A Quick Guide to the Legal System and Legal Requirements for Businesses in the United Kingdom

The United Kingdom of Great Britain and Northern Ireland consists of four countries, forming three distinct jurisdictions, each having its own court system and legal profession:

• England & Wales
• Scotland
• Northern Ireland

For detailed information on each jurisdiction, please have a look at: www.direct.gov.uk/en/Gtgl1/GuideToGovernment/

The UK joined the European Economic Community (now the European Union) in 1973. It has since been a requirement to incorporate European legislation into UK law, and to recognise the jurisdiction of the European Court of Justice in matters of EU law.

The UK is a signatory of the European Convention of Human Rights (Incorporated into UK law with the Human Rights Act 1998).

For further information about European Union law, please see: http://curia.europa.eu/

There is no written constitution. There are three elements to the UK legal System:

• Statute Law
  
• Case Law
  
• Constitutional conventions
  

Constitutional conventions have no statutory authority but nevertheless have binding force. Much of the relationship between the Sovereign and Parliament is conventional rather than statutory. Although the Queen is the Head of State, the supreme authority of the Crown is in practice carried by the democratically elected government.

Statute Law

The legislature is a bicameral Parliament, which is the practice of having two legislative or parliamentary chambers. In the UK these are the House of Commons and the House of Lords. The House of Commons consists of 659 Members of Parliament (MPs), generally elected by simple majority vote in a general election every five years. Membership of the House of Lords was once a right of birth to hereditary peers. However, the House now consists almost entirely of appointed members due to a series of reforms. The two main forms of primary legislation are Public General Acts and Local and Personal Acts.

Case Law

This is developed when judicial precedent is applied in the courts by judges interpreting statute law and applying common law. Cases in the courts are reported in numerous law reports. The common law is created and refined by judges: a decision in the case currently pending depends on decisions in previous cases and affects the law to be applied in future cases. When there is no authoritative statement of the law, judges have the authority and duty to make law by creating precedent (the common law), which binds future decisions of (stare decisis).

An international comparison of the UK legal system

The UK has one of the most supportive legal systems in the world for businesses. In an assessment of 178 countries, the World Bank ranked the UK sixth globally for 'ease of doing business', a factor which covered several legal issues, including:

• ability to enforce contracts,
• labour flexibility,
• regulations for starting a business,
• regulations related to closing a business,
• ease of registering a property, and
• overall protection for businesses.

Legal requirements for businesses in the UK

The key areas where it is important for businesses to take legal advice include:

Company structure

Companies must ensure that they have the appropriate structure and that they have met the necessary legal requirements for establishing and operating in the UK. For further information, please see the UK Trade & Investment information sheet entitled 'Forming a Company' at www.uktradeinvest.gov.uk

Employment law

Businesses in the UK must meet their legal obligations to their employees. There are several key aspects that should be considered, including:

• terms and conditions of an employment contract,
• the Working Time Directive,
• work permits,
• health and safety,
• equal opportunities,
• paternity and maternity leave,
• pay (including the minimum wage),
• holiday allowances,
• notice periods, dismissals and redundancies, and
• pensions and retirement.

For further information, please see the UK Trade & Investment information sheets entitled 'The UK Labour Environment' and 'Entry into the UK for Business and Employment' at: www.uktradeinvest.gov.uk

Liability insurance

Businesses have a legal responsibility towards employees, customers and the public, and will require liability insurance in order to meet any legal actions brought as a result of negligence. For further information, please see: www.businesslink.gov.uk/bdotg/action

Contract terms and service levels

Businesses have legal responsibilities to both customers and suppliers and should, therefore, take legal advice on issues such as terms and conditions of contracts, obligations and service levels. Please see Appendix A for further information on obtaining professional legal advice.

Protecting intellectual property

Businesses should ensure that they have the appropriate intellectual property rights for their products and services, and that they are not infringing upon the rights of other businesses. For further information, please see the UK Trade & Investment information sheet entitled 'Intellectual Property Rights' at: www.uktradeinvest.gov.uk

Regulations

In the UK, companies must adhere to general operating regulations (such as the Data Protection Act) and specific regulations that apply to an industry sector or proposed business activity. For an initial checklist of regulations, please see: www.businesslink.gov.uk/bdotg/action/

Health and safety

Employees, customers and suppliers must be able to operate safely when interacting with all aspects of a business (for example, workplaces must meet minimum health and safety standards). For further information, please see: www.hse.gov.uk/

Real estate

There are several important legal issues that companies must address when buying or leasing property or land. A solicitor who specialises in property law will typically advise on issues such as ownership, negotiating the best terms (for a lease or purchase) and will also carry out 'searches' to check if there are any problems with the site or building. For further information on real estate in the UK, please see the UK Trade & Investment information sheet entitled 'Property: Commercial & Industrial' at www.uktradeinvest.gov.uk

Environmental requirements

Environmental regulations in the UK are dependent upon various factors including the type and size of the business, the industry sector and the specific processes being undertaken. For further information, please see www.netregs.gov.uk or the UK Trade & Investment information sheet entitled “Environmental Regulations in the UK” at: www.uktradeinvest.gov.uk