Week 6 Flashcards
Unincorporated Business
No separate legal entity from participants
Sole trader
Partnership
Incorporated Business
Legal entity in its own right
Private limited company
Public limited company
Limited Liability Partnership
Sole trader
No distinction between business and individual
Entitled to keep all profits after tax
Unlimited and personal liability
Sole trader formation
No formal regulatory requirements
Register with HMRC
Can run the business however they wish
Sole trader business ending
Ensure no debts/unpaid tax
Notify HMRC
Bankruptcy procedures start if they can’t pay their debits
Partnership
Two or more persons come together and act in common to form a business with a view to profit
Partnership debts
Partners are jointly and severally liable for debts/torts
Firms creditors can take action against any partner
Liability shared equally based on their percentage of ownership
4 types of partner
Typical
Salaried
Silent
By estoppel
Typical partner
Has right to take part in management
Salaried partner
Paid, on letterhead, no rights/role
Silent partner
Invests money, no role in management
Partner by estoppel
Appear as partners, no participation
One partner can satisfy a debt but others cannot
That partner is responsible for the full debt, they can then seek the money owed from any defaulting partners
Partnership creation/dissolution
Partnership liability
Liability cannot be imposed on a partner for acts that occurred before they entered the partnership
Partnerships created with a partnership agreement
Liability continues even when a partner has left the partnership for acts conducted whilst a partner
Dissolved via agreement/lapse of time etc
Partnership liable for one partner committing a tort or crime in the course of business (actual or apparent authority)
Limited Liability Partnership
Separate legal entity
Contracts formed with LLP, not partners
Properties owned by LLP
LLP has unlimited liability
LLP dissolution
LLPs continue until wound up/dismissed, even if their internal membership changes
Wound up through the application by the majority of its members (other conditions)
Wound up through their insolvency
LLP Limited meaning
Individual partners are liable only up to their investment
LLP creation
Filing documents with the companies house, allowing them to start trading (Incorporation document and a statement of compliance)
Issued with a certificate of incorporation
Limited companies
Assets/Revenues are separate from the owner’s.
Can be private or public
Limited companies dissolution
Remain in existence until wound up
Can be wound up by applying to be struck from the register, or liquidation (voluntary or involuntary for insolvent companies)
Limited companies, limited meaning
Companies Act 2006
Company itself has unlimited liability
Shareholders do not have unlimited liability unless the company has insufficient assets. In this case, they are liable up to their share value or guaranteed sum
Limited company formation
Established through royal charter, statute and registration (with the companies house)
Need to write a memorandum of association (specifies private or public), articles of association and complete form IN01
Get a certificate and an entry in the Gazette
Illegal actions in limited companies
Limited companies can commit criminal offences/torts. Directors can be convicted for their actions.
Private Company
Ends with Ltd or limited
Prohibited from offering its shares to the public
Not required to have a secretary
No need for AGM
No minimum share capital
1 director required
Pass written resolutions without a meeting
Public company
End with Public limited company or PLC
Entitled to offer its shares and debentures for sale to the public
May be listed on the London Stock Exchange
Requires a secretary
Must hold annual AGM
Allotted share capital of £50000 (one quarter of the value of which must have been paid upon allocation)
2 directors required
Cannot pass written resolutions without a meeting
Definition of an agent
An agent has the right to facilitate contracts between the principal and other third parties
Contracts formed are not binding on the agent
Agent duties
Act in the best interests of their principal (Fiduciary duty)
Avoid conflicts of interest/No profit rule
Refrain from disclosing confidential information
Obey lawful instructions
Perform them personally with care and diligence
Maintain proper accounts
Delegation allowed if agreed with principal
3 main agent rights
Indemnity
Payment
Maintain the Goods
5 methods for the creation of an agency relationship
Express appointment (Actual authority)
Implied appointment (Implied authority)
Impression of representation (Apparent authority)
Authority through ratification
Situation of emergency (Authority through necessity)
Express appointment (actual authority)
Established via contract/express agreement outlining the extent of authority the agent has
Implied Appointment
Inferred when agent, by word or conduct, acts as if they have such authority and principal acknowledges they were entitled to act as such
Impression of representation (Apparent authority)
Principal has represented to the third party that the agent has the authority to act on their behalf
Must have been a representation which is then conveyed by the principal which the third party then acts on
Authority through ratification
Agent exceeds their authority and principal accepts any negotiated contract. (Person who has no authority acted as if they had the authority)
Only valid if given in reasonable time, principal exists at time of contracting, third party aware of principal existence and agent acts on their behalf and principal has the capacity to contract
Ratification may be expressed or implied
Situation of Emergency (Authority through necessity)
One party acts on behalf of another during emergency situations
Court can bind principal in actions of agent if not possible for agent to discuss issue with principal, agent acted in good faith, action was necessary to prevent loss or damage to principal
Indemnity
Protection against liability or costs incurred in their duties, unless agreed otherwise or if they exceeded their authority
Payment (Agent right)
Result of express agreement between the parties (rate and frequency) or implied by their conduct/circumstances
Maintain the goods
If principal is indebted to the agent, they have the right to maintain control over goods related to it until said debt is cleared
Agent commits a wrongful act
Agent is personally liable and must pay damages
Principal may also be jointly and severally liable provided there is a sufficiently close connection
Wrongful conduct can fairly/properly be regarded as being done by the agent in the ordinary course of the principal’s business (vicarious liability)
Deep pocket theory
Agent has not identified the existence of a principal to the third party
Agreed contracts are between the agent and the third party
Undisclosed principal may assume obligations, not if the third party wouldn’t have agreed knowing they were the principal, or if third party was denied the identity of the principal or the agent lied
Agent can be terminated
Agreement Expiry Accomplishment Alteration of purpose Bankruptcy Death Illegality
Employment Law
Regulates conduct between an employer and their employee
Labour law
Regulates conduct between unions and employers (collective agreements)
Contracts of employment requirements
Unconditional offer Unconditional acceptance Intention to form a legal agreement Consideration Certainty If a job is subject to constraints, they must be met before the offer is made Doesn't have to be in writing
Express terms
Written into contract/statement of terms, incorporated from collective agreements or from work handbooks
Prevail over implied terms
Written statement of terms must:
Be given to the employee within 2 months of the employee starting
Contain: Name of persons, starting date, renumeration, pension scheme, notice period, place of work, T&Cs for sick pay/holidays
Implied duties owed by employers
Pay Provide work Indemnify Safety/duty of care Mutual trust and confidence
Implied duties of the employee
Duty of mutual trust and confidence Ready and willing to work Reasonable skill and care Obey lawful orders Take care of the employer's property Act in good faith
Comparison of employees, workers and independent contractors
Employee (full rights, unfair dismissal rights, minimum notice periods, flexible working, redundancy payments et al.) Often qualifying periods of employment needed
Worker (some rights)
Independent contractor (no rights)
Differentiating between employee and independent contractor
Employee: Someone under a contract of employment
Independent contractor: Someone under a contract for service
4 parts of common law multifactorical test to see if you’re an employee
Control test
Integration test
Economic reality test
Mutuality of obligations test
Control test
Who is the master and who is the servant?
Have they set hours of work?
Integration test
The more integrated within the business one is, the more they’re an employee
Economic reality test
Who is assuming the financial risk? If the person is taking on the risk, they’re more likely to be an independent contractor
Mutuality of obligations test
Is there an obligation for the employer to pay and provide work and for the employee to work
Lawful dismissal
Reasonable notice
Summary dismissal for cause without notice
Non-renewal of a fixed-term contract
Wrongful dismissal
Claim for damage by an employee if the employer breached a term (substantive or procedural) when dismissing the employee, causing loss
Unfair dismissal
Employer acts unfairly without good reason
Is claimant entitled to take a case (BoP Employee)
Main dismissal reason lawful? (BoP Employer)
Automatically unfair, automatically fair, potentially unfair
If potentially unfair, did the employer hande the dismissal in a reasonable way? (BoP neutral)
Termination of the contract of employment
Lawful dismissal
Wrongful dismissal
Unfair dismissal
Redundancy
At least a worker to get
Minimum wage Paid holiday Rest breaks Limits on maximum working time per week Statutory sick/parental leave pay
Redundancy causes
Business/workplace closure
Reduced requirement of employees
Statutory redundancy protection
Compensation for the loss of the job to an employee dismissed by reason of redundancy
Employer must apply proper and fair redundancy procedures (pools, selection criteria, consultation)
Employer must inform employees that they are being made redundant, payment of wage and contractual benefit for period of notice of termination
Who does the equality act apply to?
Those who are employed to do work/applying to do work
Requires contract, mutuality of obligation, personal service as dominant purpose and subordination
Protected characteristics under the equality act
Age, disability, gender, sexuality, race, pregnancy, religion etc
Age and ability discrimination excluded from?
Armed forces
Who shouldn’t discriminate?
Employers
Employees/workers/employed persons
Vocational training providers
Trade unions and employer’s associations
What does the equality act cover?
Recruitment Employment relation & terms of employment Access to training/other opportunities Dismissal/other detriments After dismissal
Prohibited conduct
Direct discrimination Direct discrimination by association Direct discrimination by perception Indirect discrimination Harassment Victimisation
Direct discrimination
Treat a person less favourably because of a protected characteristic.
Discriminator can also have characteristic
Exceptions include occupational requirements (Proportionate means of meeting a legitimate aim)
Comparison -> Adverse effect -> Causative link
Indirect discrimination
Provision, criterion or practice is neutral at face value but would put those with protected characteristics at a particular disadvantage
Show that it is not a proportionate means of meeting a legitimate aim and make a comparison to show that you or a particular group has suffered a disadvantage
3 types of harassment
Related to sex/gender
Sexual harassment
Less favourable treatment due to acceptance or rejection of the first two types
Harassment
Unwanted conduct related to the relevant protected characteristic which has the purpose or effect of violating the victims’ dignity or creating a hostile environment
Pregnancy/maternity & marriage/civil partnership not covered
Harassment proof
Perception of the alleged victim
Other circumstances of the case
Reasonable for the conduct to have that effect
Victimisation
Employer subjects a person to detriment because they brought proceedings under the act, gave evidence in connection to any proceedings, or alleged that another person has contravened the EA
Person has done a protected act
Victimisation test
In relation to any of the prohibited circumstance (causation)
Detriment from employer
Because employee had done a protected act or the employer believed they had or the employee may do a protected act
Equality clause
Statutorily imposes an equality clause in the terms of a contract of employment
Equal pay for equal work
Pay includes all consideration worker receives from employer
Equality clause proof
Make a claim based on similar work, work related as equivalent or work of equal value
Reference to a comparator from the same employment (hypothetical)
Material factor defence
Difference in pay is not due to sex but due to reasons such as responsibility/experience
Work-life balance rights
Pregnant workers (dismissal is automatically unfair) Maternity rights (leave/pay) Employees make take time off to help a dependent
Working time regulations requirements for employers
Employers must implement the working time directive and young workers’ directive for health and safety reasons
Working time regulations for time off
Minimum daily, weekly and annual periods of rest
Entitled to adequate breaks
Entitled to holidays and annual leave
Armed forces, police and doctors in training etc are exempt to WTR
Working time definition
Periods when you’re carrying out duties or receiving training
Working time regulations for time working
Work at most 48 hours a week, over a period of 17 weeks
Young workers can only work 8 hours/day or 40 hours a week
Night shift workers cannot exceed an average of 8 hours of work per 24 hours
Can opt out by individual agreement
Some unmeasured working time workers (managing executives, family workers and professionals)
Breaks for adult workers
11 hours rest every 24 hours
24 hours rest every week
20 minutes away from your workstation every 6 hours
Breaks for young workers
12 hours rest every 24 hours
48 hours rest every week
30 minutes away from your workstation every 4.5 hours
Annual leave
5.6 weeks in any leave year taken in leave year which it was due
3 issues with leave
Rate of holiday pay based on normal working hours
No carry forward with the exception of sick leave or employer doesn’t allow worker to exerise their entitlement to paid leave
Employers cannot “roll up” holiday pay - Must be given when the holiday is taken
Working time regulation enforcement
Criminal and civil proceedings used to enforce it’s provisions
National Minimum Wage
Over 23s is £8.91
Rise in april 2022
Includes everyone who is a worker, works ordinarily in the UK under contract and is not of of compulsory school age
Doesn’t include voluntary workers, people treated as members of family, armed forces etc
Pay definition
Counted over a period of time discounting tips/expenses
Individuals have right to inspect their pay records and not be victimised for taking action
Burden of proof is reversed, assume worker is entitled to minimum wage and employer must prove they’re not
Health and safety
Enforced by the health and safety at work act 1974
Employers owe a duty to take reasonable care of the health and safety of all wokers. An employee can claim for any injuries or damage suffered due to the employer’s negligence.
Health and safety act enforcement
Fine or imprisonment of the employer
Employers duties under health and safety act
Provide safe plant and systems of work
Safe handling and use of articles and substances
Relevant and necessary information for health and safety provided
Maintaining safe work environment
Safe environment, systems of work, safe handling of substances/articles, safe plant, providing relevant/necessary information and training
