#3640 - Introduction To Labour Law - Labour Law

1. Sources and History

Introduction

Labour law: the scope and nature of the subject

Labour law as a discipline

Defined by subject matter and intellectual tradition.

Rules which govern the employment relationship.

Broader – normative framework for the existence and operation of all the institutions of the labour market: the business enterprise, trade unions, employers’ associations and, in its capacity as regulator and as employer, the state.

Hepple – Labour law stems from the idea of “the subordination of the individual worker to the capitalist enterprise”; it is above all the law of dependent labour and hence is specific to those categories of economic relationship which in some way involve the exchange of personal service/s for remuneration.

Labour law concerned with how these relationships are constituted, a role which accorded primarily to contract, and with how they are regulated, a role shared by common law, social legislation and extra-legal sources like collective bargaining and workplace custom.

Kahn-Freund – labour law is more than just the sum of its parts; implies that labour law should embrace “sociology, social policy and the theory of business organisation”. Stresses the functional inter-dependence of the positive law with extra-legal sources of regulation, in particular collective bargaining.

Although the notion of labour law as the normative framework for the institutions of the labour market has commanded increasing attention in recent years (Davies and Freedland, Collins, Deakin and Wilkinson), it should be borne in mind that other closely related areas of law are also important determinants of labour market outcomes. Social security law – Wikeley and Harris: extends far beyond the employment relationship to embrace many aspects of the relationship between the citizen and the state in the distribution of economic resources. Also company law and taxation law. industrial sociology, labour economics, feminist legal theory and political theory.

Individual labour law – relationship of employer and employee

Collective labour law – collective bargaining, trade union organisation and industrial action

Cannot be adequately considered in isolation from one another e.g. in analysing the individual employment relationship, necessary to take into account influences of norms which are derived from collective soruces e.g. collective bargaining, and the contract of employment plays a fundamental role in relation to the economic torts and other aspects of the law governing industrial action.

Labour law: collective bargaining and labour standards

Theme – role of collective bargaining in relation to social legislation.

Collective bargaining – process of negotiation between an employer and group of employees and one or more trade unions, designed to produce collective agreements.

Two functions of collective agreements are important: the procedural or contractual function of regulating the relationship between the collective parties themselves; and the normative or rule making function, which consists of the establishment of terms and conditions which are applicable to the contracts of individual workers.

Collective agreements may operate on a number of levels. Sector level-bargaining refers to a process of negotiation which takes place at the level of a particular trade or industry, normally between an employers’ association and one or more trade unions. This is now rare. More usual for bargaining to take place either at the level of the company or enterprise or within companies at the level of the plant or establishment.

Social legislation – legislation in the field of employment and can be two types. Regulatory legislation directly affects employment relationships, typically by laying down statutory norms which override the parties’ own agreement e.g. minimum wage and unfair dismissal legislation. Auxiliary legislation consists of legal supports for the process of collective bargaining and other aspects of collective organisation- its impact on the employment relationship is indirect e.g. laws which require employers to recognise trade unions for the purpose of collective bargaining and laws which oblige employers to consult with or give information to representatives of the workforce.

Labour standards – protective norms which govern the employment relationship – can derive either from legal sources (legislation or common law) or extra-legal sources (collective bargaining).

Assessment: the prospects for labour law

Continuing modern emphasis on the role of labour law in regulating the labour mark in the interests of promoting a flexible and competitive economy (Davies and Freedland).

If the principal purpose of labour law is no longer the support of collective bargaining, what is it?

Davies and Freedland have identified the ever-intensifying problem for labour law as being “how to reconcile the various demands upon governments in relation to industrial society, within a framework of reasonably acceptable, democratic, representative and humane labour law”. Accordingly, the relationship between labour market regulation, economic efficiency and competitiveness is a central issue in labour law today.

At the same time, the decline of collective bargaining has led to renewed interest in how far labour law could or should be used to articulate certain fundamental social and economic rights. The degree to which such fundamental rights may be enshrined in law without burdening enterprises with excessive costs, or creating harmful labour-market rigidities, continues to be at the heart of debates over the future development of legislative policy.

Labour law and economic efficiency

The debate over labour market flexibility and the efficiency of labour law has stressed the degree to which over-rigid labour laws and excessive social security provision in Britain have been responsible for slowing down processes of labour market adjustment.

The 1994 European Commission White Paper, European Social Policy – a Way forward for the Union, acknowledged the importance of this issue when it commented that “the need to alter fundamentally and update the structure of incentives which influence the labour market is still not adequately recognised”.

There has been a growing recognition that the problem of incentive structures will not necessarily be solved by a simple process of deregulation, if that is understood to mean the removal of protective legislation and a return to the unregulated individual contract of employment or employment relationship. As the experience of the UK in the 1980s shows, deregulation is a complex process which, while it may lead to the removal of regulatory controls in some areas, is compatible with an enlarged role for legislation in others, in particular with regard to the control of collective organisation. The extreme complexity of British legislation dealing with industrial action and with internal trade union affairs is testimony to the continuing importance of the law in this area. More generally, the removal of certain labour law protection during this period did not mean that the state had effectively withdrawn: “contract to all appearances, the activist state is by no means dismissed...far from simply rejecting all interference, the state is assigned to the task of setting the elementary conditions for a functioning market” (Simitis). An important implication of this is that so called deregulation did not, of itself, reverse the process of the juridificaiton of labour relations, or the increasing intervention of the state in economic and social relations. Nor is it at all clear that the aim of enhancing labour market efficiency can most effectively be met by the means of deregulation, given the persistence within unregulated markets of market failures of various kinds (Deakin and Wilkinson).

There is an argument to the effect that the question of efficiency should be approached by seeking to strike a better balance between economic and social policy goals: in the words of the EC White Paper, “long run competiveness is to be sought, not through a dilution of the European model of social protection, but through the adaptation, rationalisation and simplification of regulations, so as to establish a better balance between social protection, competiveness and employment creation.”

The White Paper referred to a view which suggests that there is no necessary conflict between economic and social policy: “the pursuit of high social standards should not be seen only as a cost but also as a key element in the competitive formula. It is for these essential reasons that the Union’s social policy cannot be second string to economic development or to the functioning of the internal market”.

Others have also questioned whether there is an inevitable trade-off between rights and efficiency in this context. A study published by the UK Employment Department in 1995 found substantial evidence of what it took to be increased flexibility in the labour market which could be ascribed to the legal changes introduced since 1980. At the same time, the author of the study pointed out that “it is difficult to establish precise linkages between measures of flexibility and labour market outcomes” (Beatson). The study found evidence of greater micro-level flexibility in the UK in the form of an increase by firms of part time, temporary and self-employment, as well as an increase in function flexibility or the adaptability of workers within enterprises. At the macro level, by contrast, there was still evidence of substantial wage...