Fat Cats, Production Networks, and the Right to Fair Pay
| Published date | 01 January 2022 |
| Author | Hugh Collins |
| Date | 01 January 2022 |
| DOI | http://doi.org/10.1111/1468-2230.12714 |
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Modern Law Review
DOI:10.1111/1468-2230.12714
THE
MODERN LAW REVIEW
Volume85January 2022No. 1
Fat Cats,Production Networks,and the Right to Fair
Pay
Hugh Collins∗
Should there be a legal right to fair pay so that anyone might challenge the relative fairness
of their pay? International human rights law does not clearly support such a right, partly due
to the uncertain meaning of fairness in pay.The article challenges this uncertainty, explain-
ing the marginal relevance of theories of distributive justice.Standards of fairness should be
discovered instead inprinciplesof interpersonaljustice, particularlythebilateral pr inciple of
good faith, and in associational principles of desert by reference to contribution and recognition
of persons. These contain an egalitarian impulse providing moral reasons for rejecting market
rates of pay and,it is argued, should apply beyond single corporate entities, to corporate groups
and networks of companies sharing an integrated production scheme.Finally,appropriate reg-
ulations enacting a legal right to fair pay are explored with a view to achieving reexive yet
eective regulation using works councils to x outer limits to wage dispersal ratios.
INTRODUCTION
My question is: should there be a legal right to fair pay? This legal right to
fair pay would entitle employees to demand that their remuneration package
should be fair.Just as they have a right not to be unjustiably dismissed or
discriminated against, so too,if there were a legal right to fair pay, employees
would have a right to challenge the fairness of their wages. Such a general le-
gal right does not exist in the UK. Nor,as far as I know, has it ever existed in
other countries. Of course,pay has been regulated for such purposes as xing
a minimum wage,1eliminating sex discrimination,2and extending the cover-
age of collectively agreed rates of pay to all workers in a particular business
∗Cassell Professor of Commercial Law, London School of Economics;Emeritus Viner ian Professorof
English Law, All Souls College, University of Oxford. This article was delivered as the 49th Chorley
Lecture on 20 October 2021.I am g rateful for comments on earlier versions of this paper to Hanoch
Dagan andmembersoftheSafra Centreat Tel Aviv, andto GuyMundlak, GuyDavidov, EinatAlbin,
Virginia Mantouvalou, NicolaLacey andMax Har ris. AllURLs were lastvisited 16November 2021.
2Equality Act2010, Part5, Ch 3.
© 2021 The Author.The ModernLaw Review © 2021 The Modern Law Review Limited.(2022) 85(1) MLR1–24
The Right to Fair Pay
sector.3But none of those causes of action have extended so far as to permit
every employee or worker to question the fairness of their pay in a tribunal.
Such a right might, for example,enable the shelf-stackers in supermarkets to
claim better pay in view of the fact that their senior managers and CEOs earn
more than a hundred times their wages.4Or such a right might enable junior
hospital doctors to question why they only earn about a seventh of the pay of
a NHS trust CEO.5Or such a right might enable a cleaner who works for a
contractor to claim equal pay with the oce workers in the buildings that she
cleans long before dawn.
Popular media promulgate many stories about fair and unfair pay.6A curious
feature of the UK 2017 general election caught my eye. Though disagreeing
on most political issues, both Theresa May and Jeremy Corbyn promised to
tackle the problem of excessive pay of chief executive ocers (CEOs) of large
corporations.7Indeed,the pay of ‘fat cats’ generates regular moral outrage in
the press.These CEOs earn typically more than £1000 an hour, or about £4
million a year,which is about 130–140 times as much as the average worker,
and 80 times the median wage of their own employees,8and possibly 200 times
the wages of outsourced workers such as oce cleaners. Another persistent
theme in the media concerns global inequalities. Pay dispar ities within Western
corporations or national labour markets are dwarfed by comparisons of wages
at either end of international supply chains.9If workers inmines, elds, and
sweatshops in the developing world are paid the not unusual wage of an amount
roughly equivalent to one dollar a day,10 the ratio of their pay to the CEO
of the controlling organisation at the head of the supply chain might easily
be 4000:1.
These news stories about huge and growing wage disparities feed into a
broader concern about the increasing inequality in wealth in Western soci-
eties, as highlighted by Atkinson and Piketty.11 Bysomemeasures, disparitiesin
3O. Kahn-Freund,Labourand theLaw(London: Stevens, 2nd ed, 1977) 140-149, 158-160. Such
measures (now abolished) included the Fair Wages Resolution 1946, Wages Councils Act 1959;
Agricultural Wages Acts 1948 and 1949;Terms and Conditions of Employment Act 1959,s 8;
Employment Protection Act1975, Sched11.
4SainsburyPlc,Annual Report 2020 85 reports a pay ratio for the CEO of 173:1.
5 Glassdoor, ‘Departmentof HealthUKNHSChiefExecutive Salaries’athttps://www.
glassdoor.co.uk/Salary/Department-of-Health-UK-NHS-Chief -Executive-Salaries-E230892_
D_KO24,43.htm.
6For example Channel 4 News, ‘FTSE executive earns 2,500 times more than low-
paid employees’29 August 2017 at https://www.channel4.com/news/factcheck/
top-ftse-executive-earns-2500-times-more-than-low-paid-employees.
7Labour PartyManifesto2017, For the Many not the Few 17; Conservative PartyManifesto2017,
Forward Together 18.
8 CIPDandHighPayCentre,Executive pay 2018: review of FTSE100 executive pay
packages Report, August2018, 7athttps://www.cipd.co.uk/knowledge/strategy/reward/
executive-pay-ftse-100-2018.
9For exampleK. Crawford and V. Joler, ‘Anatomyof anAI System: TheAmazon Echoas an
anatomical map of human labour,data and planetar y resources’ at https://anatomyof.ai.
10Amnesty Inter national, DemocraticRepublic ofCongo: ‘ThisIs WhatWe DieFor’: Human Rights
Abuses in the Democratic Republic of the Congo Power the Global Trade in Cobalt (London: Amnesty
International, 2016).
11A. B.Atkinson, Inequality: WhatCanbe Done?(Cambridge, MA: Harvard UniversityPress, 2015);
T. Piketty, Capital in the Twenty-First Century A. Goldhammer(trans) (Cambridge, MA: Belk-
nap/Harvard University Press, 2014).
2© 2021 The Author.The ModernLaw Review © 2021 The Modern Law Review Limited.
(2022) 85(1) MLR 1–24
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