Business Law Report

Question: Discuss the business structures and the equality act 2010. Answer: Introduction The present report is a very important piece of paper which covers two most important aspects that prevails in United Kingdom, that is, business structures in United Kingdom and the analysis of The Equality Act 2010. Part I of the report deals with an analysis of two kinds of business structures that are prevalent in United Kingdom, that is, Partnership and Limited Liability Company. Arguments are lay down which established that establishing a company is a better choice in comparison with a partnership. Various tax issues, control issues, etc are evaluated of both the business structures prior adhering with the notion, that a company is a better choice. Part II of the report analysis The Equality Act 2010 and what safeguard an employer must take in order to avoid any kind of unnecessary complaints. Both primary and secondary sources are used to justify the arguments made. Various provisions of the Ac are analysed which must be adhere by the employer so that protection and safeguard is provided to he employees. The reference List is added in the end. Business structures As per the given scenario, a business needs to be set up as a general partnership. However, there are arguments that are lay down which establishes that running a business in the form of a limited liability company will be a much better choice when compared with a general partnership. Thus, in order to justify the statement made above, it is important to evaluate the pros and cons of establishing a general partnership and a limited liability company and in what manner the establishment of a limited liability company is a better choice. In United Kingdom, a business can be establish in several manners, such as, as a sole proprietorship, as a partnership, as a limited liability partnership or as a limited liability company. All the forms are important depending upon the needs, desires, and resources of the person. Once a business structure is finalised by a person, then, such structure identifies his responsibilities, legal obligations, statutory issues, environmental issues, etc. (Spadaccini, 2009). But the two important business forms that are evaluated in the present report are a General Partnership and a Limited Liability Company. Both the structures are analysed individually and are then compared to justify the statement made above. A General Partnership Definition and elements A General Partnership (Partnership) is a business form wherein there must be at least two persons who intends to come together to formulate a business of incessant nature and with a motive to earn profits. This distinct structuring establishes very important elements in a partnership, such as: (McCahery Vermeulen, 2004) A partnership cannot be created by a single person and requires more than one person. The business must be of incessant nature and not a single activity. The motive of the partners is to earn profits. Advantages Once a partnership is formed then there are various advantages that can be associated with it. Such as, it is very simple, easy and economical to establish and create a partnership. This is because there is no formal procedure that is required for its information, such as, any kind of registration (as the same is required while forming a company). Rather, a simple partnership agreement defining the mutual rights and obligations of the Partners, the term of the partnership, profit sharing ratio, etc. Further, the partners carry out their tasks and are remunerated through drawings. This helps in securing tax advantage which is not present if the remuneration is made by giving salaries (as the same is done in a company). Also, there are no statutory obligations of filling any kind of return which is a very cumbersome, tedious and costly affair. (Fibbe, 2009) Thus, a Partnership is a business structure which is very popular and its advantages cannot be overlooked. But, in order to justify the statement made above, that is, running the business in the form of a limited liability company will be a much better choice when compared with a general partnership, it is important to analyse the structuring and advantages of a Limited Liability Company. A Limited Liability Company Definition and elements A Limited Liability Company (Company) is one of the business structures that can be established in United Kingdom. A company is a legal entity that has its separate existence in the eyes of law. In Salomon v Salomon (1897) the concept of Separate Legal Existence is explained and it was held by the House of Lords that a company is an artificial legal person and is separate from its members, employees and officers. This separate existence of a company has evolved various distinct features of a company, such as: (Puig, 2000) It has Limited Liability- The liability of the company is limited, that is, the shareholders of the company are liable only to the extent to their shareholdings and not beyond the same. Any liability that is beyond their shareholdings will not fall on their shoulders but must be equated by utilising the assets of the company (Lee v Lees Air Farming Ltd(1960). It has perpetual succession Perpetual succession implies that a company is an artificial legal person in law and is not associated with its officers and members. Thus, in Salomon case it was held that even if all the members of the company dies, the company still remain alive and active. It can sue in its own name and be sued by any other person. Now, on order to justify that a company is a better choice in comparison with a Partnership, it is important to analyse the advantages of a company. Advantages Once a company is formulated, there are numerous advantages that can associate with the same and which cannot be found in a partnership form of business. The same are: (Chris, 2016) A company is a separate legal entity in the eyes of law, that is, it is distinct and dissociated from its members and officers (Salomon v Salomon (1897)). Any acts that are carried out by a company are in its own name and not in the name of its members and officers. Thus, a company has power to enter into contracts, purchase property, sue in its own name, acquire funds, etc. (Academia, 2015) A company once formulated has limited liability, which implies that the liability of the shareholders is limited and cannot be imposed with financial burden beyond the extent of their shareholdings (Puig, 2000) The salaries and dividend of the directors are taxed separately, thus, by taking dividends they can minimise their NIC contribution. A company is ageless, that is, it has perpetual succession. A company never dies and thus even if all company members cease to exist, a company keeps on running. This is because a company is an artificial legal person and has distinct personality. (The Law Teacher, 2016) The Corporation Tax is 21% and which is very less. There is professionalism found in a company. The shares are easily transferrable. The company name is distinct and cannot be used or acquired by any other person or business form. Tax advantage can be acquired on employees executive pensions. Thus, these are the various advantages that are part of a company and which lacks in a partnership firm, thereby making a Limited Liability company a better choice to run a business. Further, there are few drawbacks in a partnership which also establishes that a company must be established in place of a partnership. Such as, a partnership has no separate legal personality, thus, the acts of the partnership will make the partners liable and vice versa. Further, there is no limited liability and thus the partners are liable to all the losses of the partnership. Also, there are chances of disputes as normally all partners are part of decision making process. The partnership cease to exist as soon as a partner dies or leaves the firm and a new partner is entered. Thus there is no perpetual succession. (Startupdonut, 2015) Thus, considering the advantages of a company and drawback of a firm, it is justified in submitting that establishing business in company form is a better choice. The Equality Act 2010 The client employs 100 people. In order to make sure that he comply with all laws and to avoid expensive claims from the employees (because of non-compliance of the laws), it is necessary to evaluate the steps that he must undertake. In order to do so the Equality Act 2010 is evaluated. The Equality Act 2010 has brought all the prior legislations under one head and has also strengthened some of the earlier provisions. It is now important to evaluate the provisions of the Equality Act 2010 so that unnecessary claims against the organisation by the employees can be avoided. One of the prominent features of the Equality Act 2010 is its Protected Characteristics. The same are established under section 4 of the Equality Act 2010. The various characteristics are: (ACAS, 2016) That every employee is protected and no regard must be made to his or her age while complying with the protection (section 5). The Equality Act 2010 permits the employee to remain absent from work if undergoing gender reassignment. Any discrimination made regarding the same is not permissible under section 7 of the Equality Act, 2010. The Act strictly made provisions regarding disability. As per section 6, schedule 1, if any unfair treatment is carried out towards any employees because of disability or like then such acts are not permissible, such as, any information which highlights the disability of the prospective employee is not allowed unless and until specific provision is made in such regard. Specifiable protections and safeguard are provided to pregnant women employees under section 9 of the Equality Act 2010. An employer has an obligation to treat all the employees alike and no gender preference is allowed. He must not make any discrimination on the basis of sex unless and until special provisions regarding the same is made. Any deviation is considered violation of section 11 of the Equality Act 2010. An employer must not discriminate its employees on the basis of Race and Religion and Belief as per section 10 of the Equality Act 2010. The concept of Sexual Orientation is safeguarded under section 12 of the Equality Act 2010. These are some of the protected characteristics that are obligatory on an employer to follow. The employer is also not permitted to make any kind of discrimination that is direct or indirect discrimination. A Direct Discrimination is lay down in section 13 of the Equality Act 2010 and which submits that when an employee is having protected characteristics and the employer acts in a manner wherein he gave favour to one employee over another then the employee is making direct discrimination. Whereas Indirect Discrimination is lay down in section 19 of the Equality Act 2010. It submits that the policies and rules framed which are advantageous to one employee but disadvantageous to another (mainly because of their protected characteristics) then it is a kind of indirect discrimination that is done by the employer and is not permissible under law. (Youngs, 2014) The employer must also make sure that: No discrimination by Perception is carried out, that is, when one person perceived that another person is having protected characteristics and then there is discrimination by an employer. No Victimization is undertaken by an employer as per section 27 of the Equality Act 2010. When an employee is part of the complaint that is filed against the organisation and if an employer treats such employee who has supported he complaint in awful manner then such acts of the employer is called victimization of employee and is not permissible. An employer is not permitted to harass any employee and is laid down in section 26 of the Equality Act 2010. Also, an employer can protect himself and the organisation from employee claims provided an employer apart from complying with protected characteristics and avoiding any kind of discrimination, victimization, harassment etc, must: An employer is not permitted to advertise for a job which establishes gender discrimination or age discrimination unless and until the discrimination is the main essential for the performance of the job. Comply with the provisions of section 77 of the Equality Act 2010. Section 77 emphasis the concept of Equal Pay without any gender discrimination. It submits that if equal work is undertaken by both men and women then they both are eligible for equal pay without any gender discrimination. It is necessary that whenever an employer is undertaking the activity of recruitment then the same must be clear and unambiguous. If the process is found to be discriminatory then it is nothing but violation of Equality Act 2010. For instance, if the recruitment process discriminates on the basis of age, gender, etc then the same is not permissible. As per the Equality Act 2010, an employer is permissible to seek information related to health of the employee provided the same is the basic requirement of the job offered, but, beyond that the employer is not permissible to seek any health information related to the employee. An employer prior fixing the pay and benefits of the employee must consider some of the factors, such as, employees skills, rate which is applicable in the same sector, employees performance, etc. an employer must make sure that no discrimination must be made while allotting any kind of benefits and pays to the employees. Any discrimination must be based on proper reasoning provided by the employer. An employer must make sure that while fixing the working hours of the employees no discrimination must be made. In order to enhance the performance of an employee it is important that an employer must timely promote and transfer an employee. While doing so it is necessary that no discrimination must be made. If the same is done the it is contrary to the provisions of the Equality Act 2010. It is necessary that an employer must make sure that he implements such policies, rules and procedures that educate and train the employees so that better results can be achieved. Also, the employer must make sure that proper policies and rules must be framed so that an employee can seek the benefits of promotions and transfers. This will help in the enhancements of the loyalty and moral of the employees. Training must also be provided so that an employee must adhere himself with the latest technologies and skills so that he can produce much better results. An employer must make sure that the training, education, etc must be provided by an employer to the employee without any discrimination. It is important that any disciplinary procedure undertaken by an employer upon the employee must not be fair and reasonable and must adhere to changes as an hen the need arises. Hence, these are the provisions of the Equality Act 2001 and various procedures that must be comply by an employer in order to avoid any kind of undue hardship from the employees. But, if suppose the employer is not able to comply with the adequate procedure and does not follow the provisions of the Equality Act 2010, then, in such scenario section 124 of the Equality Act 2010 is applicable. As per the section the Employment Tribunal is authorised to lay down the procedure that must be followed by the employer and the organisation in order o avoid any kind of discrimination and hardship upon the employee. The procedure laid down by the tribunal is not binding but can be used as a support to lay evidence. Thus, all the above provisions and regulations must be followed in order to avoid any kind of expensive claims from the employees. Bibliography Books/Articles/Journals Chris D, Separate personality and limited liability are cornerstones of UK Company law. Discuss with reference to advantages and disadvantages of separate personality (2016). Fibbe G, EC Law Aspects of Hybrid Entities (2009) Puig G A, A Two-Edged Sword: Salomon and the Separate Legal Entity Doctrine (2000). Youngs R, English, French German Comparative Law (2014) Routledge McCahery Vermeulen, The Governance of Close Corporations and Partnerships:US and European Perspectives (2004) Oxford University press. Case Law Lee v Lees Air Farming Ltd(1960). Salomon v Salomon (1897). Online Material ACAS, The Equality Act Whats new for employers? (2016) https://www.acas.org.uk/media/pdf/n/8/Equality_Act_2010_guide_for_employers-accessible-version-Nov-2011.pdf. Academia, Separate Legal personality and Limited Liability are cornerstones of UK Company Law. Discuss with reference to advantages and disadvantages of separate legal personality (2015) https://www.academia.edu/9819084/_Separate_personality_and_limited_liability_are_cornerstones_of_UK_Company_law._Discuss_with_reference_to_advantages_and_disadvantages_of_separate_personality. Spadaccini M, Entrepreneur, (2009) https://www.entrepreneur.com/article/200516. Startupdonut, Should You trade as a partnership or a limited company (2015) https://www.startupdonut.co.uk/blog/2014/03/should-you-trade-partnership-or-limited-company The Law Teacher, A company is an artificial person created by law (2016) https://www.lawteacher.net/free-law-essays/business-law/a-company-law-essays.php.