The nature of the employment relationship

When considering how employee voice operates in organisations, we must first be clear about what the 'employment relationship' is. An employment relationship is established when one person gives their mental or physical labour in exchange for some type of reward. This was seminally defined as: “An economic, social and political relationship which provides manual and mental labour in exchange for rewards allocated by employers” (Gospel & Palmer, 1993, p. 3).

In New Zealand, employment relationships are formally structured to establish a fair and balanced agreement between parties - employees and organisation - as well as personal and psychological commitments, as follows:

Employment Contract	Psychological Contract
Employment Legislation (e.g. Employment Relations Act 2000). See latest legislation here (Employment New Zealand, 2023). Individual or collective Employment agreement: Statutory and express terms written into employment contract.	Unwritten & largely implicit expectations and perceptions of conditions of employment relationship between parties. Reciprocal agreement: but controlled by the employee. Emotional bond which sustains the employment relationship over time. (Millar, 2006; Rudman, 1994)

 

Power imbalances between parties when creating the employment relationship - or if there are breaches of the employment contract or the psychological contract - can undermine the effectiveness and value of both contracts. Employment relationship objectives need to combine "efficiency, equity and voice" (Budd, 2004, p. 8):

• Efficiency: "the effective use of scarce resources" – e.g. market-based transactions & contracts (p. 13)
• Equity: "a set of fair employment standards covering both material outcomes and personal treatment that respects human dignity and liberty" – e.g. minimum labour standards, equality of opportunity (p. 13)
• Voice: "the ability to have meaningful input into decisions" – e.g. industrial democracy; employee decision-making & autonomy. Importance of communication & consultation that has meaning - in other words, that the employee can effect a change in organisational decision-making (p. 13).

Employee involvement, participation, and voice clearly relate to equity and voice above, but may also assist efficiency due to the increased information quality from front-line workers regarding potential work process and resource efficiencies. 

Sam

References:

Budd, J. W. (2004). Employment with a Human Face: Balancing Efficiency, Equity, and Voice. Cornell University Press.

Employment New Zealand. (2023). Legislation: A range of legislation is relevant to employment relationships. https://www.employment.govt.nz/about/employment-law/legislation 

Gospel, H. F., & Palmer, G. (1993). British Industrial Relations. Routledge.