Free Enterprise and Labour Law: The Case of Employee Termination and Managerial Rights in the United States

Matthias Beck

CRIEFF Discussion Papers from Centre for Research into Industry, Enterprise, Finance and the Firm

Abstract: Today the United States is the last industrialised country that does not have a comprehensive system for the regulation of dismissals and redundancies. The relative neglect of dismissal protection can be attributed to the union-employer disputes over plant closures and redundancies. Initially US courts adhered to English employment law which had evolved in the context of a primarily agricultural, feudalistic society. In the mid 19th century, the adoption of 'employment-at-will' by US courts brought about a drastic rejection of older rules. Ultimately, however, the at-will system was not compatible with a modern society in which unions were to play a legitimate role. The evolving legislative responses, particularly the dismissal protection provided within the National Labor Relations Act, created a paradox. This paradox unravelled during the post-war years, when a series of court decisions made it clear that union claims for involvement in redundancy and termination decisions were incompatible with managerial interests. Pushed by a wave of disputes arising from plant closures, US courts, by the early 1980s, came to increasingly interpret legislation so as not to intefere with managerial rights. The ensuing series of court rulings highlights the tension between free market capitalism and the statutory regulation of redundancies, which was ultimately resolved in favour of employers.

Keywords: Redundancies; Dismissals; Economic Regulation (search for similar items in EconPapers)
JEL-codes: J53 K31 (search for similar items in EconPapers)
Date: 1997-10
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Persistent link: https://EconPapers.repec.org/RePEc:san:crieff:9714

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