Pegasus Business Law: UK Operations, Employment, and Company Structure

This report offers a comprehensive analysis of UK business law, specifically addressing the legal considerations for a company like Pegasus. It begins with an overview of the UK legal system, including its sources of law and the division of legal systems within the United Kingdom. The report then delves into employment law, using the landmark case of Pimlico Plumbers v Gary Smith to determine the employment status of Pegasus' self-employed drivers. The analysis concludes with a discussion of company formation, differentiating between private and registered companies and outlining the steps involved in establishing each type. The report highlights the key legal issues relevant to Pegasus' operations, providing a practical understanding of the legal framework governing businesses in the UK.

BUSINESS LAW

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................3
TASK 3............................................................................................................................................4
TASK 4............................................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business law is the law that governs the business activities of commercial nature. It is
also called “mercantile law or commercial law”. Business law in UK operates in two areas, first
is to regulate various corporate entities through their respective laws and second being regulation
of contract for commercial transactions (Adachi, 2013). This report covers the outlook of UK
business law system to solve the disputes Pegasus is facing currently. This report will enable
Pegasus to have a wide knowledge of the areas of Business law that can be applicable on their
business entity before it starts a business in UK
TASK 1
Division of law: There exist three separate legal systems in United Kingdom, for
England and Wales, Scotland and Northern Ireland. The joining in the European Union by UK
has made the requirement to implement European Union legislation into the UK law to have
jurisdiction over the matters of EU law. The Queen (Crown) has the power to make laws to be
made applicable in UK but the implementation of the law is exercised by the government. There
is no single written constitution that governs UK. The legal system consists of statute law, case
law and constitution conventions. The Parliament in Westminster has power to make laws but
the ultimate power is in the hands of Queen. The Constitutional Reform Act, 2005, made a
divided the executive and judiciary powers by appointing Lord Chancellor to head the judiciary
to the Chief justice and constitution of judicial appointments committee to for the appointment of
judges. The UK parliament consists of two houses, House of Commons and the House of lords.
Public and private bills are presented before both for their approval (Ayios, 2018).
Sources of law:
1. Primary Sources It is referring to bare act which has not been used and interpreted by
anyone before. It is the original form of law.
 Case Law: A case law contains the facts, issues and judgement/decree etc. passed by the
court which is reliable information of UK law. One can rely on legal principles which
were considered as at the time of passing the judgement by the court. The decisions by
way of judicial pronouncements are used to decide on future case laws.
 Legislation: The legislation of UK is not completely in written form; it is partly written.
The laws are passed by the Parliament for that part which is written in the constitution.
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Legislation are the laws that governs the United Kingdom. Only the Parliament has the
authority to enact laws that will be applicable in UK. The Parliament being the supreme
authority therefore the acts passed by it cannot be challenged before any court as all other
courts are sub-ordinates (Deakin, Johnston and Markesinis, 2012).
 European law: The regulations, directives, decisions, recommendations and opinions of
European law is itself a primary source of law. These can be used to form an
understanding of the whole European law applicable in UK.
2. Secondary Sources: These are the information that has been already used before.
 Legal encyclopaedias: Such encyclopaedias contain the detail information about various
laws that have been interpreted before and can be used in research work. Halsbury's laws
are an authentic encyclopaedia of law that prevails in England and Wales. Its contains
important case laws, legislation and their interpretation (Dolzer and Schreuer, 2012).
 Parliamentary publications: The parliamentary publications include the history of the
law enacted and the reason for which it was enacted. Such information can be found in
command papers, the debates of the parliament and the report/minutes of various
committees.
 Non-parliamentary publications: These are reports and papers of various government
departments.
 Law Commission: The main aim of law commission is to review the law and make
recommendation required to improve the legal system in the UK. The commission
consult with public, experts and interested parties to have their point of view on the
existing laws. The laws are reviewed to make it fair, simple and cost effective and to
repeal the unnecessary and outdated laws (Folsom and et. al., 2012).
 Law Journals: These contain the information given in the form of academic arguments,
newsletters and various articles regarding the legal issues.
 Textbooks: These can be used for extensive information about the legal matters. The
textbooks written by various authors can be a good source of information that can be used
for an interpretation of laws, research work etc., The books often contain summaries of
which can provide an overview of the particular area of law.
The major problem in the UK legal system is that there is no written constitution. The
Queen is the supreme authority to make decisions regarding the applicability of the law and
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make important decisions. The intervention of government is minimal which makes its legal
system weak. There is not a single law for the whole United Kingdom, Wales and Northern
Ireland has its own judiciary systems. The differences in the judiciary system can make the
whole system complex (Hamilton, 2015).
A bill is required to be presented before both the houses of parliament for their approvals,
and if the bill gets passed when it is approved by the majority by the houses of parliamentary. A
bill becomes a law when it receives the Royal Assent of the Queen. After receiving the assent, it
is called an Act. The detail process includes first reading, second reading, committee stage,
report stage, third reading and later stages which is the Royal assent stage.
A bill can be introduced by any member of Parliament. Further, bills are distinguished
between bills that are passed and agreed due to government policy and other bills are called
Private Member's Bills. An Act is a primary legislation and confers power to a government
minister to make amendments in the laws. Such amendments are called secondary legislation.
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Pegasus can know the applicability by going through the definition of the Act, the areas
and nature of business covered in the act, effective date, amendments, the nature of transactions
on which the law will be applicable and the consequences of the contravention (Hayek, 2012).
TASK 2
The case of Pimlico Plumbers v Gary smith was a landmark case for the worker union in
UK. Pimlico Plumbers was a company located in United Kingdom and Gary Smith was a self-
employed plumber there. Smith worked in the company for six years. Smith had a heart attack
and asked the company to reduce the working hours and the company refused to reduce it and
asked to leave the company work. He filed a case of unfair dismissal as an employee,
discrimination, denial of sick pay and holiday pay. The Equality and Human Rights Commission
reimbursed the costs to Gary.
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It was found that Pimlico Plumbers were rigid on the terms of their company and did not
consider Gary Smith as employees. The allegations by Pimlico Plumbers was rejected by the
lower court. The company considered the contract terms, but the court rejected its validity on the
ground that it did not reflect the reality of the workplace at the company.
The judgement of Supreme Court in the Pimlico Plumbers case states that a self-
employed person will be regarded as a worker if falls in the criteria as cited by the Supreme
Court. The case filed by the Pimlico Plumbers against a self-employed plumber Gary Smith,
arguing that a self-employed plumber cannot be considered as a worker of the company. Pimlico
lost the case to the Supreme Court, Employment Appeal Tribunal and Court of Appeal. These
courts awarded the judgement in the favour of Gary Smith. According to the judgement of
Supreme Court and the two other courts, if Gary is self-employed with some valuable
employment rights including holiday pay, working on contract basis, the company putting
administrative control, deciding the amount he will be paid, putting restriction on the
performance of similar work for the competitors in case he move out of the company, wearing
the uniform of the company he is working for etc. the he should be considered as a worker
(Macaulay, 2018).
In case of Pegasus, the self-employed drivers will be considered as “worker” since are
working on a contract basis, the drivers need to wear Pegasus' uniform, for substitution of driver
prior permission of Pegasus will be required, the delivery details of the driver are being
controlled by the company's control centre etc. The status of the drivers is determined by the
facts of the Pimlico Plumbers from the judgement passed by the Supreme court. It was clearly an
employer- employee relationship between the Pegasus and their self-employed workers.
Employment law is an integral part of law governing employer as well as employee
s of the organisation and helps in maintaining god relationship among them. basically, it refers to
business entity which holds more than one worker then these business is able to use employment
law. Likewise, Pegasus bought new vans for delivery and hired a number of drivers to run these
vans. So, through employment law the company is trying to develop a bond between the
company and drivers so that if, there are any uncertainties arising could be solved (Hammond,
2012).
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TASK 3
Private Companies: A private company is a company without the requirement minimum
share capital, restricts the number of shareholders to 50, and does not make any invitation to
public for the subscription of shares. The liability of the shareholders is limited to the amount of
the shares. Moreover, the private company is that company which is not the public company and
the control as well as the majority of equity share capital held in the hands of private owners or
the private shareholders. Generally private companies offer the shares for subscription to the
private shareholders or the specified group of private shareholders.
The steps involved in formation:
1. Decide a suitable name which does not resemble the name of the previously registered
company.
2. At least one shareholder is required.
3. Preparation of Memorandum and Articles of Association.
4. The register in which the percentage of holding of each shareholder will be mentioned.
In the case of Salomon v Salomon Co. Ltd., the doctrine of separate legal entity has
emerged from this case. Salomon was a businessman who started the business according to the
Companies Act, 1862. He made his family the shareholders of the company by giving each of
them a share of his company. The court has passed its judgement stating a company in the eyes
of law is a separate from its members and can not be held as an agent or a trustee of the
subscribers.
Registered Company: A registered company means a company whose name is recorded
in the register of Registrar of Companies. An overseas company carrying business through a
branch or place of business in UK is required to get itself registered under the UK company law.
Formation of registered company:
1. The company shall decide the type of the company. The types could be private, public,
LLP etc. depending on various factors.
2. The company must select a name. The name must not resemble the name of a previously
registered company. Moreover, a new limited company is required to get approval from
the Companies House.
3. The following information is required to be furnished to the Registrar. The information
are as follows:
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 The name of the company.
 A UK registered office which will be used by Companies House to communicate.
 The purpose of formation of company- at least one SIC code explaining the activities is
proposed to carry in future.
 Share capital structure and details.
 Details about the company's directors.
 Details about the shareholder who are subscriber to the MOA.
Preparation of Memorandum and Articles of Association: The company is required to
prepare memorandum describing the objectives of the company for which it is formed and article
will contain the bye-laws that the internal management is expected to follow. Online facility of
filing is given.
File the incorporation with Companies House: The company shall file form IN01 along
with supporting documents and prescribed fees. The documents on the website of Companies
House will be processed within 5 working days from the date of receipt.
After the approval to various documents, the name of the company will be recorded with
Companies House. After recording of the name, the company shall hold first board meeting
within the initial weeks of formation (McAdams and et. al., 2015).
The company on registration will required to maintain register of directors, register of
directors' residential addresses, register of secretaries, register of members, register of people
with significant control, register of allotment of shares, register of share transfers and register of
mortgages and charges.
Share certificates will give to the shareholders by the directors.
Role of a director:
An organisation's director is basically elected and nominated on the basis of skills and
competencies which has been carried by an individual. Within a company, role of a director is
given beneath:
 Determining and implementing new policies within an organisation is being considered
as one of vital role of a director.
 Developing meetings, conferences and preparation of annual meeting of shareholders
 Maintaining and keeping records is another role of an individual (role).
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 Binding an organisation, making contracts with the suppliers and dealing with many
complex situations within a company.
TASK 4
Pegasus has discovered that the litigation process in court in expensive, time consuming
and confusing.
Alternate Dispute Resolution is a method of settling the disputes outside the courtroom.
This can be done through evaluation, negotiation, conciliation and arbitration. The most opted
forms of ADR are arbitration and mediation. ADR is a less time consuming and easy process.
Negotiation is an element that is done to resolve the disputes.
Mediation is an informal way to resolve without the litigation. There is a person called
mediator, who negotiates, communicate with parties to know the facts more clearly and work his
ways out to resolve the disputes. This form is basically used for the settlement between investors
and their stock brokers (Marston, 2013).
Arbitration is process of amicable settlement without the intervention of court. In this
process, an arbitrator is appointed who listens to both the parties, judge the facts and then pass an
arbitration order. The process does not take much time to reach a conclusion. It a fast way to
resolve the dispute. The arbitrator is appointed by the parties to the disputes. The decision of
arbitrator is legally binding same as any judgement made by the court. Also, the arbitration
awards or judgement made internationally can be challenged in UK and vice-versa. Further, it is
appropriate in solving the disputes of technical nature and where confidentiality is prime.
The suitable form of resolving the disputes of Pegasus would be Arbitration process. It is
cost-effective and time saving.
CONCLUSION
From the above project report it has been analysed that there are various types of
regulations that are imposed by the regulatory authorities of a country for the effective execution
of the businesses. It is very important for the organisations to operate business according to the
law so that a good market image can be established. Business law is the set of principles and
regulations that are vital to be followed by the business entities to execute the business
appropriately and smoothly. If a company is not able to fulfil all the legal requirements than it
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can harm the market image of the company and legal authorities will also take strict action
against that company.
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REFERENCES
Books and journals
Adachi, Y., 2013. Building big business in Russia: The impact of informal corporate governance
practices. Routledge.
Ayios, A., 2018. Trust and Western-Russian business relationships. Routledge.
Deakin, S. F., Johnston, A. and Markesinis, B., 2012. Markesinis and Deakin's Tort Law. Oxford
University Press.
Dolzer, R. and Schreuer, C., 2012. Principles of international investment law. Oxford University
Press.
Folsom, R. H. and et. al., 2012. International business transactions: a problem-oriented
coursebook. ThomsonReuters.
Hamilton, R., 2015. Hamilton and Freer's the Law of Corporations in a Nutshell, 6th. West
Academic.
Hayek, F. A., 2012. Law, legislation and liberty: a new statement of the liberal principles of
justice and political economy. Routledge.
Macaulay, S., 2018. Non-contractual relations in business: A preliminary study. In The Law and
Society Canon (pp. 155-167). Routledge.
Miller, R. L. and Cross, F. B., 2012. Business Law, Alternate Edition: Text and Summarized
Cases. Cengage Learning.
McAdams, T. and et. al., 2015. Law, business, and society. McGraw-Hill Education.
Marston, W. M., 2013. Emotions of normal people. Routledge.
Hammond, K. J., 2012. Case-based planning: Viewing planning as a memory task. Elsevier.
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