Analysis of Employment Related Laws in the UK: A Business Law Report

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BUSINESS LAW
(An Analysis on Employment Related Laws)
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BUSINESS LAW
Table of Contents
Introduction......................................................................................................................................3
LO1: Nature of the legal system......................................................................................................4
P1: Different sources of Law.......................................................................................................4
P2: Role of government in law making and the way common law and statutory law is applied
in justice courts............................................................................................................................4
M1: Effectiveness of legal system in terms of recent developments.......................................5
LO2: Potential impacts of law on a business...................................................................................6
P3: How company, employment, and contract law has potential impacts on business...............6
M2: Differences between legislation, regulations, and standards to analyze potential impacts
..................................................................................................................................................7
D1: Critical evaluation of legal system and law.......................................................................7
LO3: Formation of different types of business organizations.........................................................8
P4: How different types of business organizations are legally formed........................................8
P5: How business organizations are managed and funded..........................................................9
M3: Advantages and disadvantages of formation of different types of business organizations
................................................................................................................................................10
D2: Review and evaluation of business organisation types...................................................12
LO4: Recommendation for proper legal solutions to resolve disputes..........................................13
P6: Recommendation of the legal solutions for resolving a range of disputes using examples to
demonstrate how a party might obtain legal advice and support...............................................13
M4: Different sources of legal advice to support dispute resolution.....................................14
D3: Effectiveness of legal solutions or advice and support for dispute resolution................14
Conclusion.....................................................................................................................................15
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References......................................................................................................................................16
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Introduction
The Government of UK and courts of European Union impose the laws on business sector in the
country. Employment law is considered as the main arena of legislation that affects businesses of
both existing firms and start-up companies. This current study is going to manifold various
aspects of UK laws in order to resolve the cases of dispute and employment related issues as the
Law Advisor in Global Solicitor law firm. Apart from that, the report also describes the role of
the Government in law making, the effectiveness of the legal system for current development
process, the critical evaluation of the legal system, and the effectiveness of the legal solutions as
well. In the last part of the report, recommendation regarding the dispute solutions have been
elaborated which includes procedures of the advice, different sources of the advice and the
effectiveness of the advice as well.
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LO1: Nature of the legal system
P1: Different sources of Law
As stated by Countouris (2016), sources are considered as the origins of laws or a range of rules
that enable a state for governing its territory. The four major sources of law in UK are common
law, legislation, European Convention of Human Rights, and laws of European Union.
Common law: The Legal system exists in England and Wales is one common law therefore,
decisions taken by senior appellate courts also become the part of law (Blanco and Pontin 2017).
Legislation: The most significant part of the legislation is the Acts of Parliament and this
legislation is created by legislature like UK Parliament. Parliament is the principle legislature in
this country and it is the only body having power of passing laws for all the countries. This UK
Parliament consists of House of Lords and House of Commons. On the other hand, National
Assembly of Wales, Scottish Parliament, and Assembly of Northern Ireland also have the power
to pass laws. Every legislature has individual website and they act as the sources of legal
provisions.
European Convention of Human Rights: The UK is one signatory in European Convention of
Human Rights or ECHR as the member State in Council of Europe. Human Rights Act (1998)
was enabled in 2000 and it enables all UK courts in protecting the rights identified in ECHR
(Schabas 2015). Therefore, ECHR is considered as the main sources of the laws related to human
rights.
European Union Law: UK is the member State of EU therefore EU laws are also act as the
sources of UK legislation because it takes precedence over UK (Dorresteijn et al. 2017).
P2: Role of government in law making and the way common law and statutory law is
applied in justice courts
Role of Government: The UK is one parliamentary democracy that has constitutional monarch
where prime minister acts as the head of government and people vote for Members of
Parliaments. Parliaments have the three key roles to play, which includes- representing citizens
interests, passing laws and monitoring the government’s activities. They possess the power of
amending, approving and rejecting government draft laws. The parliamentary system determines
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the way parliament in involved in the process of lawmaking (Llewellyn 2016). For instance, in
Westminster systems, Government’s executive branch develops majority of their draft laws such
as in British system. In this way, the Government of UK plays an important role in law making
by developing the draft at initial stage however, it is monitored and reviewed by the Parliament
furthermore.
Application of Common law and statutory law: Statutory law consists of written legislation
while Common law allows the judges to decide cases based on prior cases with similar
circumstances. The primary differences between statutory and common law is regarding the way
these laws are created and applied. Common laws are applied based on interpretations of public
juries and judicial authorities or sometimes the institutionalized opinions. Same standards of
interpretation are also followed in case of applying statutory laws. Statutory laws are applied for
keeping the citizens safe (Kovacs 2015). The Government has the right to punish a citizen in
case of breaking statutory law based on the nature of crime. A judge also makes decisions
combining both common and statutory laws as they have the power to incorporate both case
precedent and written statutes at the time of issuing a ruling.
In most of the cases, areas of property law, contract law and tort law exist within the common
law but not in statutory law. Statutory law provides quite a formal and rigid interpretation of law
so its application is difficult to all situations. On the other hand, the elements of common law
sometimes differ among districts.
M1: Effectiveness of legal system in terms of recent developments
During the last few decades, there have been multiple changes in the legal system of UK and it
can be divided into two phases. In first phase, the changes were introduced by Labour
administrations, led by Gordon Brown and Tony Blair. In second phase, Conservative
administrations introduced the changes and David Cameron led it. According to the viewpoint of
Ghemawat (2017), these changes in legal system have immense effect on common people
because it has increased the accessibility of laws for the people of all the social classes and
communities. In most of the times, rich or powerful people are capable to hire lawyers and easily
access the legal system. However, the recent changes or reformation has ensured that, ordinary
people also can access legal system and seek for justice avoiding discrimination.
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LO2: Potential impacts of law on a business
P3: How company, employment, and contract law has potential impacts on business
Company law: Company law, which is also termed as Corporate law, governs the basic rights
and conduct of persons in business organizations as well as the regulations of that firm as well.
In a few cases, this law also includes the matters associated with financial law or corporate
governance. In this way, Company law guides an organization to develop its regulations and
builds up the guideline for employees regarding their behavioral attitudes in workplace (Talbot
2015). In UK, Companies Act (2006) mainly administrates the company law and this legislation
has been enacted at more than 1,300 sections.
Employment law: Employment law is designed for protecting the fundamental rights of
employees and it covers almost all the aspects of employee and employer relationship. The law
has significant role to play for maintaining disciplines in workplace and minimizing the
problems like harassment, bullying, gender and race discrimination, disability discrimination and
many more. For example the case of “O’Brien v Bolton St. Catherine’s Academy” (2017),
O’Brien was dismissed by the employer due to her absence for long period (O'Brien v Bolton St
Catherine's Academy 2017). The employer upheld the dismissal even after submitting medical
evidences by O’Brien. This is an example of violating Employment law because the employer
did not considered the absence because of physical issues even after having all the evidences.
Finally, the Court also found it unreasonable to disregard it. Moreover, the law provides freedom
to employees for sharing their point of views and raise voice regarding any problem they are
suffering from.
Contract law: Every single activities of product selling and purchasing comes under the Contract
law of UK. Contracts are an important part of everyday activities of the ordinary people as well,
for example, when the customer purchase groceries from a supermarket immediately they enter
into the contract with that supermarket (Cutler and Dietz 2017). This Contract law ensures the
product quality to consumers from one side and certainty of payment from the customer on other
side. The two parties involved in this law need to have proper knowledge about the terms and of
contract because the agreement is not considered if a single term is not settled between them.
The case of “Cavendish Square Holding BV v Talal El Makdessi” (2015) is an example of
breaching contract, where the defendant agreed in selling his stake to claimant but Makdessi
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involved sale of the controlling interest in a marketing company (Cavendish Square Holding BV
v Talal El Makdessi 2015). Initially, the defendant agreed to pay $147 million in installments but
finally breached the contract.
M2: Differences between legislation, regulations, and standards to analyze potential
impacts
Legislation is the law that has been enacted by legislature such as the Parliament in UK or other
governing body while Regulation is the law that is directly applicable in all the Member States.
On the other hand, Standards can be defined as the repeatable and agreed process of doing
something. The government of a country on the business sector directly places legislation and it
needs to be complied with for remaining within the legal boundaries of both that industry and the
country (McGovern 2018). The regulators for enforcing legislation that particular way use
regulation and the government draws on standards at the time of putting together guidance
documents and legislations. Standards are used for establishing technical details allowing
legislation to focus on long term business objectives such as environment protection, product
safety and others.
The regulation is a Government document that consists of characteristics of products, production
methods, related processes along with administrative provisions, where compliance is a
mandatory factor. No consensus is required for establishing a regulation and the main difference
between regulation and standard depends on the compliance. Moreover, there are differences in
implications of both legislation and regulation in international trade. An imported product is not
allowed to be put on sale if it fails to fulfil all the parameters of regulations. In case of standards,
imported products that are non-complying are allowed in market for selling if they meet local
standards, for example, the colour or quality parameters for clothing materials. However, the
preference of customers also acts as an important determinant for the market share of those
products.
D1: Critical evaluation of legal system and law
The UK has three different legal systems including England and Wales, Northern Ireland and
Scotland. The English laws refer to a particular legal system governed by the courts in Wales and
England that rule on both criminal and civil matters. On another hand, the legal system is
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considered as the procedure of enforcing and interpreting the law and this system elaborates
responsibilities and rights in various ways. The case of “Ali v Capita Customer Management
Ltd.” (2017) is an example of discrimination in workplace, where the employer has violated the
regulation of Employment laws (Ali v Capita Customer Management Ltd. 2017). The claimant
issued claim as his employer refused to increase his pay during shared parental leave when the
company was about to enhance maternity pay.
The case of “Dexia crediop s.p.a. v comune di prato” (2017) provides the example of violating
Contract Law of UK. Dexia was appointed in 2002, as the advisor of Prato for debt restructuring
and interest rate swap. After entering into ISDA Master Agreement (1992 version) and the
transactions of six interest rate swap from December 2002 to June 2006, Prato stopped paying
Dexia under sixth swap (Dexia crediop s.p.a. v comune di prato 2017). According to Prato,
swaps were void as the matter of English law due to Prato’s lack of capacity. Moreover, Prato
was started to treat that swaps as void due to the breaches by Dexia. The Supreme Court refused
to grant the permission to Comune di Prato for appealing the decision of Court of Appeal in this
case.
UK joined the community of European Union, when it is needed to integrate European
legislation into the laws of UK. In this way, laws have been adopted as the part of legal system.
Furthermore, a vital constitutional transformation came with the arrival of Labour government
into power. The legal system started to be decentralized among different areas including
England, Scottish parliament and Welsh Assembly but the laws were same in all of them. Further
modification and adaptation of new laws were performed in the entire legal system of UK such
as European Convention of Human Rights has considered UK as a participant through
integrating Human Rights into the laws of UK.
LO3: Formation of different types of business organizations
P4: How different types of business organizations are legally formed
The first step of forming an organization is systemising its business from multiple sides
especially developing a clear idea about the legal aspects. Legal liability of the owner and
income tax treatment are some of the common options and major characteristics of legal
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structure in an organization. Business Organization Law refers to various ways a business can be
formed legally under state laws. The business can be legally formed in different ways such as
corporations, limited liability companies or LLC, partnerships, S Corporations, Sole
Proprietorship and others.
Corporation: It is a kind of legal entity, which can be either close corporation or a public
corporation. In a close corporation, its products are traded publicly and it is owned by only few
people. Public corporations are formed by trading the stocks on stock exchange (Talbot 2015).
Limited Liability Company (LLC): LLC is formed by one or more owners but they do not hold
any personal liability for the issues in the company.
Partnership: Partnership business is formed as an association of two or more entities and they
hold the liabilities of co-owners in the organization.
S Corporation: This type of business is formed through involving limited number of
stakeholders that helps in certain tax benefits without any stock options.
Sole Proprietorship: In Sole Proprietorship, only a single person remains solely liable for any
kind of issues and faults in business (Means 2017). Here the business is conducted without
forming any legal business entity and owners are allowed to report requirements however it does
not provide similar liability limits and tax benefits like S Corporation.
P5: How business organizations are managed and funded
The management process of an organization contains the stages like setting goals, develop plans
for meeting the business objectives and using the resources in most suitable manner. Proper
management of resources is one of the vital parts of organizational management activities as the
business firm is managed by arranging and controlling its resources within an entity. Funding is
referred to the act of supplying financial resources usually in form of money or time or effort to
fulfil financial needs. There are numerous varieties sources of funding that mitigates the financial
needs such as bank loans, government grants, venture capital, subsidies, contribution of investors
and others. Individual donations are one of the most influential sources of funding especially in
partnership business and here decisions of individual person are considered for managing the
business.
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M3: Advantages and disadvantages of formation of different types of business
organizations
C Corporation form of business:
Advantages: In this form of business, the assets of owners are protected from liabilities and debts
of corporation. Here shareholders are not liable for losses in business. It is easy to sell the shares
of stocks and the entity can continue to exist beyond the deaths of owners. It is easier to attract
capital in Corporation and owners can easily receive tax-free benefits.
Disadvantages: Corporation form of business needs to pay extra charges to government as
annual fees of franchises. Formation of a corporation is also more expensive than other forms of
organization.
Limited Liability Company (LLC)
Advantages Disadvantages
 It passes through the taxation
 The members have flexibility in order
to structure the management of
company
 There are no restrictions related to
number of membership
 The owners are not at all personally
responsible for the liabilities and debts
of business
 There is no such requirement of having
much annual paperwork or many
formalities.
 It ensures limited life
 It is highly expensive in order to form
with compared to general and sole
proprietorship
 In this case, ownership is quite harder
for transferring with compare to
corporation
Table 1: Advantage and disadvantage of Limited Liability Company
(Source: Lord 2016)
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Partnership
Advantages Disadvantages
 Business establishment, as well as start-
up costing, is quite low in this case
 It allows more availability of capital in
business
 Greater capacity to borrow
 High opportunity for income splitting
 In this case, high-calibre employees can
be the partners
 Benefits regarding particular
importance in case of resultant taxation
savings
 Business affairs of partners are entirely
private
 Limited external regulation
 The legal structure can be changed later
if the situation demands
 The liability of partners is unlimited for
debts in business
 There are risks regarding disagreements
as well as friction among management
and partners
 Each and every partner is severally and
jointly liable in case of partnership
debts
 Every partner is a partnership agent and
hence liable for the actions by other
partners
 In case of joining or leaving of
partners, it is required to value every
partnership assets, and thus this can be
costly
Table 2: Advantage and disadvantage of Partnership
(Source: Yuval-Davis et al. 2018)
S Corporation
Advantages Disadvantages
 It avoids the double taxation
 The owners carry limited liability in
this case
 The shares of ownership transferring
are quite easy in S Corporation
 It has the perpetual lifetimes
 The owners are associated with
receiving tax-free benefits
 In this case, one class of stock can be
permitted solely
 It is limited to the maximum number of
100 shareholders
 In addition, the types of stockholders
are limited
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