To judge whether a workman is fit to be employed, may surely be trusted to the discretion of the employers whose interest it so much concerns. The affected anxiety of the law-giver lest they should employ an improper person, is evidently as impertinent as it is oppressive.

—Adam Smith. An Inquiry into the Nature and Causes of the Wealth of Nations, 1776.

There should be no law prohibiting ‘unfair’ dismissal. The employer’s power to dismiss employees who fail to please is simply the flipside of the employee’s power to resign when employment conditions fail to please. The precarious nature of the employment contract has evolved for a reason: it is because in a relationship that so touches on the dignity of the individual, as to consist of one person telling the other what to do all day long, only a relationship that is precarious can force both parties to be constantly reasonable. Put another way, the employee needs the discipline of being liable to lose his job instantly in order to keep him performing cheerfully and diligently, while the employer must make the job satisfying, pleasant, and remunerative or risk quickly losing valuable, productive, and experienced staff.

Laws that aim to protect employees against unfair dismissal conflict with both liberty and logic. A contract for personal services depends entirely on ongoing mutual benefit. If one party no longer wants to continue the relationship, then by definition there is no ongoing mutual benefit. An employee who has so alienated an employer that he is dismissed deserves his fate. Likewise, an employer who has so alienated a valuable employee that the employee resigns deserves to lose him. An employee who has done nothing wrong but is fired anyway is obviously no longer needed by the employer, and the market is the best judge of this. An employer would damage his own company if he fired a valuable employee who was still needed, and would therefore be acting against his own self-interest.

The school leaver who repeatedly shows up to work proclaiming how sorry he is for being late needs a good sacking followed by a period of austere reflection. Without this he will be unable to develop his character and become a reliable breadwinner. Children become adults by being made responsible for their own actions. If, on the other hand, the government tells such a worker his dismissal was unfair, he will be deluded into thinking his behavior was acceptable. This will set him on a wobbly course of self-delusion that will ill serve him and deter employers from taking on staff and growing their businesses—or even from going into business to begin with.

Employees and employers should be free to contract on the most non-commercial terms they like. Thus, they may agree that the employee can be late to work; be rude to customers; be insubordinate to superiors; be lazy; be offensive to customers; have body odor; wear inappropriate clothes; have alcohol on his breath; have face piercings; be cranky from lack of sleep; take one hundred sick days a year; receive ten days paid leave when his dog dies; receive repeated counseling for transgressions; receive two years paid maternity leave; or receive multiple written warnings before being terminated. If the employment contract is commercially unsound, reality will punish the foolish employer by bankrupting him and making him into an employee. In this way, the wheat is sorted from the chaff. By contrast, when there is government intervention in the labor market, employers employ fewer people to reduce their likelihood of being sued. Moreover they will be particularly disinclined to hire marginal employees.

Life is hard, but laws that try to make it easy are counterproductive and gross infringements of liberty. Consider this fictional example:

Statistics show that depression and feelings of rejection among young men is higher than among young women. To get to the bottom of this alarming trend, a study was commissioned by the Department of Social Services. The study found that the emotions of young men do not cope well with rejection, and many men fall into despondency as a result of girlfriends breaking up with them. To address the situation the legislature passed a law to protect vulnerable young men from rejection. The law provided that:

  1. Before a girl can break up with her boyfriend she must first issue three warnings;
  2. The warnings must be in writing;
  3. The warnings must include reasons;
  4. The warnings must explain what other efforts were made to resolve the dispute before resorting to a warning;
  5. Upon receipt of a warning, the boy can opt for a review by a social worker;
  6. If the social worker determines the warning was not justified it will be deemed not to have been made;
  7. If the social worker determines the warning was not warranted, the social worker may, depending on the justness of all the circumstances, order the girl to perform not more than forty hours community service for issuing an unwarranted warning;
  8. If a girl breaches the legislation, she can be ordered to take back the boy she dumped, and be ordered not to break off the relationship or issue any further warnings in the subsequent twelve months. If she refuses she can be jailed until she agrees to comply.

Of course the result of such a law would be that girls would either not take on boyfriends or flee the jurisdiction. This is because the power to compel is not the answer to human happiness. The sad fact is boyfriends get dumped and employees get fired. It is not always for sound or just reasons; often it is for unjust reasons, but the law has no business, and no competency, to interfere in free dealings between citizens to determine rights and wrongs. Laws exist solely to protect rights from being breached.

This article is an extract from the book ‘Principles of Good Government’ by Matthew Bransgrove