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LSC UoS BA in Business

Assignment Brief

Course/Programme: BA Business
Level: 4
Module Title: Business Law and Ethics
Module Leader:
Assignment titles: Analysing the structure of UK employment laws along with
fundamental features of the UK company law
Assignment number(s): 1

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Table of Contents
Introduction......................................................................................................................................3
The broad structure of UK employment law since the 1970s.........................................................3
The favourability of employment laws........................................................................................4
Fundamental features of company formations in the UK................................................................5
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Introduction
The government of the UK has prepared many laws and regulations to overlook the welfare of
business organisations, employers and employees. The laws are applied to specifically articulate
the rules and regulations of forming a business, operating the firm, and how it shall safeguard its
employee’s rights while not harming the interest of the employers. The study will effectively
focus on these critical issues. It will provide a broader structure of the UK’s employment laws
and their very development since the 1970s. It will discuss the critical laws along with their
significance and will commend whether these laws are Employee or employer-friendly. Lastly, a
detailed basic feature for the formulation of companies in the UK will be provided along with
specific rules and regulations to be complied with by firms during their formations. |

The broad structure of UK employment law since the 1970s

UK employment laws are developed to ensure that both employers and employees get
appropriate protection during their job periods. The employment law of the UK is a combination
of legislation that outlines the dismissal, payment structure, anti-discriminatory policies, and
employees’ rights. The history of the UK’s employment law starts with the 19 th century’s Master
and servant act 1823. But the study shall analyse the structural sequence of laws and regulations
since the 1970s.

Figure 1: UK employment law timeline

Source: (Carr and Lewis, 2017)1

Equal pay act 1970 was enacted in 1975 that outlines the critical guidelines of paying the men
and women working in the organizations equally. It outlines the criteria of employee
performance measurements and enforced the companies to apply those neutral rules to determine
the actual amount of wage for both men and women (Gamble and Kelly, 2019) 2. The matter of
1
Carr, I. and Lewis, D., 2017. Combating Corruption through Employment Law and Whistleblower Protection. Industrial Law Journal, 39(23),
pp.52-81.
2
Gamble, A. and Kelly, G., 2019. Shareholder Value and the Stakeholder Debate in the UK. Corporate Governance, 9(2), pp.110-117.

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safety and health was a pivotal issue to be covered by employment laws. The Health and Safety
at Work Act -1974 defined the fundamental regulations and structure to encourage and enforce
the employers to make their workplaces safe and healthy. It also outlines the critical duties that
employers have to employees and the public in case a third party is injured in an accident.

The Working Time Regulations Act - 1998 introduced the schedules and rules for duty hours for
employees. It outlines that employees must have 20 paid holidays per year and enforced
employers to limit excessively long working hours. National Minimum wage act - 1998 was the
first law that outlined the national minimum wage for UK employers. Over time, the minimum
wage has been adjusted with existing economic conditions. Equality act - 2010 is the most
powerful and articulated employee act that has codified all previous discrimination legislation
like the sex discrimination act 1975, the Race relations act 1976, and the Disability
discrimination act 1995 and centralised them into a single law (Equality Act 2010, 2022)3. The
Data protection act - 2018 provides more rights to employees to control their personal data and
information given to their employers. And employers are enforced to effectively maintain them.

The favourability of employment laws

The employment laws of the UK have been designed to safeguard the rights and values of
employees and employers simultaneously. But there has been an old complaint by the employers
that the labour laws of the UK have solely mandated the employees and termed the laws as
Employees friendly. But things have started to change after 2010 as several reforms and
readjustments have been conducted that certainly favoured the employers. The worthiest
example is the introduction of the new ACAS (Advisory, Conciliation, and Arbitration Service)
early conciliation service that is designed to lower employment claims in courts. This method
enables both employer and employee to make an informal arbitration. If either of the parties
doesn’t accept the verdict, the case is passed to the claim tribunal if ACAS provides a certificate
to the party. Thus, if there is no certificate from ACAS, employees can’t file claims at the
tribunal.

The qualifying period for unfair dismissal claims was increased from one year to two years. But
it has increased the difficulties for the individuals who were unfairly expelled from their jobs.
UK government has also unleased a new cap for claims for unfair dismissal which is the lower
3
Legislation.gov.uk. 2022. Equality Act 2010. [online] Available at: <https://www.legislation.gov.uk/ukpga/2010/15/contents>
[Accessed 5 August 2022].

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of £74,200 or an employee’s one year’s gross salary. Thus, employees who are highly paid will
be the losers in claim cases. This kind of cap on salary claiming is discouraging the employees to
ask for their valid rights. The government has also lodged fees for employment tribunal claims.
This fee charging has significantly reduced claim applications, especially from lower-paid
employees. As a result, the ministry of justice articulated that the number of claim applications in
the tribunal has decreased by 79% from the previous year’s (2020) numbers (Machin and
Manning, 2022)4. Thus, it can be attributed that the employment laws are now favouring the
employers not the employees in the UK.

Fundamental features of company formations in the UK

Company formation in UK is completed according to the companies act 2006. For a Limited
Liability company, the first step is to propose a name. The selected name must not be similar to
any existing company already registered. If the name is not similar to any other company, then
the applicant firm can use the name according to the acceptance of company house and continue
its incorporation process.

Figure 2: UK company registration steps

Source: (Set up a private limited

company |GOV.UK, 2022)5

The address of the company

must be registered as
official mails from the
company’s house will be
delivered to that address. Moreover, the address must be situated in the UK’s jurisdiction i.e.,
England and Wales, Scotland, or Northern Ireland. The next step is to select the directors and a
company secretary. In the registration process, the responsibilities of the directors will be
specified and they must abide by that. They must follow the Article of association, keep the
records of transactions, file company tax returns, operate the firm on behalf of the stockholders,
4
Machin, S. and Manning, A., 2022. The Effects of Minimum Wages on Wage Dispersion and Employment: Evidence from the
U.K. Wages Councils. ILR Review, 47(12), pp.319-329.
5
GOV.UK. 2022. Set up a private limited company |GOV.UK. [online] Available at: <https://www.gov.uk/limited-company-
formation/register-your-company?step-by-step-nav=37e4c035-b25c-4289-b85c-c6d36d11a763> [Accessed 5 August 2022].

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and pay taxes. To be an eligible director in the UK, the person must not live in the UK. The next
step is to appoint shareholders or guarantors for the firm. There can be at least one shareholder
or guarantor but the number is subject to the applicant’s jurisdiction. Moreover, directors
appointed in the previous step can also be shareholders (Companies Act 2006, 2022) 6. The
shareholder’s rights and responsibilities need to be articulated at this stage. It must clarify
whether shareholders can exchange their voting rights for money, on what matters they can vote
on, etc. The next step is very critical for the companies listing in the UK. They must prepare a
memorandum and articles of association. A memorandum of association is the legal document
certifying the formation of the companies by all initial shareholders. But the articles of
association are the written rules about operating the company, its organisation structure,
employment policy, and sustainability strategies.

For the formation of a community interest company, there are different model constitutions that
can be applied for this purpose. The next step is to identify what kind of records to be kept by
companies. A company must record itself and regarding its financial and accounting records. For
the first one, the company must keep the details of directors, the result of any shareholder voting,
transactions with any party, and loans taken from banks against company assets. A register of
people with significant control (PSC) must be kept even if there are no such people in your
company (Butturini, 2020)7. At the last stage, register the company with companies house
subject to the fact that all the documents and claims are approved by companies house. After the
completion of these steps, a certificate of incorporation will be given to the initial shareholders
that will legally confirm the existence of the company with the company number and the date of
formation.

Conclusion
The employment laws in the UK are combined and designed to provide better coverage to the
employee’s rights. Several laws have been developed since the 1970s to address the issues of
minimum wage rate, equality in the workplace, and data protection for employees. But these
laws are allegedly favouring the employers, not the employees. Because the claim tribunals have

6
Legislation.gov.uk. 2022. Companies Act 2006. [online] Available at:
<https://www.legislation.gov.uk/ukpga/2006/46/contents> [Accessed 5 August 2022].
7
Butturini, P., 2020. Written Resolutions in UK Companies Act 2006 and Their Possible Relevance beyond UK
Borders. European Company and Financial Law Review, 17(6), pp.760-786.

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been reshaped that mostly facilitates the employers to avoid employee claims. The formation of a
limited liability company in the UK is subject to the company act 2006 and the whole process is
overlooked by the house of companies. Companies must abide by the rules to legally operate
their operations in UK territory.

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References
Carr, I. and Lewis, D., 2017. Combating Corruption through Employment Law and
Whistleblower Protection. Industrial Law Journal, 39(23), pp.52-81.
Gamble, A. and Kelly, G., 2019. Shareholder Value and the Stakeholder Debate in the
UK. Corporate Governance, 9(2), pp.110-117.
Legislation.gov.uk. 2022. Equality Act 2010. [online] Available at:
<https://www.legislation.gov.uk/ukpga/2010/15/contents> [Accessed 5 August 2022].
Machin, S. and Manning, A., 2022. The Effects of Minimum Wages on Wage Dispersion and
Employment: Evidence from the U.K. Wages Councils. ILR Review, 47(12), pp.319-329.
GOV.UK. 2022. Set up a private limited company |GOV.UK. [online] Available at:
<https://www.gov.uk/limited-company-formation/register-your-company?step-by-step-
nav=37e4c035-b25c-4289-b85c-c6d36d11a763> [Accessed 5 August 2022].
Legislation.gov.uk. 2022. Companies Act 2006. [online] Available at:
<https://www.legislation.gov.uk/ukpga/2006/46/contents> [Accessed 5 August 2022].
Butturini, P., 2020. Written Resolutions in UK Companies Act 2006 and Their Possible
Relevance beyond UK Borders. European Company and Financial Law Review, 17(6), pp.760-
786.