Business Law II BA (Hons) in Business Studies - Independent Colleges Ireland

READ THE FACTS AND ANSWER THE QUESTIONS WHICH FOLLOW IT.

FACTS

Walter works as a high level web designer for sports-wear business – JUST RUN. The business is owned by Paula and Peter who are equal partners in the business, and has 20 employees in total. Paula does not really understand what he does and is not in a position to tell him what to do or how to do it. She just likes the website that Walter maintains.

Walter is free to work from whatever location he chooses although he participates in meetings with Paula and Peter about the firms’ strategy. He tends to work from the firms Head Office one day a week and the rest from either his home or other locations. He provides his own laptop and can work whatever hours he wants as long as the website is maintained. He invoices the firm for his work by the hour and the firm deducts PRSI but not PAYE from his wages. He is part of the firms’ soccer team and the book club. He contributes to the firms’ pension scheme. Under his contract he cannot sub-contract the work on the firms’ website out to anyone else and is answerable to the firms PR and Development manager on a monthly basis for sales using the firms website. He receives a bonus based on increase in sales via the website.

He is considering joining the trade union recognized by the firm but one of the sales team tells him he doesn’t think it would be open to him as he isn’t an employee of the firm. He also wants to go on holidays soon and has been told he will not be entitled to holiday pay. He knows that the web sales team all receives holiday pay. Walter is concerned and looks at the contract which he signed when he started work for the firm. The document states that he works under a “contract for service”. Walter never noticed this before.

Paula, the senior partner in the firm had a meeting with the firms’ accountant, Mr. Moneybags. The accountant told Paula that she and the other partners should consider forming a private company with liability limited by shares, and to transfer the existing business to that company.

Paula and Peter discuss the accountants advice at a meeting but they don’t know how what to do. The accountant did not explain what advantages setting up a company might offer to them.

After read the facts answer this 2 questions

(1) Walter asks you to explain to him whether he is an employee or an independent contractor? (40 marks)

(2) Paula and Peter ask you to advise them on the following issues;

(a) What does the term limited liability mean? (5 Marks)

(b) What steps must be followed in order to form a private limited liability company? (15 Marks)

(c) What are the advantages and disadvantages of choosing a private company with limited liability? (20 marks)

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