MGMT2022 – Lecture 1

Introduction to the Law and its purpose

Why is this subject important to managing people at work (HRM)?

- Contemporary HR functions and themes are all influenced and shaped by employment law e.g.
Ø The terms of engagement for work  Privacy
Ø Recruitment and selection  Migrant labour
Ø OHS  Discrimination
Ø Remuneration  Dismissal
Ø Work/life balance

What is the Legal Environment of HRM?

- Managers are not completely free to choose whom they hire, promote or fire
- HRM practices governed by laws/regulations
- These laws vary from country to country
- Growing significance of law for HR Managers and indeed other managers:
Ø Managers must keep abreast of their legal obligations
Ø FWC has made it obvious in many decisions that Managers must understand their legal obligations in relation to work
arrangements and can be held individually responsible.

What are the sources of employment law in Aust.?

The three sources of employment law:
- Common Law
Ø Contracts of service; and
Ø Contracts for service
- Statutory regulations
Ø Mix of federal and state legislation
Ø Mix of specific ‘industrial’ legislation (e.g., Fair Work Act 2009) and specific issue legislation (e.g., Anti-Discrimination
Laws, Long Service Leave Laws)
Ø Shifting the balance from state to federal
- International labour standards

Why the mix of federal and state laws? Structure of the Australian Constitution

THE CONSTITUTION
- S.51(35) of the constitution – used to establish Australian
Conciliation and Arbitration Commission in 1904.
- Use of other ‘heads’ of the constitution by national
government to legislate on industrial relations is relatively
recent. What powers has it started using?
Ø External affairs power - s.51(29) - since 1975
Ø Tax power - S.51(2) – in 1992 for superannuation
legislation
Ø Referral power – s.51(37) – Cth government can legislate
on any matter referred by a state – e.g., 1996 Victorian
Government referred IR power to Cth Govt.
Ø Corporations Power – s.51 (20) – ‘Work Choices’
- The Clth government also uses processes of cooperation to
influence legislation around the country e.g., ‘harmonising
work health and safety regulation through the WHS Model Act
2012.

Federal / State relations

- If the Federal Parliament has not legislated in relation to any of
the matters listed in s 51, then that matter remains within the
regulatory authority of the States.
- If a State parliament has made a law in relation to one of these Examples Examples Examples
matters, and the Federal Parliament makes a law in relation to the Customs Customs Customs
same matter, then s 109 of the Australian Constitution provides Defence Defence Defence
that, the latter shall prevail, and the former shall, to the extent of Currency Currency Currency
the inconsistency, be invalid. Territories Territories Territories
 MGMT2022 – Lecture 1

Australian Court System:

Federal Court Hierarchy State and Territory Court Hierarchy

Common Law
- The CL determines which ‘workers’ in our economy obtain the protections and obligations contained in awards, agreements,
and industrial law as a whole.
- CL has developed gradually & incrementally

The doctrine of precedent

- The common law is built on the basis of judgments in courts.
- The decisions of most courts are recorded and published, leading to the creation of a source of law: case law.
- According to the doctrine of precedent, in reaching a decision about a question of law the court must follow the decisions of
courts higher than itself in the same hierarchy of courts within the particular jurisdiction.
- Decisions of courts outside the particular hierarchy are not binding but may be persuasive.

The conceptual contest at the heart of employment law

- There are two main competing philosophies of the function of labour law:
Ø Labour law as a social tool – the protective view
® Countervailing force
® Decent threshold
® Foster social cohesion
Ø Labour law as economic tool
® A tool of economic regulation to foster/enable competitive market relations (i.e., freedom to contact)

Labour Law as social tool – the protective view
- This view is associated with Otto Kahn Freund.
Ø The contractual relation ‘in its inception, is an act of
submission, in its operation it is a condition of
subordination.’ [Kahn-Freund 1977]
- Labour law is a countervailing force against the inherent
inequality embodied in the employment relationship i.e.
- It moderates the operation of the market in the interests of
all –– establishing standards to govern work relations and
mechanisms for bargaining over the terms of that rel/ship
– and, in the process, limiting the range of a workers’
duty of obedience and enlarging their freedom.
- Labour law ensures that employers cannot impose
conditions of work that fall below what is understood as a
decent threshold in a given society.
- Labour law operates as a tool to foster social cohesion
through concepts of fairness, equality and a commitment
to a decent life for workers.
Labour Law as Economic Tool
- This is the libertarian or economically rationalist
perspective.
- Labour law is a tool to foster competitive market
relations.
- Hayek wrote that the function of law should be to
facilitate the individual transaction between seller and
purchaser of labour without seeking to regulate the
outcomes of that transaction. i.e., facilitate freedom of
choice and the unfettered operation of supply and
demand.

The inevitable paradox

- Kahn Freund wrote that this conflict of views reflects an inherent paradox in labour law.
- That, by restraining the power of management over the individual worker, the law limits the range of the worker’s duty to
obey management rules – thus enlarging worker freedom  hence restricting freedom to contract i.e., a restraint on trade.
- So inevitably, someone’s freedom is curtailed.

Can the purposes be mutually reinforcing?

- Hugh Collins (2010) argues that employment law regulates relations for two reasons, and this is not necessarily paradoxical:
 MGMT2022 – Lecture 1

Ø To ensure employment relations function as successful market transactions

Ø To protect workers against the economic logic of the commodification of labour.
Ø So, it is not only protective or economic.
® The problem employment law addresses are more complex – it is to promote the production of wealth through
labour while also preventing the excesses of the market system and its logic from destroying human dignity,
entrenching injustice and destroying social cohesion.
- But this means any resolution will be complex and contested – Hence you will see over time, a constant battle over the
frontier of the employment relationship.
- One of the central issues to understand here is that labour markets are not like other markets i.e., labour is not a commodity.

How is the labour market different than other markets?

- Note that the principles in International law embody the ‘protective’ view of the law’s purpose in this field.
Ø Note. ILO Declaration in 1944 that ‘workers are not the property of the buyers of their service; they are not a chattel that
can be traded’.

The central focus of –’employment law’

- Otto Kahn Freund (1983) said that: For labour law, the central problem has been the relationship between the collective
agreement and the contract of employment.
- The history of labour law in Australia is a history of successive attempts to modify this relationship, through shifting the
balance between common law and statutory law. E.g., think about recent struggles over Deliveroo and Uber riders.
- To study employment law in Australia, you need to understand something of this history and the dual system of common law
and statutory law (i.e., legislation)