It's a complicated legal world for managers and HR professionals. The goal of any work related law is to try to make the employment relationship work better. However, the types of laws that someone believes will improve the employment relationship depends on what someone thinks are the goals of the employment relationship and how that employment relationship works. First, start with a free market emphasis. From this perspective, the smooth functioning of the employment relationship is necessary for providing economic goods and services in efficient ways. So it's all about productivity, profitability, and economic growth. In other words, efficiency is key. The role of the law then is to help this work smoothly by providing orderly rules that facilitate economic transactions. Enforceable contracts, protection for property rights, the freedom of workers to quit at any time, and the maintenance of a system of courts for the orderly resolution of contractual disputes. These are all part of common law in the United States and Great Britain. For those who emphasize the economic aspects of work, this is all that the law should do. But others see fairness or equity as a goal. In this way of thinking, it's less about property rights and more about how workers are treated. So workers should be protected from discrimination on the basis of race, ethnicity, gender, and other characteristics. This also includes requirements for equal pay for equal work. It also entails safety and health standards. Or in some countries outside of the United States, there's requirements for employment contracts so that workers at least know their terms and conditions of employment. Laws along these lines are called employment law in the United States and sometimes called individual labor law in other countries. We can see this is pushing companies toward win-win, high road HR practices and preventing the worst abuses that undermine good employers. But where to stop? The concern with fairness can be brought to include a more general concern with worker's lives. What are their living standards? Do they have time for other things? So, many countries outside of the United States have mandated leave requirements such as for vacation or parental leave and also require other benefits like health coverage and retirement benefits. So at some point this becomes less about promoting high road HR practices and more about making up differences in bargaining power, that is the desire to level the playing field between workers and companies. One well known example of this, minimum wage requirement. Or outside the United States, protections against unjust or unfair dismissal. Support for these types of laws is again typically rooted in a desire to make up for a lack of worker bargaining power, which prevents them from being able to achieve decent standards and benefits in the workings of the free market. This is rooted in a pluralist industrial relations set of beliefs. This way of thinking also adds employee voice as a key goal of the employment relationship in addition to efficiency equity. The industrialization school therefore, supports laws that provide legal protections for labor unions, and in some countries outside of the United States, for works councils as well. This is seen as providing a voice for employees while also supporting equity by better balancing power between workers and companies. Laws in this vein comprise what's called labor law in the United States or collective labor law in some other countries. To make things even more complicated, these laws are passed at different levels. There are city and local regulations. [MUSIC] States and provinces sometimes pass different laws. [MUSIC] There are national level laws. [MUSIC] In some instances, like the European Union, there are supranational laws. And there are even international standards, although typically at an international level these are not binding laws. It's more about norms and expectations, what some people call soft law rather than hard law. So it's a complicated legal world for managers. In some sense however, all of these laws are trying to serve some combination of efficiency, equity, and voice. But there are different views on what this means, and how to achieve these different goals. From a free market perspective, efficiency is key and equity and voice are seen in market-based terms. Equity is what the market provides and voice is exercised through one's feet, and being able to find the best employment opportunities possible. From this perspective, the best regulatory approach is through common law supports for free market transactions. From an HR perspective that assumes employers and employees have shared goals, employment law or again, individual labor law in some countries, is seen as a nudge toward high road HR practices that serve efficiency and equity. But beyond outlawing the worst practices that can undermine good HR practices for all, the law should largely let organizations determine their own practices. From an industrial relations perspective that assumes that employers typically have power advantages over workers, strong laws are supported in order to better level the playing field. This includes the direct setting of standards, such as minimum wages, unjust dismissal protections, and various mandated benefits. And it also includes support for collective labor law that provides legal support for worker voice through works councils and labor unions. From an industrial relations perspective, employment and labor laws are needed to balance efficiency, equity, and voice in an otherwise unequal employment relationship. This is seen as good not only for workers, but also for organizations and society. For example raising wages can increase consumer purchasing power, which stimulates the economy, benefiting organizations and reducing poverty. Which benefits not only those workers and their families, but society as well. So understanding these different elements of the law, as well as the different assumptions that underly contrasting approaches is important for managers and HR professionals. [MUSIC]
