All functioning societies are governed by a set of rules defining the boundaries of appropriate behaviour, though the rules emanate from many different sources. Within the framework of private law, individuals are largely self-governing subject to the basic principles of the law of obligations (contract, property, and tort); the law has nothing to say about whether everyone should have the same amount of stuff or even the same amount of social standing or economic power. This creates a lot of freedom, but also produces a lot of inequality because there are no rules about how to share stuff out fairly to ensure that nobody has more than others.
The UK House of Commons Select Committee Report on self-employment and the gig economy, published in April 2017 and chaired by Frank Field MP, begins by observing that ‘the self-employed are a large and growing part of the UK labour force’ constituting some 5 million workers amounting to 15% of the total labour force.
The aim of Employment law is to regulate the voluntary exchange made between employer and employee. Voluntary? Why should a voluntary exchange require any form of regulation? There are two main reasons.
The modern market economy depends upon voluntary exchange between people selling what they have to offer and buying what they need. Workers sell their problem-solving skills and ability to get things done, and employers pay them a wage in return. That’s the beauty of the market. Alas, markets are not very effective in ensuring that everybody ends up with the same amount of stuff.
Income inequality is widely considered to be one of the most pressing social problems of our time. There is an intuitive sense that the economic pie ought to be carved up in a fairer way, coupled with the assumption that less for some will result in more for others. Thus we see a tension between distributive concerns and the productivity goals of corporate law.
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