Argument for Freedom of Contract

It is argued that workers and employers, as 'equal' bargaining parties, should be 'free' to engage in work relations on individually negotiated terms,37 and that modern workplace laws '[p]lays havoc with the classic principles relating to contracts', which underpin all employment relations, and interferes in mutually agreed, beneficial agreements that consenting individuals enter into – agreements that the state has no place to interfere in.  Such freedom would promote efficient market outcomes, and social prosperity would naturally follow.

The modern worker is contrasted as being completely different to that in existence during the industrial revolution, and laws implemented from issues arising during those periods hold little relevance to the era of globlisation.  This is further supported with the assertion that modern contract law is far more flexible and adaptable than in earlier times, with greater protections for workers through remedies under contract law, promissory estoppels and equity.

A cited example of common law 'protection' was illustrated in the Harvester case, in which the court held workers should receive a '[f]air and reasonable wage' based on '[t]he normal needs of the average employee, regarded as a human being living in a civilized community'. However, in his judgment Higgins J identified problems associated with '[t]he one sided nature of the employer's valuation' of wages in an unregulated system,and the need for regulation of minimum standards in the workplace.

These arguments ignore the reality of the employment relationship in its social context,49 and are founded on unrealistic presumptions rooted in an economic perspective. Whilst the nature of work has dramatically changed since the industrial revolution, many fundamental issues still remain. An economic analysis of workplace law does not take into account the social, cultural and ethical influences that are a fundamental part of everyday life; history has shown this inevitably leads to social inequity, injustice and ultimately instability.

 Workers face continued challenges of bargaining inequality with employers in the workplace by the very nature of the relationship; 'equality' of bargaining power being a fundamental presumption of economic theory. Employees, compelled to agree to unfavourable terms due to this power imbalance would find little justice in a common law system that generally upholds express contractual terms; the potential for abuse is significant – more so than in modern times with the diminished role and strength of unions.

Inequality continues to be a real threat in employment for vulnerable workers, particularly in the areas of race, sex, age, pregnancy, religion, family needs and migrant workers. Corporations have emerged as the dominant employer, and operate almost exclusively from an economic and profit driven perspective. Workers have little power against such powerful entities at all stages of the employment process. Corporations generally have well paid and highly skilled legal teams to represent their interests in drafting (and sometimes negotiating) employment contracts, and later during any potential legal proceedings.

It is almost inconceivable that the average worker could bargain on equal terms, or even challenge such power. Under a regulated system, workers are protected by statutory minimum standards whilst still maintaining the ability to negotiate more favourable individual contracts – as long as those contracts don't undermine the minimum standards. They are also able to lodge complaints free of charge, seek representation and remedy through the Fair Work Ombudsman or similar agencies, which have statutory authority to enforce workplace laws.

The most effective way to restrict democracy is to transfer decision-making from the public arena to unaccountable institutions: kings and princes, priestly castes, military juntas, party dictatorships, or modern corporations. Statutory based regulation of the workplace developed because of both social and economic necessity,and calls for reform in the interests of economic rationalism ignores the dual functionality of workplace laws, in which social and economic functions are equally interdependent. 

Regulation is essential to maintain the balance of competing interests in the employment relationship which is naturally balanced heavily in the employers' favour, particularly in the global era of worker mobility and corporate power.  Deregulation of the workplace would serve to threaten the very social fabric of society, through inequity, social injustice which would ultimately lead to industrial conflict and economic instability.  It should be remembered that human dignity lays at the core of all workplace relations -labor is not a commodity or an article of commerce, and should not be treated as such.