Legal Aspects and Government Influences: Work Wear ltd - Case Study Example

Work wear ltd Legal Aspects and Government influences Legal aspect :task a Introduction Work Wear Limited is a business that has been set up by Claire & Robert Brown, their daughter Anna Cox-Brown and a friend Cuthbert Bridge. The partnership business has been in operation for around twenty months and things have been running smoothly among the four partners. They make and sell overalls, uniforms and other work wear to other factories and retailers. Claire and Robert Brown were the main contributors of the capital of the business and some of this capital was raised through a loan on their property. Anna Cox-Brown and Cuthbert are sidelining Claire and Robert Brown and this has caused conflict to their earlier partnership relationship. (Allen, 2009) Partnership A partnership is defined by the Partnership Act as the relationship which involves two people holding a business together with the main objective of making profits. This is a definition which explains the relationship which exists between the two partners’ partnership is not a body corporate and as such does not hold a legal personality status. A partnership has several disadvantages which make partners convert it to a company so as to deal with these advantages. One of the consequences of not being a body corporate is that the debts of the business are the debts of the individuals within the partnership. All the partners of the business therefore share a liability jointly to the debts of the company. The death of any one of the partners will lead to the dissolution of the business unless the partnership agreement stipulates a different approach. A partnership is also not allowed by law to own property since the entity is not a legal person. Another disadvantage of being in a partnership is that the partners may be sued for the business’s debts. The advantages attributed to a partnership include the following. First a partnership is fairly easy to start as it does not require many documents and requirements to start. It has also the advantage that due to the several numbers of partners it has the ability to raise fund s and capital for its startup. Partnerships also have the advantage of being cost effective as each partner can specialize in a certain section of operation of the business and also the fact that each partner will bring his skills and qualifications to the table. When a group of business individuals decide to start a partnership the best way to deal with the advantages related to this business entity is it has a business pre nup. This document should spell out what will happen when and if different situations that are a threat to the business happen. These includes when a partner wants to get out of business, a partner wants to retire, when a partner dies etc. Private Limited Company A private limited company is a type of company classification that has limited liability to its shareholders but it has restrictions to the ownership of the business.(Senge, 2006) The restrictions are spelled out in the company’s articles of association or its bylaws which are put in place to protect the company from hostile takeover attempts. The major restrictions are that the partners shall not sell their shares or transfer them without fist offering them to the other shareholders for them to buy. The number of the shareholders cannot exceed a certain fixed figure say fifty members. The following are the advantages related to a private limited company. When a private limited company is set up it protects the personal assets of the members and also the entity has more access to resources and can easily acquire credit from the commercial institution among others. The greatest advantage however is the limited liability status; this is because they are treated as single entities which make the company to be its own person who is responsible for its own debts. Forming a private limited company also has tax deductible costs and allowances which can be redeemable againstprofits. There is also the advantage of the business continuing even after the death, resignation and conflicts within the business entity. The disadvantage associated with a private limited company includes that there are several requirements needed for it to be registered as a private limited company. All the requirements of the business must be met continuously otherwise it might lose its status as a limited private company. Recommendation I recommend the partnership to be converted into a private limited company. They will be able to enjoy the advantages associated with the entity. Claire and Robert Blaire will no longer have to worry about their property since the business will be a separate from the partners. Also in case of the company suffering from bad debts the shareholders will have a limited liability. The issue of Anna Cox-Brown and Cuthbert trying to sideline Claire and Robert Brown will be tackled. If there were losses and profit, Claire and Robert Brown, Anna Cox-Brown and Cuthbert Bridge would share them depending on their capital contributions. These will be calculated from the percentages of their contributions to the total contributions.(Hollender, 2010) When entering business agreement all the members should be informed on the agreement and they should also agree to this. At times the private limited company will be have directors who will be in charge for the running of the business to the directors have to keep the members up to date with their operations and only make decisions that lies under his jurisdiction. Legal aspects: task b Introduction The company made an agreement with a local factory to supply it with a large number of its employee’soveralls. The factory’s manager came in to the factory and saw its products and invited Anna Cox-Brown and Cuthbert Bridge to have dinner with him. They made a deal that the company would supply the factory with 100 dark blues overalls. Work wear limited emailed the factory to confirm the 100 overalls order. James’s factory was not satisfied with the overalls supplied and as such refused to pay.(Allen, Visionary Business;An Entreprenuer Guide to Success, 2009) Legal Agreements A distinguishing element of a partnership is the element of the unlimited liability of the partners. Each and every one of the partners is individually liable for any debts that face the business. These include the debts that are incurred by the business because of the activities of any of the partners. When any of the partners enters an agreement he does so on behalf of the company and as such the agreement is legally binding to all the business partners. Thus any one partner has the ability to bind the company into a legal agreement. In the case of Work wear limited the partners Ann and Cuthbert enters an agreement with factory to provide the overall for the factory’s worker. Thefactory was not satisfied and hence has refused to pay. Claire and Robert were not involved in the deal or with the deliverance of the factory workers’ overall. Despite this they are also liable for the deal as the other partners will use the name of the partnershipto enter into the business deal, there is thus no way to avoid this liability. Partnerships are one of the most dangerous entities as any negligence of the partners will fall on all the other partners. Apart from this the partners are also liable fully by the whole amount of the entire obligation of the business. For instance the partners of the business each have different contributions to the business but all of them have 100% liability on the business. Even though a partner may have a small contribution to the business say 19% he or she will still be a 100% liable for the business.(Dolan & Raich, 2008) Work Wear Limited thus has a valid contract with the factory as it was entered by two of its partners who were acting in behalf of the partners. James is entitled into sending the goods back to them since he had specified on the quality and color of the overall he wanted for his company’s employees. In conclusion any agreement signed between a partner or partners of the of the business ties all the other partners and the agreement has been made by the business. Legal aspects: task c Introduction Work Wear Limited needs to review their employment requirements. They have concern of their financial future of the partnership and they wish to know if they can be able to reconstruct their workforce. They are of the idea of buying specialized equipment whereby they can reduce the number of workers by six workers though they will need to employ one specialist who will be operating the new machine.(Dolan & Raich, 2008) Employment Law The employment laws are very wide and cover many different issues. There are different issues that surround employment, some of these issues included; employment contracts, discrimination, sickness and dismissals. When the employment processes are going on, an organization needs to be extremely cautious so as to ensure that they do not break any employment laws when drawing up contracts. This is because one the contract is drawn and signed by both parties i.e. both the employee and the employer, it becomes a legal document. When drawing up a employment contract, it can either be written or it can be implied both of which are legally binding. Within the employment contract the terms of employment will be the guide to both the employee and the employer and any movement or action outside this contract will be liable for the failing of the agreement. If there is a need to change the terms of the contract both parties should come together and agree on the new terms. A new employee should be provided to him or her so that he reads with them too and he or she should sign and if he goes against them will be made liable. When one gets sick there is a need for there to be laws which will protect the sick individuals.(Senge, 2006) The sick should be given a sick leave to get well and it’sagainst the law to not give a sick person leave to go to the hospital. When an employee is being dismissed, he should be done so within the terms of employment law. If the contract of employment has not given and specified a notice board an employee should be give an adequate time before being dismissed. There is a statutory minimum notice of one week for an employee who has been employed for a period of one month and so on and so forth. The company should ensure that it’s accused of wrongful dismissal. During this period of the notice the employee is entitled to remuneration that he was already being given be it salary or the employee benefits. An unfair dismissal is whereby an employee is dismissed unfairly for no reason. (Hollender, 2010)On the other hand when an employer breaches hos employment contract the employees will be dismissed and this kind of dismissals is referred to as constructive dismissal. Before the company dismisses the employees it should be fully aware of all these laws and should ensure that the employees are properly remunerated and that the employees are given the required amount of time for a notice before they are dismissed. Work Wear Limited therefore should ensure that the company gives an adequate notice period for the employs they decide on dismissing and also ensure that during the notice period that they are properlyremuneratedand that they are paid a salary as before the notice and also that they are given the required benefits. Work Wear in case they had no specific notice period will take a period that is legal i.e. depending on the time period that the employees have worked for the company. Effect of the Redeployment to Employment Contracts Once the redeployment of staff occurs the employment will need to be changed and new terms of employment will be of a different situation. (Hollender, 2010)For example the deployment can lead to the employee moving from one department to another which have different situation facing the employees. This different may be increased risks, more time working i.e. increased working hours. The employment terms thus will have to be changed in order to cover for the new dynamics within the organization. Government influences: task d The UK economic growth is likely to enter recession and this may be due to the failing demand from Europe and the GDP growth is expected to go down to 0.3% this year. The employment is projected to rise by around 9% this year. Many steps are being taken by the government to improve and stabilize the economy. The government’s long term goal is to increase the economic growth of the country and also to stabilize the economy. I f the corporation tax and VAT is increased it will decrease the revenue gotten from the sales of the company. If the company relies heavily on the loans from the market, an increase in the interest rates will reduce their accessibility of the business to credit needed to improve and increase its operation. Government influences: task e The advantages of selling to selling to EU countries as opposed to selling them to non EU countries is that selling in the EU countries will be the fact that selling within the EU will avoid the difficulties involved with exporting things to other non EU countries where the business will be forced to pay heavy taxes and also the fact they will be faced with numerous bureaucracies before being able to sell their products abroad. The business will have to look in to EU legislation to understand how it works and its rules and regulation. It will affect the business in that the business has to ensure that it is in line with their rules and regulations. The department for business Innovation and skills can support a business idea that proves to be viable in the market.(Dolan & Raich, 2008) They can offer financial help to the business to add to its capital. It can also offer entrepreneurship training sessions and also management training for the business to ensure that once started it will be profitable and also that it will be sustainable over time. Conclusion In conclusion a business venture before starting should be very informed on the laws affecting its formation and also its operations. The business owners should also ensure that the business entity should be set up properly following up all the rules surrounding g the formation of a business entity. Also they should also ensure that the business entity that chooses is most advantageous to their venture. They should follow the employment laws surrounding hiring, firing and dismissal of the employees. When the employment processes are going on, an organization needs to be extremely cautious so as to ensure that they do not break any employment laws when drawing up contracts. (Allen, 2002)This is because one the contract is drawn and signed by both parties i.e. both the employee and the employer, it becomes a legal document. When drawing up a employment contract, it can either be written or it can be implied both of which are legally binding. Within the employment contract the terms of employment will be the guide to both the employee and the employer and any movement or action outside this contract will be liable for the failing of the agreement. If there is a need to change the terms of the contract both parties should come together and agree on the new terms. Bibliography Allen, M. (2002). The Ten Percent Solution:Simple Steps to Improve Our Lives and Our World. New York: New World Library. Allen, M. (2009). Visionary Business;An Entreprenuer Guide to Success. London: New World Library. Dolan, S., & Raich, M. (2008). Beyond:Business and Society in Transfromation. New York: Palgrave Macmillan. Hollender, J. (2010). The Responsibility Revolution;How the Next Generation of Business Will Win. New York. Senge, P. (2006). The Fifth Discipline;the Art and Practice of the Learning Organisation. Chicago: Random House. Read More