Job Security and the Theoretical Basis of the Employment Relationship

Despite extensive statutory regulation in the form of the Fair Work Act 2009 (Cth), the employment relationship in Australia is still founded on the contract of employment. It thus privileges the terms of the contract and the 'bargain' struck by employer and employee. It is argued, based on insights from the law and legal theory of contract, property, equity and other areas of private law, that this approach is inadequate. The normative authority of contract derives from the assumption that contractual obligations are voluntarily incurred, but this assumption cannot be maintained in light of the vast differences in bargaining power between employer and employee in most cases. It is argued that, to provide a general law basis for job security, the general law should develop principles based on a recognition of the vulnerability of employees. Such principles would be broadly analogous to property rights and, in particular, Joseph Singer's theory of the 'reliance interest' in property.