A common idea is that market exchange is justified by informed and free agreement between parties. This paper investigates the idea that employer authority is justified by consent. According to this view, agents in the market are informed of the consequences of their actions and are not coerced. This makes their acts voluntary. A problem in applying this justification to the employer/employee relationship is presented in this paper. If the contemporary economics of the employment contract is correct, we must, in order to explain the existence of such contracts, make the assumption that the contracting parties are trying to reduce their uncertainty of future decisions to be made. This is why the parties agree to an incomplete contract in which the employer has authority. However, this implies that consent to acts of authority has been given under conditions of ignorance; it follows, then, that the course of action that the employer chooses cannot be justified by consent because the criterion of informed consent will not have been satisfied. Another method of justification must be sought. It is suggested that in order to achieve justification of acts of authority, a real possibility to contest employers’ decisions should be in place. This possibility is needed, more than just for information, but because if the “volenti non fit injuria” principle is not in effect, then the employee is in a situation of coercion. This problem of coercion must be alleviated before justification on the basis of informed consent can be achieved. Pettit’s idea of contestability will then be applied. The company must satisfy three conditions in order to make effective contestability possible. There must be a basis and channels for contest, which means that there must be transparency as well as effective measures to make grievances heard. There must also be a forum for contest where proper hearings of contestations are guaranteed.
- incomplete contracts
- employment contracts