Regulating the Employment Relationship

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Regulating the Employment Relationship

Advantages

  • Sinzheimer - the object of transaction in an employment relationship is a human.
  • Sinzheimer - personal dependency is the basic problem of labour law (employers are often richer than employees, employees need the job more than employers need the actual employee).
  • Sinzheimer - human dignity may be endangered by the employment relationship (imblalance of bargaining power could lead to the exploitation of employees, whether accidentally or not).
  • Hoffman in Johnson - employees get a sense of actualisation from work, not just pecuniary return.
  • Marx - 'the dull complusion of economic relations (there is an econmic compulsion to go and get work whether you want to or not, and therefore your freedom of choice may be constrained).
  • Kahn-Freud - the main object of labour law in to be a counterveiling force to counteract the inequality of bargaining power.
  • Sidney and Beatrice Webb - history shows that employers will always exploit their superior economic power if allowed to do so.

Disadvantages

  • Restricts economic efficiency (if you make it too difficult for employers to get rid of employees, you can make the company less competitive).
  • Less job creation, which in turn harms workers.
  • Creates bureaucracy and cost.
  • Penalises good workers at the expense of bad workers (the only kinds of workers who need employment protection are those who are not very good at their job).
  • Inequality of bargaining power is a fact of economic life, and there is nothing special about the employment relationship.
  • The effects of employment regulation and mandated benefits ultimately fall on employees, consumers, the unemployed and taxpayers, not on employers.
  • 'Endowment effect' - a term in behavioural economics, it means that employees are lead to value the benefits regulation brings more highly than the potentially bigger benefits of reform.

Evaluation

Employment law is seen by many as a way to counteract the imbalance of power seen in employment relationships - this is a very real thing. However, some argue that regulation prevents growth in the labour markets, and may not be as beneficial to employees as first thought. 

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