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The Parallel Historical Path of Company and Labour Law

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Abstract

The paper explores the conceptual foundations of the legal principles that govern the operation of company and labour law. The paper argues that far from seeing the doctrinal architecture of company and labour law as a product of apolitical and objective rules a paradigm shift is required. The rule book conception of law is a misguided methodological framework. In sharp contrast to that methodology this paper avers the legal principles governing company and labour law must be viewed through the prism of the sovereignty of property rights. In effect, the viewpoint that law is an autonomous domain is eschewed in this paper. Instead the historical, social and economic forces directing legal developments in two crucial fields are illuminated. The upshot is a study illustrating the dialectical bond that exists between company and labour law. The paper is divided into three parts. The first part examines the way prescriptive law is the keystone of labour law. The role of the control test and implied terms are scrutinized in order to illuminate the way that the common law of employment facilitates the hegemony of managerial prerogatives. Apolitical legalism plays no role in this sphere of law. The second part considers the juridical forms that entrench the power of shareholders and managers in the modern company. In this sphere of law the courts sanction facilitative law by prioritizing the voluntarist assumptions of business people. The curve of legal reasoning in company law is dominated by the courts treating the leading personnel in companies as the personification of economic relations. The owners and administrators of capital are regarded as occupying the commanding heights of the economy, and are given judicial support to choose their own constitutional arrangements. Shareholders and directors are vested with a large degree of autonomy and discretion that is translated into the capacity to opt in and out of the regulatory web. The final part sums up the factors that underpin the triumph of the prescriptive and facilitative law that dominates labour and company law.

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Notes

  1. Posner (2008), p. 8.

  2. Ibid., p. 9.

  3. Posner (1969) 21. 3 Stanford Law Review p. 636, fn 191.

  4. Posner (1986), p. 495. Posner (1975) 53 Texas Law Review pp. 763–764.

  5. Posner, “The Economic Approach,” p. 760.

  6. Thompson (1990), p. 262.

  7. Polanyi (1971).

  8. Atiyah (1979). Friedman (1965).

  9. Fox (1974), p. 181.

  10. Wightman (1996), p. 2.

  11. Contract Law in America, p. 20.

  12. Tool and Samuels (1989), p. 3.

  13. Seidman (1989), p. 18.

  14. Collins (2003), p. 3.

  15. Ibid., p. 4.

  16. A scholarly and lucid defence of legalism inspired by support for the judicial methodology of Sir Owen Dixon can be found in Gava (2002) 26 Melbourne University Law Review p. 566.

  17. Kahn-Freund (1972), p. 8.

  18. Davis (1966), p. 40.

  19. Ibid., p. 39.

  20. Ibid., p. 40.

  21. Wedderburn (1993) 109 The Law Quarterly Review p. 245.

  22. Ibid., p. 259.

  23. Lane (1974), p. 38.

  24. Ibid., p. 248.

  25. Quoted in Wedderburn (1986), p. 19.

  26. Hill (1996), p. 234.

  27. Ibid.

  28. Rise and Fall of Freedom of Contract, pp. 388–389.

  29. Ibid., p. 389.

  30. (1855) 4 E. and B. 570 at 578 or 119 E. R. 209 at 212.

  31. (1858) 27 L. J. M. C. 207.

  32. Deakin and Wilkinson (2006), p. 90. Also see Kahn-Freund (1951) 14 The Modern Law Review p. 505.

  33. (1858) 27 L. J. M. C. 207.

  34. (1880) LR 6 QBD 530, 532–533.

  35. [1947] 1 D.L.R. 161, 169.

  36. [1953] 1 Q.B. 248, 295. In Australia a multiple indicia test was developed. It prioritized the control factor. See Stevens v Brodribb Sawmilling Co Pty Ltd. (1986) 160 CLR 16, 25.

  37. The Law of the Labour Market, p. 95.

  38. Vettori (2007), p. 12.

  39. (1952) 85 CLR 237.

  40. Ibid., pp. 299–300.

  41. Ibid.

  42. Ibid.

  43. Justice Kirby (2004), p. 90.

  44. Ibid., p. 91.

  45. Ibbetson (1999), p. 294.

  46. How Judges Think, p. 369.

  47. Selznick (1969), p. 132.

  48. The Law of the Labour Market, p. 62.

  49. (1845) 14 M. and W. 112.

  50. Beyond Contract: Work, Power and Trust Relations, p. 188.

  51. (1829) 9 B and C 896; 109 ER 333.

  52. Ibid., p. 900.

  53. Ibid.

  54. ER, p. 335.

  55. Ibid.

  56. B and C 896 at 901.

  57. (1858) 5 C. B. (NS) 236.

  58. Smith (1992) 3 (1) The Economic and Labour Relations Review p. 107.

  59. (1858) 5 C. B. (NS) 236 at 246. 141 E. R. 94.

  60. Turner v Mason (1845) 14 M. and W. 112; Laws v London Chronicle (Indicator Newspapers) Ltd. [1959] 1 W. L. R. 698.

  61. Boston Deep Sea Fishing Co. v Ansell (1888) 39 Ch. D. 339; Robb v Green [1895] 2 Q. B. 315 at 320; Wessex Dairies v Smith [1935] 2 K.B 80 at 84.

  62. Amber Size and Chemical Co. v Menzel [1913] 2 Ch.239; Faccenda Chicken Ltd. v Fowler [1986] 1 All E.r. 617.

  63. Secretary of State for Employment v Associated Society of Locomotive Engineers and Firemen(No2) [1972] 2 QB 455.

  64. Harmer v Cornelius (1858) 5 C.B. (NS) 236; Lister v Romford Ice and Cold Storage [1957] A.C. 555.

  65. (1889) 14 P. D. 64 at 68.

  66. Law, Society, and Industrial Justice, p. 131, Collins (1986) 15 (1) The Industrial Law Journal p. 1.

  67. Anderman (2004), p. 105.

  68. Freedland (2003), p. 104.

  69. [1979] IRLR 84 (EAT).

  70. [1981] ICR 666 (EAT).

  71. Brodie (2004) 33 The Industrial Law Journal pp. 349–350. Riley (2006) 29 (1) University of New South Wales Law Journal pp. 166, 174.

  72. Grantham (1998) 57 (3) Cambridge Law Journal p. 557.

  73. Gamble and Kelly (2000), p. 29; For a study that pinpoints the fraught dialectics of the law and the infant years of the railway industry see: Kostal (1994).

  74. Harvey (1984), pp. 137, 155.

  75. The Political Economy of the Company, p. 31.

  76. Cottrell (1980), p. 44.

  77. Hirst (1979), p. 140. Ireland (2010) 34 Cambridge Journal of Economics p. 843.

  78. Hunt (1969) p. 127.

  79. Ibid., p. 117. Harris (2000), p. 233.

  80. Industrial Finance, p. 47. The Development of the Business Corporation in England, p. 118.

  81. The Development of the Business Corporation in England, p. 122.

  82. Gower (1969), p. 45.

  83. McQueen (2009), p. 46.

  84. Ibid.

  85. Ibid.

  86. Smith (1986), p. 109.

  87. The Limits to Capital, p. 146.

  88. Ibid., p. 147.

  89. Ireland (1999) 62 The Modern Law Review, p. 41.

  90. (1837) 2 Y and C Ex 268.

  91. Ireland, “Company Law,” p. 41; Grantham, ‘The Doctrinal Basis,” p. 563.

  92. Ireland, “Company Law,” p. 42.

  93. Redmond (2009), pp. 38, 119.

  94. Ireland, “Company Law,” p. 43; Automatic Self-Cleansing Filter Syndicate Co.Ltd. v Cunninghame [1906] 2 Ch 34.

  95. Herman (1982), p. 7; Hill (2000) 48 American Journal of Comparative Law, p. 47.

  96. Grantham, “The Doctrinal Basis,” p. 573.

  97. Ireland (2000), p. 150.

  98. Berle and Means (1962), p. 338. Grantham, “The Doctrinal Basis,” p. 573.

  99. Stokes (1986), p. 160.

  100. Industrial Finance, p. 41.

  101. A Social History, p. 45.

  102. Ibid., p. 164.

  103. Ibid., p. 51.

  104. Ibid., p. 10.

  105. Ibid., pp. 115, 195.

  106. Hobsbawm (1975), p. 217.

  107. Quoted by Mayanja (2007) 20 Australian Journal of Corporate Law, p. 163.

  108. Industrial Finance, pp. 57–58.

  109. Ibid., p. 61.

  110. A Social History, p. 163.

  111. Ibid., p. 166.

  112. Ibid.

  113. Ibid., p. 165.

  114. Industrial Finance, p. 64.

  115. A Social History, p. 251.

  116. Ibid.

  117. Industrial Finance, p. 66.

  118. A Social History, p. 251.

  119. Industrial Finance, p. 68.

  120. (1872) LR 5 HL 480, at 486–487.

  121. (1884) 25 Ch D 752.

  122. Ibid., at 767–768.

  123. [1899] 2 Ch 392 at 435.

  124. [1925] Ch 407 at 427.

  125. Quoted in Finch (1992) 55 (2) The Modern Law Review, p. 200.

  126. Davies (2008), p. 478.

  127. [1991] B. C. L. C. 1027.

  128. Ibid.

  129. Principles of Modern Company Law, p. 491.

  130. Ibid., p. 490.

  131. Parkinson (1996), pp. 76–77.

  132. [1942] Ch 304.

  133. Ibid, p. 306.

  134. Cook v Deeks [1916] 1 AC 554 at 563; See also Mayanja, “Promoting Enhanced Enforcement,” p. 179.

  135. Company Law and Legal Theory, p. 173.

  136. Ibid.

  137. Principles of Modern Company Law, p. 510.

  138. (1883) 23 Ch. D 654. See also Parke v Daily News Ltd. [1962] Ch. 927.

  139. Ibid., p. 673.

  140. Bottomley and Forsyth (2007), p. 314.

  141. Ibid. Quoted in Bottomley, Forsyth.

  142. Ibid. Quoted in Bottomley, Forsyth.

  143. Principles of Modern Company Law, p. 518.

  144. Industry and Empire, p. 217.

  145. Ibid., p. 216.

  146. Ibid., p. 217.

  147. Mayanja, Promoting Enhanced Enforcement, p. 160.

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  1. Department of Law, Macquarie University, Sydney, NSW, 2109, Australia

    Frank Carrigan

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Carrigan, F. The Parallel Historical Path of Company and Labour Law. Liverpool Law Rev 32, 19–48 (2011). https://doi.org/10.1007/s10991-011-9088-y

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