Many researcher believe that human civilization is founded on the stones of legal laws and legislation. Without an effective law and order system, nothing can be organised in an order and may cause chaos. This is applicable to business world as well. Business organisations have to follow certain legislations defined by the legal system in order to keep their business growth growing and going. In this report, the English legal system and how it assists in running the businesses. In addition, the role of the government is also explained in law-making. To broaden the knowledge of legal system, its effectiveness and recent reforms is elucidated in this report. In the next section, key essential laws for every business in the UK are talked about along with their application in different case scenarios. In the end, a comparison is drawn between the legal solutions and alternative legal advices.
Declaring the Parliament of the United Kingdom is sovereign, it is meant that the Parliament is the supreme and self-determining body. The constitution of the UK is partially codified and therefore, the Parliament has infinite powers and liberty. Prime motive of the Parliament is to serve the nationals of the UK (Hart and Green, 2012). The meaning of the above statement is perplexing. Scholars like A.V. Dicey have analysed both positive and negative sides of this definition of sovereignty. Negative aspects include that the Parliament has no legal limitations and nobody including the Supreme Court can have a right to challenge the decisions of the Parliament. No authority having a necessary competency can supress the Parliament. Courts cannot override the Acts of Parliament, but they can invalidate the statutory laws to fundamental case law rights.
Sources of Law
There are two well-known sources of law: Primary and Secondary sources.
Primary Sources: These are the authentic and original source of information. These are elaborated below:-
Secondary Sources: These consist of books, newspaper, journal, or any other law source. These consist of case studies or articles on previous lawsuits. These may serve as the perfect source for research purpose.
Apart from the sources of law, there are certain professionals who look after the proper execution of law and order in the UK (Hart and Green, 2012). These professionals are: Solicitors, Barristers, and Judges.
In the United Kingdom, the legislations are passed as a Public Bills. These bills are introduced by the government of the UK or the MPs. The process starts in the House of Commons that contains the elected candidates. In order to attend to the needs and issues of different social groups, a bill is prepared and presented in the Parliament. Thereafter, the procedure is start with the first reading in both houses: House of Commons and House of Lords.
In the Commons, the bill is analysed and the views of the opposition in the house are heard. Later on, the bill is voted up and sent to the House of Lords. In the UK, this house usually comprises the Supreme Court. After evaluating the bill, the House may suggest some changes in the bill and revert the bill back to the House of Commons. Once the amendments are done, the bill is again go through the reading process by both the Houses. After the reading and going through the parliamentary stages, the bill is sent for the Royal Assent. It is given by the Monarch- the Queen of the UK. No bill can be passed without the approval of the Queen. Once approved by the Monarch, the bill is gazetted and passed.
Implementing the Statutes and Case laws
In the United Kingdom, there are two types of laws that govern the law and order system. First is the statutory laws and second is common laws or case laws. The former is formed by the Parliament and is applicable on everyone living in the UK. The government of the UK is solely responsible to codify them. The latter ones are usually refer as the precedents. These are the laws formulated in the court while making the verdict of similar past case. The statutes are superior and can override the case laws. Common laws serve as a useful instrument in understanding the statutory laws and can fill the gap in the statutes.
The English Legal system is one of the most effective legal systems in the world. It is keeping a balance between the business world and the law & order in the United Kingdom. In order to discard the elements causing delay, lowering down the efficiency, and intimidating the witnesses, the legal system should be modernized. There are different meaning that can be understood by the term ‘law reforms’. The Education Act of 1944 was recently reformed in order to remove the gap in the education system (Barak, 2016).
The Company Act 2006 is the most perfect example of law reformation. The Act has simplified the company law and it focuses on making the corporate world friendly for both employee and employers (Wessing, 2016). The code has codified the duties of the employers and gave a new concept called “enlightened shareholder value”. This concept helps in providing a greater attention to all the stakeholders and encouraging the organisation to adopt more long-term goals.
Apart from this, General Data Protection Regulation 2018 and Equality Act 2010 are some legislations that are far better than perfect.
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.
There certain basic laws that every industry or organisation operating in the United Kingdom has to follow. These legislations include, the Company Act 2006, Employment Act 2002, Data Protection Act 1998, etc. Most significant of the aforementioned legislations is the Company Act. It defines various duties of the director of an organisation as given below:-
In the given case study of JPM Publishing, the company is looking to convert into a public sector organisation. This may have certain implications on the company. Conversion may have both positive and negative impact on the organisation. The latter may include increasing liability over organisation to contribute a bit into corporate responsibilities towards society. For that purpose, company has to develop the policies regarding CSR. Company’s control may go to the government authority. The conversion process is time-consuming and increase work load on the organisation (Wessing, 2016). Here, some of the legalities are discussed in context of JPM going public.
Health and Safety Regulations: Companies operating in the United Kingdom have to comply with the Health and Safety at Work Act 1974. The Act regulates that safe environment at work premises for all the stakeholders. For the public sector organisation, it is mandatory to follow the guidelines given in the Act and carry out a comprehensive risk assessment. Organisation have to provide regular training to the employee (Barak, 2016).
Equal Opportunities Regulations: Every employee has a right to equal opportunities at work as defined under the Equality Act 2010. The act obligate the employer to treat every employee with equal respect. Employer should provide an environment where any kind of discrimination on the basis of sex, caste, religion, race, income, social status, etc., does not happen. In addition to this, the law directs the employers to make relevant adjustments for the disabled individuals, thereby assisting them in competing against the normal workforce.
Data Protection: The Data Protection Act 1998 directs the organisation to protect and preserve the personal data of the stakeholders and users. This acts provided them with certain protocols to follow while dealing with the personal information. In 2018, the General Data Protection Regulations (GDPR) came into action and set new guidelines for the same.
Businesses nowadays operate in a complex environment which is often regulatory and intensive. The regulations may pose many challenges to company. They obligate organizations to re-evaluate its requirements and workforce skill sets. Legislations influence the organizational structure and the way it responds and its ease of adapting new changes. Legislation imposes external pressure on the organization to carry out risk assessment. It improves and fosters organization against any failure in the future. Legislation removes any risk factor or uncertainties from the business environment.
In real world, regulations and standards is very profitable for majority of the organisation, especially for small businesses. They may add extra cost in the organisation’s budget, but in a long run, they are beneficial. In many research works, it has been found that the relationship between the regulations and growth can have both positive and negative impacts on the growth of the organization. It all depends upon the nature of the organization. They promote a positive competing business environment. They minimizes the legal discrepancies arises in the business operations.
The English legal system is an effective system that ensure that justice should reach to all. It does not discriminate between rich and poor. The government of the United Kingdom took a major step in providing justice to the poor strata of the society by launching Exceptional Case Funding Scheme. The legal system of is flexible and robust. It is open to reforms and allow easy process of implementation of laws. It also takes care of the business world as it governs their functioning as well. Corporate laws, such as Employment Act 2002, Company Act 2006, Equality Act 2010, and GDPR 2018 are some of the basic legal acts that every business must comply with.
There are numerous laws that proves the efficiency of the English legal system in resolving the business disputes. In the case of O'Brien v Bolton St Catherine's Academy  IRLR 547 CA, Ms. O’Brien was dismissed from her duties by the employer due to her long-term sickness. The case was related to discrimination arises from disability and unfair dismissal. The court found the employer guilty of disregarding Ms. O’Brien’s new medical fitness record and dismissing her from her job. This proves the importance of Employment Act 2002 and Company Act 2006.
Case 1: Champion Ltd. and winding up issues.
Champion Ltd., was asked to leave their place and establish their operations somewhere. This led to decline in the company’s customer, and later on company faced the financial crisis. Organisation was unable to pay the outstanding debts. This forced the creditors to file a winding up petition in the court.
What legal system says?
Since the outstanding loans amount exceed the limit of £750, creditors can file for the winding up petition as per the provisions given in the Insolvency Act 1986 and Company Act 2006. The creditors can legally go to the court and can file for the liquidation rights of the company. The winding up can have three forms as defined below:-
Since Champion Ltd is in financial crisis due to which it cannot pay the outstanding liabilities. Therefore, majority of the chances suggest that court will issue the winding up orders against the will of the organisation. CVL is the best option for the company to call the liquidation of the organisation.
Case 2: Mr. Anderson and Amber Ltd. employment contract dispute
Issue: Mr. Anderson was a CFO at Amber Ltd. and he resigned without serving any notice period of 12 months as mentioned in the employment contract.
What laws says?
According to the Employment Act 2006, every employee has to serve the notice period before leaving the organisation which is 12 month in this case.
So according to Civil Jurisdiction and Judgement Act 1982, Amber ltd. can send a notice of prohibitory injunction to Mr. Anderson. Court may stop Mr. Anderson to join as CEO at Beta Ltd. until he serves 12 months at Amber Ltd or else he can pay for the losses incurred to the organisation. Mr. Anderson and Amber Ltd can also try to solve the issue through the method of ADR. They can negotiate and save a lot of time and money without going to court.
Case 1: Champion Ltd.
In the given case scenario, the Champion Ltd is left with no option except to liquidate itself. Creditors are making attempts to get their money back. Therefore, they are threatening the company for winding up petition. If this happens, the company’s bank accounts would be freeze without giving any notice (Paterson, 2015). Champion Ltd. can stop this by calling Company Voluntary Arrangement given in the Enterprise Act 2002. This would help the organisation to negotiate with the creditors and develop a mode of repayment without freezing the assets of the company. Similar action was taken by British Homes Stores when it collapsed. Company Voluntary Arrangement helps the company to pay the outstanding debts after negotiating a deal with the creditors.
Case 2: Amber Ltd., and Mr. Anderson
Amber Ltd. got affected by the sudden resignation of its CFO, Mr. Anderson. He didn’t serve a notice period of 12 months as mentioned in the employment contract. This is a clear case of employment contract breach. Company can go to the court for getting a prohibitory injunction notice under Civil Jurisdiction and Judgement Act of 1982. This may eat up company’s time and resources. To prevent them from going to the court, Mr. Anderson should negotiate certain terms and conditions that best suits the interest of both parties. Similar case was of Sunrise Brokers LLP v Rodgers  EWHC 2633 (QB), where Rodgers left the company without prior notice of 12 months to join rival firm. The High Court held Rodgers to serve Sunrise Brokers for 12 months and post-termination restrictions after it.
Case 1: Solving the financial crisis by Creditors Voluntary Liquidation.
Positive impact: The voluntary liquidation keeps the company’s control in the hand of the directors. It saves a lot of money and time of the organisation. It keeps the financial condition of the company confidential.
Negative Impact: Liquidation may affect the company’s goodwill and credit worthiness in the market.
Case 2: Amber Ltd. vs Mr. Anderson, suggested solution is ADR
Positive Impact: It is economical method and time-saving approach. It keeps the relationship healthy between the disputants. The issues between the parties can be prevented from going public.
Negative Impact: The decision-making can be biased and other party may not feel satisfied and may challenge the decision in the court. This may make the method costly and time-consuming.
ADR is the best method for most of the employment contract breach cases. It is time and money saving unlike the litigation method. ADR method is flexible and the decision favours the interest of both the parties involved in the dispute. ADR method can have different form: Mediation, Negotiation, and Arbitration. These methods have their own conditions to be applied in the cases.
Mediation: In this method, the settlement is done through a neutral and external third party. The third party is called mediator. He is responsible to form a communication link between the two disputants.
Arbitration: In this method, the third party called the ‘arbitrator’ is hired to make the final decision that suits the interest of both the parties.
Negotiation: In this method, there might not be a need of the third party to settle the issue. Two parties often make settlement by sitting together and understanding each other’s interest.
Litigation methods are costly and time-consuming. Therefore, ADR methods are the suitable instruments to resolve the issues effectively. In the given case study of Amber ltd. and Mr. Anderson, going to the court in search of resolving the issue may take decades to decide and chances can be that Amber ltd. may lose the case. ADR settles the situation in such a way that the decision is a win-win case for both the parties. It provides more innovative solutions to settle the dispute (Paterson, 2015). Only limitation of ADR is that the method doesn’t guarantee a solution.
In the given case study, voluntary methods to settle the issues are useful. In the first case study, going to the third party to liquidate the company voluntary instead of going to the court may help the organisation to negotiate with the creditors and develop a mode of repayment without freezing the assets of the company. In the second case, ADR keep maintain the confidentiality of the issue and may resolve it in the best way possible that won’t be possible in the litigation method. The court proceedings are best suited in the case of large implications that cannot be resolved by ADR.
In this report, meaning of corporate law or mercantile law and how they affect the business world were talked about. There are two domains of corporate law. First is regulation of business entities via legislation of partnership, bankruptcy, company, etc., and the second is regulations of business finance via contract law. This reports highlighted the English legal system and how it assists in running the businesses. In addition, the role of the government was also explained in law-making process. To broaden the knowledge of legal system, its effectiveness and recent reforms was elucidated in this report. Later section talked about the key essential laws for every business in the UK and their application in different case scenarios. In the end, a comparison was drawn between the legal solutions and alternative legal advices.
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