The scenario of this report determines that a newly appointed intern in ‘Sorted Business Solutions’ is asked to provide legal advice to small and medium companies in the context of their business services.
- Determine the principles and concept of the English legal system that incorporate employment and company law. Also explain the requirement of organisation planning, communication skill and company initiatives.
- Describe several law related to business transaction, company management, business source, liabilities of an employer, employment law and so on.
1. Overview
According to the given scenario Frieda and Susan have successfully run an internationally themed café in Cornwall for 3 years which has been prospering. They want to expand their business and want to employ permanent staff in South West of England. In order to expand business, they need to know about the way to set up business in partnership and or limited company.
The main types of business models are limited and partnership business
Legal requirements to set up partnership business are as follows
While setting up business in partnership it is important for both partners to share responsibility of the business such as any losses which business makes, bills for the purchasing done for business such as stock and equipment (Gray and Davies, 2015)
Along with this, partners need to share business profit and each of them need to pay tax on their share. At the time of starting a new business it is important that each pattern inform HRMC that they are self employed. In partnership business if one partner withdraws from the business then partnership can be dissolved at the time and has no legal status (Verhoest, Petersen and Soecipto, 2015). There is a systematic procedure which company need to follow for forming partnership business. There are some advantages and disadvantage of partnership business that area as follows
Capital: As because of the nature of business each partner will fund the business with start up capital. Therefore, if in business there are more then two partners company will get more fund (Hedley, 2017).
Share responsibility: Partners help in sharing the responsibility which help in carrying out business successfully. Instead of splitting the management and taking equal share for each business task (Delmon, 2017). They can easily split work as pre-accordance to their skills. For instance, if one partner is good in dealing with figures then it can handle accounts while other can focus on sales.
Disadvantage of partnership:
Disagreement: In the partnership it is one of the clear disadvantage as people have different views and ideas related to the way business should run. However, it can lead to disagreement and dispute which can affect the business (Giddens, 2015).
Liability: Taxation law is one of the disadvantage as because partners must pay similar to the sole traders. As per the current laws partnership lead to bring more than a certain level as then they are subject matter for paying tax at personal level (Mayblin, 2016).
Profit sharing: Partners required to share profit equally within the firm. It can create inconsistency as because one of the partner is putting fare share of effort for running the management of business but gaining the rewards.
Legal requirement in limited business:
At the time when an individual want to set up private business it means to have separate finance from their personal loans (Lewis, Dwyer and Waite, 2015).
It can easily have kept profit after paying tax. While setting up business privately it is important to fulfill some documents such as memorandum of association article of association and statement of capital holdings. Along with this, it should be legally registers which help in legally confirm their existence. After registering company can easily carry out its business activities in legal manner. Limited company do not need to share their profit with anyone (Deakin, 2018).
Along with this they can easily make decision without interfere of others. There are some strength and weakness of starting a limited company that are as follows
Tax – One of the main advantage of running business as a limited company is that they need to pay less tax. Their profit subjects to UK corporate Tax is 19% and the government has intention to cut of 17%.
Limited liability: While carrying out business as a limited company means to have guarantee of limited liability. It is important to ensure that any kind of fraud do not occur. Along with this, limited company can give added protection as if anything goes wrong. The company can easily carry out business with financial protection ((Huda, 2016).
Sperate entity: As because of nature a limited firm is deemed to have separate legal entity as compare to their owner. It leads to provide many benefits such as retire or die as the firm will continue to exist and operate. However, it leads to make sure security of employees and other members as other legal business do not get this advantage (Huda, 2016).
Disadvantage of limited firm
Cost: It can be sad that limited company are costly as compared to partnership firm. Along with this company also have less fund for carrying out business activities. Owner is only responsible for business and its activities.
Restricted capital raising: For private limited company there are some limit on raising he capital. However, they can gain through funding from the sales of shares but it leads to lost the ability of private limited companies whose shares are restricted (Deakin, 2018).
Duty of care which is own their customers and staff members
Duty of care is known as legal duty which can be imposed on individual demanding obedience to a standard of rational care at the time of accomplishment the act which can harm others. Therefore, it can be stated that while providing services to other it is important for company to ensure that their actions or step do not harm others such as staff member and customers (Lewis, Dwyer and Waite, 2015). A failure to take such care lead to result the defendant being liable for pay damages to the party who got injured or suffer from any loss. In partnership business both partners will be liable for breaching the duty of care however if one of the partner is not in fault. On the other side, in limited company an owner is responsible because of negligence of staff members. As it may suffer from damage because they need to pay to claimant for all the losses (Mayblin, 2016).
Legal requirements with relation to employing permanent staff.
In respect to hire employees there are some procedure which company should follows such as providing a written statement of employment or contract, a minimum level of paid holiday etc. Along with this, owner need to ensure that employees do not work for longer time. All the employees should be get at least minimum wages. In respect to hire there should be proper documentation required to be done such as providing them offer letter at the time of hiring them for permanently (Giddens, 2015). Owner need to keep record of its employees who are working for 1 years. All the employees should be having legally written statements with all the terms and condition on the basis of they are hire. There are some policies which is required by law for employees. Such as grievance policy, health and safety policy, disciplinary and dismissal policy.
2. Recommendation
On the basis of provided information it is recommended that Freida and Susanshould open company in partnership as because it will help them in carrying out business activities successful at international level. It helps them in bearing all the consequence equally. Along with this company can easily raise capital and get enough fund to carry out business operations. However, the idea of changing name can affect the business as because most of the people know them by older name may got confused. However, expanding business in partnership will help company in sharing all the losses which they may suffer (Delmon, 2017). They can easily increase the capital and carried which help in smooth flow of business operations. Partners also share decision making which assist them to carry out business whenever they want. If there are more partners then it means to have more brains which can provide more innovative ideas and easily resolved business issues.
3. Employing staff for first time
Equality Act 2010:
The equality Act 2010 of UK is an Act based in some provisions to modify various complicated form of laws, rules and regulations. It is a mirror which implements the Acts on the basis of anti-discrimination law in UK. It protects employment which bounds people on grounds of belief and religion, sexual attitude, gender and age. This act amplifies equality in pay, reduces race discrimination, protects services for people of all age groups. It equally treats public and private employment ignoring civil partnership, beliefs, disability and characteristics of age. A significant and reasonable judgement is made in special cases of disable employers and services are provided to get over their barriers (Hedley, 2017).
National Minimum Wage:
National Minimum Wage Act came into being from 1st April 1999. The workers who can work individually and has the contract to do with the client or any customer can follow this act. Workers who involved with the agencies are also included so that they must not deduct the charges from their basic claim (Verhoest, Petersen and Soecipto, 2015). State secretary makes the order of other involvements and home workers are also included. Secretary is allowed to make significant exclusions like profit of fisherman can be eliminated. Presently Euro7.83 per hour for workers ageing above 25, Euro7.05 per hour for workers ageing between 21 to 24 and Euro 5.60 per hour for workers ageing between 18 to 20 forms the minimum wage in UK.
Employment Rights Act 1996:
Employment Rights Act was passed by Conservative government to systemise current law for the betterment of the rights of individuals in UK. It includes Redundancy payment Act 1965, Wages Act 1986 and Employment Act 1975. It fights for every individual's employment including redundancy, unfair judgement and time off rights for parenting. Every employee has its employment contract which is given in written form in two months in the initial period. It illustrates the terms and conditions of the employment.
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