Law and economics: A hidden rationale for unfair dismissal

Abstract

Statutory unfair dismissal legislation has been around since 1971% yet 34 years on the core principles and rights remain unchanged, still suffering from a lack of credibility and certainty. There is much confusion and unhappiness from both sides as to how decisions are made and how a balance between the interests of employers and employees is to be struck. There seems to be little certainty as to the application of justice in dismissal, with employer and employees alike feeling aggrieved. The seeming lack of coherence in the judiciary's approach results in damage to the legislations certainty and credibility. This thesis will suggest a new way of looking at unfair dismissal, one that provides coherency and consistency. It will look in depth at the most contentious problem areas and sustained criticisms associated with the legislation, before suggesting that a rationale can be brought to the judiciary's approach when reference is made to the doctrine of Law and Economics. It will seek to show that the principle of efficiency is highly influential in judicial decision making and that this can be traced to a law and economics ideology. The basics of the doctrine of law and economics will be explained and an example of it in action will be given. This it is hoped will provide the reader with enough information to be able to engage with a law and economics analysis of the contentious areas of unfair dismissal in the subsequent chapters. The thesis will suggest the Band of Reasonable Responses Test is not an unruly beast as it is controlled by efficiency. Building on this it will show how the rise in the use of Some Other Substantial Reason can be understood in a similar way. The thesis will then address the problems pertaining to job security and remedies and seek to answer the critics by showing what the legislation originally intended and that the judiciary’s approach is rooted in efficiency. Lastly it will deal with the growing calls for the common law action of wrongful dismissal to be used to remedy the inherent weakness in the unfair dismissal statute. Using law and economics it will be shown why this is not in the interests of efficiency and therefore is unlikely to occur, whilst further buttressing the contention of the thesis that law and economics is at the root of the judicial approach to dismissal. The thesis will seek to bring a fresh perspective into a debate which whilst remaining contentious has become stuffy and stagnant with regard to realistic suggestions for reform. It does not seek to offer comment on the correctness of the judiciary’s approach or suggest any radical reforms. It seeks to bring a fresh understanding of a hidden rationale which can be seen to encapsulate the judicial approach to dismissal and further stimulate debate which will enable proponents of change to explore other avenues.