the option to exercise his rights in context of
notice period and redundancy pay, he can sue the company for unfair dismissal. Lastly, Paul can
also bring actions against the company for breach of the Data Protection Act, where his personal
information was not only held in unlawful manner but the same was also leaked.
(d)
The working time regulations provide that a person cannot be made to work for over 48
hours in a week on average. An employee cannot be forced to work overtime where the contract
does not provide the same. Even when working overtime is covered in the employment contract,
an employee cannot be forced to work for over 48 hours based on the work time regulations.
Only when the employee signs the written “opt-out” agreement can the employee be forced to
work overtime (NI Direct, 2017).
In the given case, no such “opt-out” agreement had been signed and so, Michael cannot
be forced to work overtime as the employment contract never mentioned this clause. This would
allow him to leave the present job and join another. Thus, it is advised to MPP Ltd to get the
other employees to sign the “opt-out” agreement and refrain from making a case against Michael
for not serving the notice period.

BLA 10
References
Andrews, N. (2015). Contract Law (2nd ed.). UK: Cambridge University Press
Company Law Club. (2017). Are directors entitled to be paid?. Retrieved from:
http://www.companylawclub.co.uk/are-directors-entitled-to-be-paid
Deloitte. (2017). UK GAAP. Retrieved from: https://www.iasplus.com/en-gb/standards/uk-gaap
Elliot, C., & Quinn, F. (2017). English Legal System. London: Pearson Education Limited.
Employment Cases Update. (2017a). Kwele-Siakam v The Co-operative Group Ltd
UKEAT/0039/17/LA. Retrieved from:
https://www.employmentcasesupdate.co.uk/site.aspx?i=ed35968
Employment Cases Update. (2017b). Rajaratnan v Care UK Clinical Services Ltd
UKEAT/0435/14/DA. Retrieved from:
https://www.employmentcasesupdate.co.uk/site.aspx?i=ed27674
Gennard, J., & Judge, G. (2005). Employee Relations (4th ed.). London: Chartered Institute of
Personnel and Development.
Hannigan, B. (2015). Company law. Oxford: Oxford University Press.
Hardy, S., & Butler, M. (2016). European Employment Laws: A comparative guide (3rd ed.).
London: Spiramus.
Hepple, B. (2014). Equality: The Legal Framework. West Sussex: Bloomsbury Publishing.

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In Brief. (2017). English Law: An introduction. Retrieved from: https://www.inbrief.co.uk/legal-
system/english-law/
MadeSimple. (2017). Sole Trader Vs Limited Company: Advantages and Disadvantages.
Retrieved from: https://www.companiesmadesimple.com/sole-trader-v-limited-
company.html
NI Direct. (2017). Overtime. Retrieved from: https://www.nidirect.gov.uk/articles/overtime
Official Journal of the European Union. (2006). Directive 2006/54/EC Of The European
Parliament And Of The Council. Retrieved from:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?
uri=OJ:L:2006:204:0023:0036:en:PDF
Sargeant, M. (2013). Discrimination and the Law. Oxon: Routledge.
SOAS. (2017). Sources of UK Law. Retrieved from:
https://www.soas.ac.uk/library/subjects/law/research/file70249.pdf
UK Government. (2017a). Redundancy: your rights. Retrieved from:
https://www.gov.uk/redundant-your-rights
UK Government. (2017b). Personal data an employer can keep about an employee. Retrieved
from: https://www.gov.uk/personal-data-my-employer-can-keep-about-me
UK Government. (2017c). Data protection. Retrieved from: https://www.gov.uk/data-protection
UK Parliament. (2017). How laws are made. Retrieved from:
http://www.parliament.uk/education/about-your-parliament/how-laws-are-made/

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