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Business Law
Introduction
The report here is discussing various laws applicable on businesses in different scenarios. Under this report, major focus has been made on laws relating to employment. The employers through this report are explained the laws applicable on their organization with reference to health and safety of employees at workplace. This report is also highlighting the consequences that could be faced by an employee on giving an improper notice of resignation to employer. In this report the liquidation process of company has also been discussed. Various recommendations have also been provided to employers with reference to applicable laws on their businesses. Therefore, this report gives an overview of the laws that guide the operations of any business organization, resignation of employees and liquidation processes.
Section1.
LO1. Explain the basic nature of the legal system.
P1 Explain different sources of law and laws that organisations must comply with
- Discus the meaning of this statement and the various sources of UK Laws.
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Every year the government announces its programme for legislation by way of the Queen’s Speech at the State Opening of Parliament in October or November. Therefore, it is commonly said that ‘Parliament is sovereign. This statement is justified in the context of English legal system since in the begging of very year government announces its agenda of work which it will be carrying in the given year. The list of the issues that it will take before the parliament is also prepared and then as per the nature and seriousness of issue the draft and law making process is started with the approval of the parliament. The serious and the matters which are to take for the discussion and the subject matter which required the immediate laws are settled by the parliament of the country only. Parliament of the country enjoys the sovereigntyover the other organs of the government and the decision of the court and common law principles can be set aside by the instrument of legislation. The dominance is there of parliament which carries the law making functions of the government (O'Loughlin, 2016).
Sources:
The main sources and the origin of the law in UK are not in one single source and there is a broad classification of the sources from which the various legal principles are deduced. The broad classification includes the modern and ancient sources. The class of modern sources includes the legislation, judicial precedents, constitutionand the ancient source of law includes the traditions, custom and rituals. Legislation is the constitutional body that carries the functions of law making as per the list of agenda that is presented every year. When the legislature fails to make the law and there is unsettled position of law on issue before judicature in that case judges of the court announces the judicial precedents. Constitution is the grand norm of the country and all laws, regulations and other provisions of it has to be made in agreement with the constitutional guidelines otherwise they will be set aside void or ultra-virus. The ancient sources like custom is also used as source of law when the habitual practice that are very common of the daily life of people to give legal recognition to those practices. In the common practice the custom are considered as so strong that they prevail over the legislature as well.
Laws that organisation must comply with includes commercial laws like contract law, completion law, consumer protection law, company law apart from these the impliedterms of the contract that are prevalent in the trading of the business in common parlance (Mucciarelli, et. al., 2016).
P2 Explain the role of government in law-making and how statutory and common law is applied in the justice courts.
- Explain the role of government in the law making process and how statutory and common law are applied in the justice courts.
Law making
The lawmaking process not starts with the introduction of the bill in the two houses of the parliament however it starts with the agenda of the government. The agenda is prepared by the parties to the voting for securing the support of the public. Thewinning parties get the chance to put its manifesto to the parliament.
After the agenda of the government it is decided as to what will be introduced in relation to the issue in the house. The proposal is to be prepared for the introduction of the issue in the parliament and it is always not necessary that the recommendation of the law considered by the political parties only and sometimes it may come directly from public as well. Public have to take the assistance of the minister to send the issue in the parliament as they do not have independent right to present the matter in the parliament (Geldenhuys, 2017).
Consultation and forwarding of matter by Cabinet Ministers
The “green paper” process is issued here and the comments of the interested and affected ones are received and sometime the “white paper” is also issued which is government firmer intention. Agreement of cabinet ministers is required after the publication requirement to forward matter for discussion in parliament. After approval of forwarding matter proposal content is prepared and then it is announced in the Queen’s speech of every year and after than parliament scrutinises the bill for discussion.
Parliamentary Stages
Ever houses i.e. House of Lords and House of Commonsgo through the five stage process which starts with the introduction and reading the bill in formal manner to have basic understating in relation to object and scope of bill. Second reading involves discussion by MPS and it the controversial matter is addressed in that case bill will not go to another stage till voting. Committee stage includes online to line evaluationof bill provisions and then finding is reported in parliament and third reading allows final voting and last chance of discussion. On approval of one chamber another chamber considered the same and in the last stage bill turns to monarch consent and then its execution is carried out.
Application of the Statutory and Common Laws:
All laws and related common law principle guides the business and they are the legal obligation for it to company with. The legal liabilities includes incorporation of the organisation as per laws of Company Act, running the business of the subject matter that is permitted, to hire employee and respect their connected rights as per the employment laws, responding to the stakeholders within the legal framework etc. apart from these statutory obligation the company is also bound to follow the common law principles like “Lifting of corporate veil” “SeparateLegal entity” etc. All the business owner follows these laws to avoid the illegal consequences of enforcement and save business from economic and loss of business loses. The benefits are also availed by the organisation by following legal obligation like it helps in fulfilling the social corporate responsibility of the company making brand image etc. (Perren, et. al., 2012).
M1 Evaluate the effectiveness of the legal system in terms of recent reforms and developments.
The business organisation are not only bound by the laws that are already existing in the country and it is also bound by the new reforms that are done in the existing laws or new provisions are made for application over business. These laws express the liabilities to be fulfilled by the company as well the rights and benefits that company can availwith the companiesof the statutory obligation. Like other developments takes place in country laws must also be updated and effectives of the legal system can be maintained. Reforms makes sustainability in the country and the weaker section is protected from the various complications. Reforms in UK which has enhanced the effectiveness of system includes ADR as one of the major source of dispute settlement, legal aid facilities to indigents, implication of complication of procedure from court and introduction of the information technology system in the court etc. (Lewis, 2012).
LO2 Illustrate the potential impact of the law on a business.
P3 Using specific examples illustrate how company, employment and contract law has a potential impact upon business.
The JPM Publishing if converted into the public limited company that its responsibilities towards the legal complication will be increased. Being the public company the various obligations like corporate social responsibility will be increased for the company apart from the better internal management of the company. The main duties includes under the below give heads:
Health and safety regulations:
For betterment of the employees and workers at the workplace there are various laws and regulations those parties over the workplace. One of them is Health and Safety Act 1974 with the combination of six pack regulations like Management of Health and Safety at Work Regulations 1999, and Use of Work Equipment Regulations 1998 etc. All these laws and regulations are the liability of the employer to comply in running business in such a manner thathealth of workers and employees is not compromised at the cost of development of the company. Under section 69 of the Enterprise and Regulatory Reform Act 2013, the employee and workers of the company has been given right to go court or tribunal to prove that the employer was negligent and seek the appropriate damages (Jordan, et. al., 2013).
These regulations exist in the company for two purposes one is to guide employer and owner of work that at any cost the health and wellbeing of workers and employees have to be there on priority and development and the success of the business must be there on secondary level. Second purposes is there to provide remedies to workers in case the owner of the business does not fulfil obligation or negligent to perform on certain occasion.
Equal Opportunity Regulation:
For governance of equal treatment liability at work Equality Act 2010 was enacted to deal with the growing incidences of the direct and indirect discrimination at workplace. Before the enactment it was human right of every one that they should be treated equal and this equality was not mathematical and reasonable classification was allowed. However the term reasonable classification was used as instrument to discriminate the individuals not only at work but other places as well. With the introduction of the impugned act, statutory right has been ensured to everyone and the same is equally applicable over the work place as well and it appeals the employer to have equal treatment against all workers and employees (Umeokafor,et. al., 2014).
The occurrence of the discrimination will affect the business growth as biasness will stop the employee to compete fairly and they will focus on other means to get the promotion rather than improvingand performing better. The productivity and the entire business will be affected due to this. The employees’ turnover and frequent change of the job will be the one of the common consequences of discriminatory practice. The Disability Act is also there which also appeal from the organisation to provide equal opportunity to work and succeed to the person who suffers from certain kind of disabilities and not to subject these people with any kind of unreasonable discrimination and keeping them behind the opportunities.
Data Protection Act:
The statute of 1998 is there for the protection of data and information by the business organisation. The preamble of the act states for securing the freeexchange of information by the two parties with the trust and confidence. It embargos the owner of business to keep the information of employees and customer in secure system and unauthorised use of it is also prevented by this act. If the secure system is not used and the information of the customers of the company are disclosed than they have the right to approach the enforcement bodies for the same.
M2 Differentiate and analyse the potential impacts of regulations, legislation and standards.
Success of the business depends upon the legal system of the country. If the legal system is rigid and provides huge legal formalities and compliances than the business will have to make the attention towards these legal formalities and the business trading have to be confined within the limits of legal formalities on the other hand if the legal formalities are not much there and flexibility is there in regulation of the business of the company in that case business will be run in an easy manner. As the number of regulations, legislations and standards increase than in that case complications for running the business increases. The legal compliance from the very beginning however will be benefiting and initial efforts will only be required. The standard compliance will always benefit the business in the growth (Aydin andButhe, 2016).
D1 Provide a coherent and critical evaluation of the legal system and law, with evidence drawn from a range of different relevant examples to support judgements.
The laws discussed above like Health and Safety Regulation, Equality Act etc. are the example which prescribes the strict compliance requirement by the employer and punishes and settle even the minutest of the issue. The legal system of country is transforming from common laws to parliamentary form of governance which is sign of development from the various laws and regulations that are made by parliament on regular basis to deal with the issues decided in the agenda of the government. Country is having the strong enforcement mechanism for the all types of laws and it is one of the success reasons of the company. The reforms by parliament as per the need is another reason which make the justice system in the country effective (Jordan,et. al., 2014).
LO3 Suggest appropriate legal solutions to business problems
P4 Suggest appropriate legal solutions for a range of business problems e.g. termination of contract, rescue from insolvency and liquidation
Case 1
Champion Ltd. is a London based company who is facing financial problems due to declined customer base. Company has therefore defaulted in repayment of debts to banks and creditors. The company is now being threatened by creditors that they will move to courts for winding up petition. In given case scenario, the creditors may opt for compulsory or voluntary winding up procedures.
When a creditor is owed by the company for an amount of £750 or more and he has served a statutory demand to the company requiring the debt amount to be paid within 21 days to which the company has not taken any action like paying off the debt or entering in an agreement to pay off the debt, the creditor shall have right to present a petition to the court for compulsory winding up of company. The creditor may also opt for voluntary winding up of company. Under this process, directors and shareholders voluntarily decide to shut the operations of company and move to liquidation process by calling meeting of shareholders and creditors for passing required resolutions and appoint liquidator to carry the procedure of liquidation. The court shall not play any role in voluntary liquidation.
Recommendations to company
Champion Ltd. may avoid being taken to court for compulsory winding up by adopting one or the other way. It may pay off the debts due in statutory demand is made by creditors, or by defending its position of owing any money to creditors by proving in court that no such debt is due. It may also enter in a Company Voluntary Agreement (CVA) or Creditors Voluntary Liquidation (CVL) process, through which it can be saved from court proceedings. Champion Ltd. must act quickly once a statutory demand is made by creditors.
Case 2
Mr. Anderson is CFO of Amber Ltd. who gave a notice for resigning to company of a month. The employment contract of Mr. Anderson states that he must serve 12 months-notice in case he wants to resign or leave the company. Mr. Anderson ceased working for Amber Ltd. after a month’s notice. Amber Ltd. wants to sue Mr. Anderson and receive injunction orders against him. In given case scenario, Amber ltd. wants to know the possibilities of getting injunction orders.
Based on provisions of Employment Rights Act, 1996 and Basic Conditions of Employment Act (BCEA), both employer and employee have a right of notice in case of termination of contract of employment. Where an employee has been employed for more than one month but less than two years, the notice shall not be less than one week. Where an employee has been employed for two years or more but less than twelve years, the notice shall not be less than one week notice for each year of employment. Where an employee has been employed for more than twelve years, the notice shall not be less than twelve weeks (Barnard, 2014).
However, where the contract of employment specifies for a certain time period, then the employer or employee in case of termination are required to comply that notice period clause. If such notice is not given, then it shall be breach of contract and legal actions can be taken against the employer or employee liable for such breach.
Recommendations to Company
Amber Ltd. has an option to sue Mr. Anderson for breach of contract as he has not served the notice period of 12 months as determined by employment contract. When company takes legal actions against Mr. Anderson, he shall be found liable for breach of contract and the court may grant injunction against him. However, this is a cumbersome procedure. Therefore, Amber Ltd. may also consider resolving the matter through Alternative Dispute Resolution (ADR).
P5 Provide justifications for the use of appropriate legal solutions
Case 1
Champion Ltd. is recommended to consider entering into a Company Voluntary Agreement (CVA) or Creditors Voluntary Liquidation (CVL) process. This action by directors of company will reflect a positive conduct on their part, and it shall be presumed that they are performing their duties and responsibilities efficiently. This way control of liquidation process shall also remain in hands of directors of company. Moreover, the directors may also remain in position to be able to influence the choices made by liquidator. Therefore, voluntary liquidation by Champion Ltd. could make the process of liquidation easier and cheaper (McGregor, 2015).
Case 2
In a decided case of Nationwide Airlines (Pty) Ltd v Roedinger, Nationwide Airlines claimed that their pilot Roedinger gave only one moth notice for termination of employment whereas as per employment contract, he is required to serve 3 months-notice in case of resignation. Here, court decided that the applicant has right of specific performance of contract (Labournet, 2015).
Based on facts of decided case and discussed legal provisions, Amber Ltd. can file a suit against Mr. Anderson and can demand injunction orders against him.
M3 Assess the positive and negative impacts of legal solutions to business problems.
Case 1
Positive Impacts:
Liquidation of company through voluntary process is a quick and efficient procedure. In this process, control of proceedings remains in hands of directors. The threatening from creditors could be ended as the liquidator will deal with creditors for any purposes. Since, it is a quick process; risks of wrongful trading could be reduced. The voluntary process is also comparatively cheaper as the only cost directors are required to incur is for arranging creditors meeting and preparing statement of affairs. The fees of professional involved shall be paid by sale of assets. The company shall also be able to avoid court procedure. Moreover, the directors of company shall be able to use the funds for starting a fresh company and buying assets (Boraine, 2013).
Negative Impacts:
If company liquidates voluntarily, the operations of the company will come to an end immediately after a final decision for liquidation is made. The conduct of directors shall be investigated, and serious actions may be taken if any wrongdoings are found. The director may be barred from acting as a director for up to 15 years and prosecutions may be initiated against him. If there is any overdrawn from director’s current account, then they may be forced to repay the debts by liquidators. There shall not remain any assets as they might be sold to pay off the debts or dividends and for payment of fee of insolvency practitioner (Johns, 2017).
Case 2
Positive Impacts:
If Amber Ltd. files a suit against Mr. Anderson for not serving a valid notice as required by employment contract, then it is a win-win situation for the company. It may receive an order of injunction or specific performance against Mr. Anderson. The court may also order Mr. Anderson to pay damages to the company for breach of contract of employment. The company may also not pay remuneration to Mr. Anderson for the lesser period being served by him. This legal action can also be an example for other employees of Amber Ltd.
Negative impacts:
Filing suit in a court of law is an expensive and time taking process. If Amber Ltd. files a suit against Mr. Anderson, then it will a costly process and in the meantime of court proceedings, the operations of company would also be affected as Mr. Anderson may not serve at his position. Further, in case Amber Ltd. fails to explain the reasonability of 12 months-notice in court of law, and then it may have to face consequences. Therefore, risk exists for Amber Ltd. if it files a case against Mr. Anderson.
LO4 Recommend appropriate legal solutions based upon alternative legal advice provided.
P6 Recommend legal solutions based upon a different country’s legal system and/or a different legal framework.
Amber Ltd. may resolve its matter of breach of contract of employment by Mr. Anderson through Alternative Dispute Resolution (ADR). There are four ways under ADR through which matter can be resolved outside court. This method is different from litigation process. These four ways are Arbitration, Negotiation, Conciliation, and Mediation.
These four methods can be understood by studying their basic nature. Arbitration is most commonly used process. Under this process, an arbitrator is appointed who is impartial to resolve the dispute between parties. The decision of arbitration in binding on parties to dispute. It is similar to litigation process but is a procedure carried outside of courts. It is less time taking and less expensive when compared to traditional litigation process. The second method of ADR is Negotiation. It is a process under which the parties to disputes communicate directly with little involvement of their representatives to arrive at a settlement. This method involves the least intervention of outside appointed party. The settlement arrived at by the parties under this process have the maximum chances of compliance. This is a straightforward method and does not involve any expenses (Miao, 2012).
Conciliation is a process in which a conciliator is appointed who is actively involved in bringing the parties of dispute to a settlement. The main job of conciliator is to suggest possible options to parties of dispute and suggest the ways in which concessions can be made. However, the terms of such settlement are not binding on parties of dispute. This method is most commonly used in matters of industrial dispute. The last method of ADR is Mediation. Under this method, a mediator is appointed to resolve the dispute between both the parties. This method is most commonly used when the parties to dispute are not on speaking terms. The main job of mediator is to communicate with parties in order to arrive at a settlement. These mediators are industry experts or professionally trained persons. However, the settlement arrived at through mediator is not always binding on parties. Here, the parties usually reach at a voluntary contractual agreement for closing and resolving the matter of dispute.
Traditionally, only litigation was the route available to parties for resolving the disputes which has resulted in considerable pending cases in court of law and a very slow system. The efficiency of courts is also compromised because of work burden. Therefore, it has led to the growth of ADR’s. ADR methods of resolving disputes have reduced the burden of courts and also have provided the decisions in a less costly and less time-consuming manner. Therefore, Amber Ltd. is recommended to consider ADR option to resolve the issue. Coming to a settlement will save its money and time. It will also protect the company from going through the complex process of courts (Lucas, 2014).
M4 Compare and contrast the effectiveness of these recommendations.
The two legal alternatives available to Amber Ltd. for acting against Mr. Anderson for breach of contract are traditional litigation process or Alternative Dispute Resolution. Under litigation process, a case is filed in court of law and the dispute is resolved by judicial authorities and judges. Under ADR’s, case is resolved by independently appointed authorities. It is process carried outside the courts. The decision under litigation process id binding on both the parties and it is enforceable whereas decisions arrived at through ADR’s are not always binding. Litigation is a time-consuming process and it is expensive as compared to ADR’s. Under Litigation, a judgement is passed by the judges who may also lead to legal consequences. Under ADR’s, disputes may be resolved through settlement. The dispute resolving authority under litigation is judges of courts whereas under ADR, they can be arbitrators, mediators, conciliators or negotiators. Both the processes have their pros and cons. However, personal relations between parties may be impacted negatively under litigation process which may not be same under ADR’s (Khan, 2015).
Therefore, the method of selection of process of resolving dispute depends on type of dispute, degree of seriousness, desired solution, relationship between parties and cost factor. Amber Ltd. must consider both the process before opting one method for acting against Mr. Anderson.
D2 Critically review and evaluate the use of appropriate legal solutions in comparison with alternative legal advice.
Case 1
If Champion Ltd. is unable to pay off its debts, then it may go into liquidation. However, if the company does not want to go into liquidation then it may resort to other legal alternatives such as appointing an administrator who shall be an insolvency practitioner to carry on the operations of company and keep it a going concern. It may also appoint an arbitrator to come too agreed terms for the payment of debts with creditors.
The directors of Champion Ltd. may choose any legal solution based on capabilities of company. If they are of opinion that it is not possible for company to carry on its operations, then they may go into liquidation. If they are of opinion that the debts can be paid by keeping company a going concern, they may appoint an administrator or arbitrator (Magardie, 2016).
Case 2
Amber Ltd., in given case scenario is suggested to file a suit against Mr. Anderson for breach of contract of employment. However, there are other legal remedies available to Amber Ltd. against Mr. Anderson. Amber Ltd. may solve the matter through Alternative Dispute Resolution (ADR) method. This method shall be less costly for the company and this process is less time consuming.
Under Alternate Dispute Resolution method, the matter can be resolved through arbitration, conciliation and mediation which is more easy and common approach when compared with litigation processes (Genn, 2012).
Conclusion
The study of this report has highlighted various resources from law has emerged. These sources play a significant role in its interpretation. This report has discussed various laws applicable on business which serves as a foundation for conducting business operations. Health and safety of employees must be undertaken with due care by employers. Employment laws guides the rights of employers and employees. The report is giving a summarized view of applicable laws in given business scenarios and various legal solutions have been recommended to business organizations. The laws must be complied by organizations and its employees in order to avoid legal consequences. In this report, the organization is also recommended various methods and processes available for resolving disputes.
References
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