Institutional Logic of the Arrangements in Labor-Capital Contracts:A Reflection of At-will Contracts in the Perspective of Law and Economics

At-will employment contracts typically demonstrate that no rule can be framed without observing its inherent institutional logic,which is a universal jurisprudential doctrine.Viewing from the perspective of law and economics,one can only find that neither the Employment Contract Act nor the Implementing Regulations of the Employment Act can secure that the employee has a secured job by way of entering into an at-will employment contract.Such a contract,on the contrary,may infringe the same valuable employment right and thus results in a redistribution of interests that may impair the employment rate or quality.Due to the technical difficulties in supervising and estimating human capital's achievements,firms tend to fail to produce sufficient objective evidence to prove that an employee is unfit for his/her work, a regular requirement for rescinding the employment contract,and thus fail to satisfy the demand of the judicial governance mechanism that an evidence be observable and verifiable from outside perspective. Therefore,the defense against disputes arising out of rescinding an employment contract accorded to firms by the Employment Contract Act seems of no significance in judicial practice.In the context of structural labor surplus,to help the employee to improve his/her skill so as to remove the possibility of being replaced is by far more conducive to the firms' maintenance of labor-capital contractual relationship.Consequently,law enforcement cost will be reduced.