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Three Degrees of Contract

Extracted from Worksite

Marian Baird argues there is a need to more fully understand what workers, employers and our society expect from the employment relationship.

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The recent dispute at Tristar was more than a dispute about the inadequacy of current arrangements to protect the legitimate entitlements of workers when the companies they work for go broke. The dispute is also more than a conflict over the adequacy of the Federal Government scheme versus alternative employee entitlement protection schemes. Though this issue is fundamentally important in its own right, the Tristar dispute is one among many conflicts which reflect a breakdown over the last decade (or perhaps longer) of the relationship between employees and employers in Australian society. The dispute also, and once again, highlights the questionable and unhelpful role of conservative governments in industrial relations.

Most of the disputes in the last few years can be seen in a similar light - the MUA/Patricks waterfront dispute, the National Textiles dispute, the One Tel collapse and the BHP dispute on the Pilbara - reflecting fundamental changes which are happening in the employment relationship. The employment relationship can be understood as comprising a set of overlapping contracts: the legal contract, the psychological contract and the social contract, and change has occurred in all three.

Legal Contract

The employment relationship is typically understood in terms of the formal, legal contract of employment. Guarantees about the terms and conditions of a worker's employment are found in a number of legally enforceable documents - the common law contract of employment, the award, the enterprise bargaining agreement as well as statutes of the state and federal governments. There is therefore an array of material for the lawyers to get their hands onto, and yet this hasn't prevented the sorts of disputes mentioned above. If anything, there has been a growth in the number of disputes about the legal nature of the employment relationship. For instance, in various companies' attempts to move workers from one sort of employment contract to another, in companies' attempts to change who, legally, the employer is, and quite absurdly, disputes about the legality of the dispute, rather than the underlying cause of the dispute.

The growing focus on the legal aspects of the employment relationship has tended to overshadow the other two levels at which the employment relationship is played out - or, if you like, the two other forms of employment contract. One of these is between the individual and their employer - which is sometimes referred to as the psychological contract, and the other is between Australian workers as a group and employers as a group - sometimes referred to as the social contract.

Psychological Contract

The psychological contract refers to the reciprocal expectations of individual workers and their individual employer and includes the whole pattern of rights, privileges and obligations between worker and organisations. These are aspects that are not explicitly written into the legal contract - but are brought to the relationship by the employees and the employer. In the past these have included expectations of a long-term job, of a career, of support and encouragement at work. Employers on the other hand may expect more in terms of work effort, flexibility, commitment and loyalty. In essence, these implicit expectations on both sides are encapsulated in beliefs about fairness, trust and delivery of worthwhile employment relationships. There is a growing belief amongst researchers that the psychological contract has broken down, often due to changes introduced by organizations and their failure to meet their obligations, especially in terms of job security and career prospects.

Social Contract

The experiences and expectations of the individual are grounded in the norms and expectations of society, which leads to third type of contract - the social contract. The social contract refers to the 'rules of the game' accepted at the social or community level, the rules which employees, their representatives, and employers are expected to understand and follow. Generally the social contract encompasses community ideas and expectations such as the right to decent jobs and good conditions, the right for employees to have some say in their workplace and the right to be able to bargain collectively. It certainly includes the right to know who your employer is, and that your accrued entitlements are not going to be squandered by your employer.

These three contracts are interlinked; they represent three degrees of contract, and should not be regarded as means of separating or diminishing the employer and employee relationship. When they start to unravel at one level, for example at the social level, then they also begin to unravel and break down at the psychological and legal levels, just as we have witnessed in Australia in recent years. So, what should be done? There is a need for more public debate about all three forms of the employment contract. There is a need to more fully understand what workers, employers and our society expect from the employment relationship, and likewise, what they expect to give to that relationship. There is also a need to re-examine the part to be played by governments at the societal level, to recognise that government has an obligation to all citizens in society, not just to a few.

Questions about fairness, equity, justice, security, stability and democracy at work are basic concerns of all citizens and people have a right to know if these areas are being respected and protected. At the moment it doesn't look like it and it is therefore time to address these less tangible entitlements alongside the more tangible ones of pay and leave that Tristar and other disputes have highlighted.

Marian Baird is a lecturer in Work & Organisational Studies, University of Sydney

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  Issue 122 contents

»	Unions Raise Labor Stakes
»	Standards Breakthrough in Call Centres
»	Hotel Cleaners Told: Bring Your Own Mops
»	Corporate Giant Sponsored IT to India Report
»	New Front in Battle for Compo Rights
»	Progress in Email Privacy Push
»	Christmas Progress on Sweatshops, Truckies
»	BHP Steel Workers Fight for Security
»	Union Concerned At New ASIO Powers
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»	Writers in New Chapter for Unionism
»	CFMEU Backs Standards Inquiry
»	Mining Company Moves To Ban Fiji Film
»	Unions Choir Sings Up Storm
»	2002: Where to Now?
»	Activists Notebook

»	The Soapbox
»	The Locker Room
»	Trades Hall
»	Tool Shed

»	Apology to Tim Harcourt
»	Tom is Gobsmacked
»	Who was Gordon Freeth?
»	More Compo Feedback
»	Trains of Treasure
»	The Great Tuckpointer Debate Revived

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