Introduction

In the previous chapter we saw that British company law and corporate governance are inspired by the shareholder value principle. The corporation, technically distinct from its shareholders, is seen as existing principally to promote their interests. The board is required to take the advancement of shareholder interests as its principal decision-making criterion and is accountable to shareholders. Greater dialogue between the board and shareholders, especially institutional shareholders, is a major policy goal.

The increasing sophistication of corporate governance mechanisms is clearly welcome to the extent that it truly leads to well-run businesses that meet the needs of their customers or clients at the same time as they promote the relevant interests of shareholders and employees. But where are the mechanisms that would allow employees both to play their part in promoting the well-being of the business and to protect their own reasonable interests?

Serious engagement with the possibility of mandatory employee participation on the corporate board came to an end by the late 1970s. From then on, it has been taken for granted in the UK that company law and corporate governance belong to the shareholder. Employees, their interests and mechanisms for participation have been hived off into a separate labour law compartment. This chapter looks at the contributions made by labour law to the search for institutions that facilitate employee participation in governance.