Business law regulates the working and functioning of organisations so that there is smooth running of it. This unit is designed to understand the impact of business law and its application to businesses.
- Nature of legal system
- Legal solutions for different business problems.
- Impact of law on the businesses
Business law refers to body of law, which governs business and commerce by regulating corporate contracts, hiring practices and sales/ manufacture of consumer goods. It encompasses all the laws that dictate how to form and run a particular business and it establishes rules that all organisation should follow.
This report discusses about Nature of legal system and legislation impacting business. The role of government in the law making process and it discusses how statutory and common law is applied in the courts. It discusses about potential implications and impact of rules and regulations like Health and Safety Act 1974, General Data Protection Regulations. Further, it discusses about legal solutions to business in respective case study.
Meaning of “Parliament is Sovereign” and Different sources of law
The term sovereignty means that a governing body has the full right and power to govern itself without any outside interference of other sources or bodies. Parliamentary sovereignty is a principle of the United Kingdom constitution.
This implies that: (1) Parliament can make whatever laws on any topic (2) It has no power to bind a future Parliament with there law and (3) The valid act of Parliament cannot be changed by any courts of United Kingdom.
The constitution of UK is completely uncodified, and is partially written and does not exist in a single text like other countries of the world (Gordon, 2015).
Parliament of United Kingdom has passed laws to limit the application of Parliament sovereignty. These are; Entry of UK to the European Union in 1973. The decision to establish United Kingdom court in 2009 and The Human Rights Act, 1998.
The principle sources of UK laws are:
- Statues: It refers to official act of Parliament after legislation has been proposed. The proposals of new law or any changes in existing laws come in the form of Bills. There are hundreds of Bill put before the Parliament but only few bills gets approved by the House of Lords and House of Commons and this approved law is known as Statutes Law of UK.
- Common Law: The common law is an important source of legal principles, particularly in relation to preservation of the rights of individual against the rule of Law and the state.
- European Union: It refers to the system of law which is specific to 28 members of the EU. United Kingdom is a Member state of the European Union, which implies that EU law takes precedence over UK law. It relates to the wide range of different matters, from agriculture to competition law. This law ensures that populations of member states are treated and it should treat others equally (Hawke, 2013).
Role of government in law-making and how statutory and common law is applied.
Laws are rules and regulations which are mandatory for everyone to obey and no one must be treated above the law. In UK, Parliament is a legislative body with the highest authority, examines work of government and debate on formation of any law, and approves them.
The House of Common and House of Lords together makes Parliament and with approval from both these houses and then only Bill can be formulated into Law (Lueg and et. al., 2014). Members of Parliament or House of Common are people elected by public in democratic elections held every 5 years in United Kingdom.
Senior Bishop in the Church of England, hereditary peers and life peers constitute or formed House of Lords. It is the Second Chamber of Parliament and complements the work of elected House of Commons.
Stages of Law making process are;
- Bill: A proposed new law is called a Bill which is drafted by civil layers instructed from the government. The idea of new law can be taken from an election manifesto promise; The influence of pressure groups or experts of particular field, etc. There are three types of Bill i.e. Public, Private and Private Membership (Reid, 2016).
- First reading: The Bill is introduced through first reading where the contents of Bill are read and what it is going to be proposed is read. It gives time to MP's in order to prepare and discuss it.
- Second Reading: The next stage is second reading is where principles are considered on floor of House. MP's then vote whether it should be proceed or not.
- Committee Stage: Bill is sent to smaller groups of MP's that examines it in detail. There will be further amendments that are made at this stage to Bills if required. The number of times a Standing Committee meets is depend upon the importance of Bill (Hanf and et. al.,2012).
- Report Stage: This stage is known as ' The Consideration' where detailed examination of Bill by all MP's, including amendments if it is been suggested at the Committee stage.
- Third Reading: It is the final part of debate within the House of Commons. MP's discuss the overall content of the amended Bill and from here, it moves automatically to House of Lords.
- Royal Ascent: This is the final stage of law making process where monarch must formally approve the Bill and then it becomes the Act of Parliament.
Application of Statutory law
In United Kingdom, statute laws are the acts passed by parliament as legislation and it is the most important part of law and overrules previous decision, whether they are older acts, case law or secondary legislation. It is designed to keep citizens safe as well as ensures that they are able to work effectively but when a statutory law is broken by anyone, the government will have predetermined punishment in proportion to crime.
Application of Common Law
It refers to body of legal rules that have been made by the judges. The judges issue ruling on cases, as opposed to rules or as made by the legislature or in official statutes. Common Law includes areas of Contract, Tort and property law within them as Judges Decision will be based on precedent in these areas (Douglas-Scott, 2015).
Health and Safety regulations
The Health and Safety Act is the important legislation of United Kingdom government for Health, welfare and safety at workplace. The law imposes range of duties on Employers, Self Employed as well manufacturers, designers and suppliers of different substances which are use at work. Health and Safety Executive and Local Authority are governing body, which provides guidance and has wide-ranging powers to issue notices for improvements at workplace or in case of any flattering or halting at workplace. Further, they have power to prosecute any employer in case of non-compliance with law.
Responsibilities of Directors of JPM Ltd is as follows:
It is important to comply with health and safety legislation for every business irrespective of their size and nature. The failure to implement right worker protection can result in loss of workers lives as well imprisonment for Employers and responsible authority . Thus, it becomes mandatory for Directors of JPM Ltd to take responsible actions and fulfil their duties.
Employers of JPM have duty to ensure safety, health and welfare of their employees “so far as is reasonably practicable”. Directors must arrange and give effect to adequate arrangements for effective organising, planning, coordinating and monitoring of preventive and protective measures. Employer needs to make a written policy statement showing their commitment towards a safe and healthy working environment. The policy should include the measures to protect employees within JPM Ltd and list of delegation of responsibilities for managing health and safety at workplace.
Director needs to identify and deal with causes of work related to ill health including mental issues and stress. It should conduct suitable and sufficient risk assessment in order to evaluate and identify hazards and probability that they may harm JPM Ltd. Employers must ensure that businesses take more responsibilities for health and safety issues. They should build an environment where employees and directors coordinate and cooperate their work to ensure that they meet their safety and health responsibilities. Director of JPM Ltd needs to anticipate and tackle with new issues in relation to Health and Safety at workplace and must follow guidance by HSE for better implementation of safety, welfare and Health at workplace (Burton, 2014).
Equal Opportunities regulations
Equality Act 2010 provides an equal treatment and opportunity with access to employment in private as well public sector. It listed a set of protected characteristics such as age, gender, disability, marriage and civil partnership, belief or religion, sexual orientation, pregnancy and maternity. Regarding these characteristics, the Act provides distinction protection by framing provision for each of them (Hornung, 2012)
Responsibilities and Duties of the Directors:
Under this Act, people are not allowed to discriminate, harass or victimise another person because they have protected characteristics. Thus, Employers of JPM Ltd needs to build a discrimination free environment while recruiting, retaining and paying employees. Directors should avoid a racial discrimination while conducting a recruitment process.
As JPM Ltd is going to become a public company, there will be a need for more employees therefore, it should see that the job advertisement made by them should not include any gender discrimination unless the job requirement say so. Employers need to make reasonable adjustment for disabled person and create harmonise work environment so that disabled person can easily adjust to workplace.
Employer needs to build a strong mechanism to deal with complaints of discrimination at workplace and should reward those employees who help others to complain against discrimination. This will encourage other staff members in JPM Ltd to speak against discrimination cases.
Director of JPM Ltd needs to provide equal opportunities to both male and female workers and encourage engagement of employees in decision-making process. They should provide fair remuneration to each employee along with flexible working hours.
General Data Protection Regulation (GDPR)
GDPR is a Data Protection Act formed to protect individual users from getting their data or information breach or distorted by any companies. It is legal framework that sets guidelines for collection and processing of personal information of individuals within European Union member territories. General Data Protection is applicable to both “controllers” and “processor” and has separate legal obligations for both parties in case of breaching of any data or information.
In the above case, JPM Ltd needs to comply with General Data Protection Regulation as it is a publishing company and carries different data related to publishing of articles, books, etc. Directors of JPM Ltd needs to fulfil their set of responsibilities in order to properly implement GDPR within their organisation (Koops, 2014).
Responsibilities of Directors are as follows:
Director of JPM Ltd needs to employ DPO within organisation as it will act as an advisory person on matter of obligations, compliance and help in managing personal information more accurately. It needed to evaluate what type of data is held by JPM Ltd and where it stores information. Directors need to execute effective planning to protect and effectively use existing data in order to prevent any legal charges or proceedings over JPM Ltd.
Director should evaluate and analyse the purpose for which the personal data will be used. It must aware it clients and customers about changes occurred due to implementation of GDPR. It is responsibility of the Director to provide information to employees on their demand. They must build a legal basis for processing a personal data and must evaluate to check whether company is able to comply with requirements of General Data Protection Regulation. Directors of JPM Ltd can use Information Commission Officer Guidelines to prepare for GDPR. Further, they should train their existing staff members on how to use General Data Protection Regulation. JPM Ltd needs to include policies and training sessions for new candidates. Director needs to implement appropriate security standards to protect company data from breaching and should set responsibility for processor and controller to comply with Data protection Regulation (Albrecht, 2016)
Appropriate legal Advice in relation to Case law:
Legal Advice to Champion Ltd:
As per the above case, Champion Ltd is a London Based company which was paid to move its site to North London for making a way to the development of new stadium by premier league club. After moving their business Champion Ltd experienced financial problems due to decline in its consumers now this result in low revenue generation and declining profits. Company has becomes default on numerous occasion to honour its payment to the bank for loans taken during the relocation. The list of money lenders includes various other creditors. Champion Ltd has now under worst condition as their creditors are threatening company for winding up process by filing a petition against them.
The creditors has the legal powers to claim for their amount from Champion Ltd and can apply for Winding Up petition. According to this regulation Court orders or forces an insolvent company into compulsory liquidation. Creditors that are owed more than £750 can present petitions to wind up Champion Ltd. After, completion of seven days wind up petition is heard by court and Judge weighs whether the Creditor has the valid basis for filing a petition and if, Judges says that it is equitable to wind up then the winding up process starts. At the time of hearing Champion Ltd has the power to divert the case in their favour and stop company from getting liquidate.
This very harmful situation for Champion Ltd and in order to avoid this circumstances company can opt for the other ways of liquidation. Company Liquidation is the process of bringing down or closing a particular business by distributing their assets to creditors and shareholders. It occurs when a company becomes insolvent and get defaulted on numerous occasion while paying their debts. There are three ways to liquidate a company these are:
- Members Voluntary Liquidation: This procedure can be applied in situation where directors and shareholders of the solvent firm decides to close down their businesses. Company is able to repay their existing creditors and shareholders. This opposite of Creditors Voluntary Liquidation as here members of the company mutually agreed to close down the running business.
- Creditors Voluntary Liquidation: It is the winding up process of insolvent company where its liabilities exceeds it assets. Directors of company agreed upon the liquidation by providing a notice to shareholders and creditors. The liquidators is appointed by chairperson and process of liquidation is carried.
- Compulsory Liquidation: In this process Company is been wind up and assets are sold to repay their claimants because of Court orders issued at request of petitioner. The common basis for Compulsory Liquidation is when company is unable to repay their debts on time and when court feels that it is equitable to wind up that company.
The possibility of getting Injunction by Amber Ltd.
Legal Advise to Amber Ltd:
As per the given scenario, Mr Anderson was appointed as CFO in Amber Ltd which states that he has access to all the highly confidential information. Mr Anderson was an employee in Amber Ltd and he entered into contract that specify certain employment restrictions among them one was to submit 12 months notice by either side to terminate the contract. Mr Anderson has taken up the offer of Beta Ltd after period of transitional arrangements with Amber Ltd and he suggested that it should end on May 31, 2016.
Termination of Contract refers to ending up of agreement or contract prior to it being fully performed by any one party. There are different ways of contract termination which are; Impossibility of performing contractual obligations, Breach of contract, Prior Agreement and recession of Contract. Mr Anderson breach the contract and did not fulfil the needs of agreements (Bray, 2017).
It refers to an equitable remedy which is given in the form of court order and that compels a party to refrain or do a specific act. Party which fails from complying to Injunction faces civil and criminal penalties. This case is related to Interlocutory Injunction as Mr Anderson is refrain by court orders which prevent him for doing certain acts as there is pending of final determination of previous case. Further, Mr Anderson cannot make any contract with Beta Ltd because he has not submitted prior notice of resignation before 12 months (Marsoof, 2015).
Alternative legal solution.
Alternative Dispute Resolution refers to process of dispute resolution which includes techniques and process for resolving dispute between two parties and prevent it from litigation or court trial. There are different forms of ADR which are as follows:
- Negotiation: The most common for ADR is negotiation as parties under this form mutually agrees to resolve matter and reach to conclusion. Mr Anderson can opt for negotiation with Amber Ltd and get free from Injunction orders.
- Mediation: The Mediator assist the parties to identify dispute issues, develop options and consider alternatives. Mr Anderson and Amber Ltd can appoint any third party to act as Mediator in there situation and even if the parties cannot reach the solution it can go for other option.
- Arbitration: Mr Anderson and Amber Ltd can present arguments and evidence to an independent Third party who makes determination and resolve the issue. This would be beneficial for both the parties (Alternative Dispute Resolution (ADR).2016).
This report concludes that Business law are important for governing and monitoring business activities. They are the key regulations and company needs to oblige to them. Contracts are important document between employer and employee it is enforceable with various elements like; offer, acceptance, mutual consent of parties and consideration. Termination or breach contract arises when parties do not fulfil the obligations of contract. In the above case, Amber Ltd can apply for injunction.