Demand for labour will be influenced by the final product value, cost of labour, efficiency of management and use of technology (Dufty and Fells 1989: 5). So from a purely economical point of view, labour will be allocated to where its needed, where the demand is, and where the profit is. .This is essentially the capitalist theory, maximising profit through minimum inputs, the generating of excess capital. .
The legal dimension of the employment relationship is the framework, the basis of the exchange system. It protects the individual worker in that it provides a counterbalancing force in regard to "the inequality of bargaining power which is inherent and must be inherent in the employment relationship" (Kahn-Freund 1972:8). All that workers bring to this bargaining is their only asset, their capacity to work, whereas the employee has the ability to seek alternate labour resources, particularly if there is an over supply of a particular skill. (Creighton & Stewart 1990: 2-3). For modern society, this unbalanced relationship requires that the "weaker" party be protected, hence labour laws. One must not forget that the laws that we all abide by are a product of our society, and therefore reflect views that are inherent in our present ideology (Dufty et al: 8) The nature of labour law in Australia is that it is indicative and punitive in that it sets out guidelines for which employers and employees to follow, and has punishments for failure to adhere to these guidelines. .
Labour relations law is divided up into two major segments, common law and statute law, with individual and collective implications. Common law is what is known as "judge made" law in that it "is made up of judges' decisions on cases which then become accepted and used within the legal process." This type of law is based on what has been done in the past, and draws heavily on the famous "Master and Servant" Act, a feudalistic remnant that has stood the test of time.
