¹ See e.g. Gillies v. Goldman Sachs Canada (2000), 49 C.C.E.L. (2d) 236 (B.C.S.C), rev'd on other grounds (2001), 95 B.C.L.R. (3d) 260 (C.A.) (half of total compensation). Even non-cash incentives, such as convertible performance points or a trip, may be integral non-discretionary parts of total compensation: Carmichael v. West Chemical Products of Canada (1996), 22 C.C.E.L. (2d) 287 (Ont. Gen. Div.).

² See e.g. Husband v. Labatt Brewing Co., [1998] B.C.J. No. 3193 (S.C.), online: QL (BCJ) (employer paying bonus as matter of course through each year of employee's contract).

³ See Ryshpan v. Burns Fry Ltd. (1995), 10 C.C.E.L. (2d) 235 (Ont. Gen. Div.), appeal settled (1996), 20 C.C.E.L. (2d) 104 (Ont. C.A.) [Ryshpan] (employer permitting employees to borrow against future bonuses to buy computers).

⁴ Jolicœur v. Lithographie Montréal, [1982] CS. 230, aff'd (15 April 1987), Montreal 500–09–000314–823 (C.A.).

⁵ See e.g. Ryshpan, supra note 3.

⁶ See e.g. Ashton v. Perle Systems (1994), 2 C.C.E.L. (2d) 243 (Ont. Gen. Div.).

⁷ See e.g. Alpert v. Carreaux Ramca Ltée (1992), 9 O.R. (3d) 207 (Gen. Div.) (change from uncapped bonus based on net profits to capped bonus amounting to constructive dismissal).

⁸ Fletcher v. Cliffcrest Enterprises (1985), 9 C.C.E.L. 44 (Alta. Q.B.).

⁹ See e.g. Lloyd v. Imperial Parking (1996), 192 A.R. 190 (Q.B.).

¹⁰ See e.g. Leventhal, G.S., “What Should Be Done with Equity Theory?” in Gergen, K.J., Greenberg, M.S. & Willis, R.H., eds., Social Exchange: Advances in Theory and Research (New York: Plenum, 1980) 27.CrossRefGoogle Scholar

¹¹ See Thériault, R., Mercer Compensation Manual: Theory and Practice (Boucherville, Qc.: Morin, 1992) at 2811–84.Google Scholar

¹² See Gerhart, B., “Designing Reward Systems: Balancing Results and Behaviors” in Fay, C.H., ed., The Executive Handbook on Compensation: Linking Strategic Rewards to Business Performance (New York: Free Press, 2001) 214 at 217–18.Google Scholar

¹³ See Thériault, supra note 11 at 335.

¹⁴ See St-Onge, S. & Magnan, M.L., The Determinants of Pay-for-Performance Perception in a Merit Pay Environment (Montreal: Faculty of Management, McGill University, 1992) at 12.Google Scholar

¹⁵ See Milkovich, G.T. & Newman, J.M., Compensation, 7th ed. with Milkovich, C. (New York: McGraw-Hill, 2002) at 317.Google Scholar

¹⁶ On these ideas, see e.g. Heneman, R.L., Business-Driven Compensation Policies: Integrating Compensation Systems with Corporate Strategies (New York: AMACOM, 2001) at 225–31Google Scholar; Orens, R.M. & Elliott, V.J., “Variable Pay Programs—Pay for Results” in Chingos, P.T., ed., Paying for Performance: A Guide to Compensation Management (New York: John Wiley & Sons, 1997) 25 at 36.Google Scholar

¹⁷ See Flannery, T.P., Hofrichter, D.A. & Platten, P.E., People, Performance, and Pay: Dynamic Compensation for Changing Organizations (New York: Free Press, 1996) at 248–49.Google Scholar

¹⁸ See Orens & Elliott, supra note 16.

¹⁹ See E.W. Freher, “Designing the Annual Management Incentive Plan” in Chingos, supra note 16, 161 at 162.

²⁰ Alternatively, a plan may attempt to anticipate external factors by more heavily indexing performance criteria, although complex indexing risks imposing substantial transaction costs. See Holmstrom, B., “Incentive Compensation: Practical Design from a Theory Point of View” in Nalbantian, H.R., ed., Incentives, Cooperation, and Risk Sharing (Totowa, N.J.: Rowman & Littlefield, 1987) 176 at 181.Google Scholar

²¹ The literature speaks of 360-degree assessment. But note the risk that establishing a direct link between these more rounded performance measures and pay awards may encourage dysfunctional behaviours, such as collusion.

²² E.g. caps on bonuses may invite strategic behaviour by employees, such as the transfer of transactions across periods at fiscal year-end to maximize rewards.

²³ Pay as communication is an important recurring theme in the management literature. See e.g. D. Pritchard, “Managing the Reward Process: Reconciling Work, the Individual, and the Market” in Fay, supra note 12, 194 at 194.

²⁴ The general management literature is peculiarly silent on the psychological leverage that an employer may gain by retaining and wielding discretion respecting bonuses; fear and envy are not, evidently, sentiments that managers wish, explicitly, to be cultivating in their work environments, whatever their potential instrumental incentive utility. The instrumentalization of a PRP system as a power device would be a fruitful area for further study.

²⁵ See e.g. Thériault, supra note 11 at 348–49, who outlines a number of standard formulas for calculating bonuses but ignores the purely discretionary bonus.

²⁶ This raises a question worth further study, the extent to which managerial fairness comprises a human dignity aspect. See Flannery, Hofrichter & Platten, supra note 17 at 228.

²⁷ For classical contract theory's inability to conceive of payment in anything other than its most rigidly instrumental incarnation, see the discussion of the no-fresh-consideration cases in Collins, H., “Competing Norms of Contractual Behavior” in Campbell, D. & Vincent-Jones, P., eds., Contract and Economic Organisation: Socio-Legal Initiatives (Aldershot, U.K.: Dartmouth, 1996) 67 at 67–69.Google Scholar

²⁸ The grid and the energy dynamic are two of the four aesthetics in Schlag, P., “The Aesthetics of American Law” (2002) 115 Harv. L. Rev. 1047.CrossRefGoogle Scholar

²⁹ The classic sense of contract as exchange, with negotiation and the employee's consent, persists more in the case of senior executives, such as the chief executive, who are frequently much better positioned to bargain for customized compensation packages.

³⁰ See Deakin, S., “The Many Futures of the Contract of Employment” in Conaghan, J., Fischl, R.M. & Klare, K., eds., Labour Law in an Era of Globalization: Transformative Practices and Possibilities (Oxford: Oxford University Press, 2002) 177 at 193–94.Google Scholar

³¹ The contrast between managerial direction and contract recalls Fuller's work on the various social or legal processes. See Fuller, L.L., The Principles of Social Order, ed. by Winston, K.I. (Durham, N.C.: Duke University Press, 1981).Google Scholar

³² See Fudge, J., “New Wine into Old Bottles?: Updating Legal Forms to Reflect Changing Employment Norms” (1999) 33 U.B.C. L. Rev. 129 at 130.Google Scholar In Wallace v. United Grain Growers, [1997] 3 S.C.R. 701 at paras. 91–92, the Supreme Court of Canada acknowledges the power imbalance in the employment relation, but ultimately fails to move beyond a contractual characterization.

³³ The possibilities of a focus on work are further developed, along with a rich assessment of dimensions of asymmetry in the employment relationship, in Davidov, G., “The Three Axes of Employment Relationships: A Characterization of Workers in Need of Protection” (2002) 52 U.T.L.J. 357.CrossRefGoogle Scholar

³⁴ Nakkuda Ali v. Jayaratne, [1951] A.C. 66 (P.C.), now over-ruled, represents the high-water mark of this rigid conception of fairness. Even the current position that the duty of fairness always applies to discretionary decision-makers, however, does not entirely recognize that fairness may be inherent in any well-designed system. The abstraction of “fairness” from its living social and psychological context (where fairness is inherent to “good” and “effective” processes) perhaps mirrors the abstraction of the judicial system from the whole social system.

³⁵ Another area for further study would be the effect of employment statutes on areas not directly regulated by legislation. In other words, do employers ever voluntarily adopt the principles emerging from legislation? For a discussion of the application of statutes by analogy, see MacCormick, N., Legal Reasoning and Legal Theory (Oxford: Clarendon Press, 1978) at 193–94.Google Scholar

³⁶ See Macaulay, S., “Private Government” in Lipson, L. & Wheeler, S., eds., Law and the Social Sciences (New York: Russell Sage, 1986) 445.Google Scholar See also, examining the connections between the internal regulation of institutions under public law and private law, Mockle, D., “Ordre normatif interne et organisations” (1992) 33 C. de D. 965.Google Scholar

³⁷ But see the normative argument for a general duty of fairness in employment relations in England, G., “Recent Developments in the Law of the Employment Contract: Continuing Tension between the Rights Paradigm and the Efficiency Paradigm” (1995) 20 Queen's L.J. 557 at 589–91Google Scholar [“Rights Paradigm and the Efficiency Paradigm”].

^37a For the argument against this exemption, see Cartier, G., “Procedural Fairness in Legislative Functions: The End of Judicial Abstinence?” (2003) 53 U.T.L.J. 217.CrossRefGoogle Scholar

³⁸ See the contextual interpretation of the duty to act fairly in Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817 [Baker].

³⁹ For an attempt to develop a fuller theory of procedural justice, emphasizing the quality of participation and the kinds of reasons offered in support of a decision, see Macdonald, R.A., “A Theory of Procedural Fairness” (1981) 1 Windsor Y.B. Access Just. 3.Google Scholar

⁴⁰ See Summers, R.S., “‘Good Faith’ in General Contract Law and the Sales Provisions of the Uniform Commercial Code” (1968) 54 Va. L. Rev. 195.CrossRefGoogle Scholar

⁴¹ See “Rights Paradigm and the Efficiency Paradigm,” supra note 37 at 585.

⁴² See Baker, supra note 38 at para. 43.

⁴³ See e.g. Whittaker, S. & Zimmerman, R., “Good Faith in European Contract Law: Surveying the Legal Landscape” in Zimmerman, R. & Whittaker, S., eds., Good Faith in European Contract Law (Cambridge: Cambridge University Press, 2000) 7 at 38.Google Scholar

⁴⁴ See e.g. Rizzo v. Rizzo Shoes Ltd, [1998] 1 S.C.R. 27 at para. 24.

⁴⁵ On the inadequacy of damages to remedy a breach of fairness by an employer, see England, G., “Recent Developments in Individual Employment Law: Tell Me the Old, Old Story” (2002) 9 C.L.E.L.J. 37 at 54–55Google Scholar [“Recent Developments in Individual Employment Law”].

⁴⁶ See Baker, supra note 38 at para. 53.

⁴⁷ See Edelman, L.B. & Suchman, M.C., “When the ‘Haves’ Hold Court: Speculations on the Organizational Internalization of Law” (1999) 33 L. & Soc'y Rev. 941.CrossRefGoogle Scholar

⁴⁸ See H. Arthurs, “Private Ordering and Workers' Rights in the Global Economy: Corporate Codes of Conduct as a Regime of Labour Market Regulation” in Conaghan, Fischl & Klare, supra note 30, 471 at 476 [“Private Ordering and Workers' Rights”].

⁴⁹ But see Edelman and Suchman's recognition of a more complex relationship between organizational models of justice and legal models in a prior essay: Edelman, L.B. & Suchman, M.C., “The Legal Environments of Organizations” (1997) 23 Ann. Rev. Soc. 479 at 504–506.CrossRefGoogle Scholar

⁵⁰ But for an argument linking public law fairness with the efficiency norms of the firm by claiming that recognizing the former will advance the latter, see “Recent Developments in Individual Employment Law,” supra note 45 at 52.

⁵¹ See Mount Sinai Hospital Center v. Quebec (Minister of Health and Social Services), [2001] 2 S.C.R. 281 at paras. 35, 37, 2001 SCC 41, Binnie J., concurring.

⁵² See Tucker, E., “The Political Economy of Administrative Fairness: A Preliminary Enquiry” (1987) 25 Osgoode Hall L.J. 555 at 590–92.Google Scholar But on the problem of legitimacy for firms, see “Private Ordering and Workers' Rights,” supra note 48 at 487.

⁵³ See Teubner, G., “The Two Faces of Janus: Rethinking Legal Pluralism” (1992) 13 Cardozo L. Rev. 1443 at 1451.Google Scholar It is arguable, however, that even a self-evidently “legal” exercise of using a pragmatic and functional approach to find a place on a spectrum is only arbitrarily pushed into that code.

⁵⁴ On the trans-border consistency of firms' internal social orders, see Robé, J.-P., “Multinational Enterprises: The Constitution of a Pluralistic Legal Order” in Teubner, G., ed., Global Law without a State (Aldershot, U.K.: Dartmouth, 1997) 45 at 65.Google Scholar A basic consensus obtains amongst Anglo-American states as to what constitutes fairness, but there remains variation over points as significant as the duty to give reasons and the doctrine of legitimate expectations.

⁵⁵ See Fuller, L.L., The Morality of Law, rev. ed. (New Haven, Conn.: Yale University Press, 1969).Google Scholar

⁵⁶ There is a rich and growing corpus of work on morality and economics. See e.g. Etzioni, A., The Moral Dimension: Toward a New Economics (New York: Free Press, 1988).Google Scholar

⁵⁷ I am speaking here of norms—internally logical requirements—resulting institutionally from the system itself, not arising relationally from particular long-term or relational contracts.

⁵⁸ See Arthurs, H.W., “Labour Law without the State?” (1996) 46 U.T.L.J. 1 at 44–45.CrossRefGoogle Scholar

⁵⁹ See Henry, S., Private Justice: Towards Integrated Theorising in the Sociology of Law (London: Routledge & Kegan Paul, 1983) at 124.Google Scholar

⁶⁰ An important intermediate step is reflected by Nonet, P. & Selznick, P., Law and Society in Transition: Toward Responsive Law (New York: Harper Colophon Books, 1978).Google Scholar

⁶¹ An example of such reflexive regulation is a multilateral trade treaty that imposes no uniform environmental standard but will require each party signatory to comply with its own self-determined standards.

⁶² See the account of the potential difficulties of applying an abstract definition of procedural law to concrete cases in Lange, B., “Economic Appraisal of Law-Making and Changing Forms of Governance” (2000) 63 Mod. L. Rev. 294 at 303.CrossRefGoogle Scholar

⁶³ See Sciarra, S., “Franchising and Contract of Employment: Notes on a Still Impossible Assimilation” in Joerges, C., ed., Franchising and the Law: Theoretical and Comparative Approaches in Europe and the United States (Baden-Baden: Nomos Verlag, 1991) 239 at 250.Google Scholar

⁶⁴ See e.g. Teubner, G., “Juridification—Concepts, Aspects, Limits, Solutions” in Teubner, G., ed., Juridification of Social Spheres: A Comparative Analysis in the Areas of Labor, Corporate, Antitrust and Social Welfare Law (Berlin: Walter de Gruyter, 1987) 3.CrossRefGoogle Scholar

⁶⁵ See Black, J., “Constitutionalising Self-Regulation” (1996) 59 Mod. L. Rev. 24 at 24.CrossRefGoogle Scholar The spheres metaphor conveys the autonomy of systems but does not represent how different systems occupy and overlap within the same geo-political space.

⁶⁶ I should not wish to imply that Macaulay falls for this position concerning normative transferability—he engages actively with Teubner's work on the system-specificity of norms (supra note 36 at 492ff.)—but the risk is deeply embedded within the private government analogy.

⁶⁷ See ibid. at 487–88.

⁶⁸ See Collins, supra note 27 at 93.

⁶⁹ For example, judges operating reflexively might consider arguments not that X was a breach of the employment contract, but rather claims that X was inappropriate because it was inconsistent with the systemic internal logic of efficient compensation programs. The legal understanding of a contract has been enriched by sociological and psychological research (see e.g. Rousseau, D.M. & Parks, J. McLean, “The Contracts of Individuals and Organizations” (1992) 15 Research Org. Behav. 1Google Scholar, but the dominant model remains the legal one.

⁷⁰ For a conception of a more technical reflexive law, such as one relying on economics, see Lange, supra note 62.

⁷¹ See Walzer, M., Spheres of Justice: A Defence of Pluralism and Equality (New York: Basic Books, 1983).Google Scholar

⁷² On this point, see Teubner, G., “Legal Irritants: Good Faith in British Law or How Unifying Law Ends Up in New Divergences” (1998) 61 Mod. L. Rev. 11 at 13.CrossRefGoogle Scholar

⁷³ See Macaulay, supra note 36 at 500.

⁷⁴ See e.g. Coutu, M., “Le pluralisme juridique chez Gunther Teubner: la nouvelle guerre des dieux?” (1997) 12:2C.J.L.S. 93 at 110–11CrossRefGoogle Scholar; Bankowski, Z., “How Does It Feel to Be on Your Own? The Person in the Sight of Autopoiesis” in Nelken, D., ed., Law as Communication (Aldershot, U.K.: Dartmouth, 1996) 63.Google Scholar

⁷⁵ See Teubner, G., Law as an Autopoietic System, trans, by Bankowska, A. & Adler, R. (Oxford: Blackwell, 1993).Google Scholar

⁷⁶ See Kleinhans, M.-M. & Macdonald, R.A., “What Is a Critical Legal Pluralism?” (1997) 12:2C.J.L.S. 25 at 44.CrossRefGoogle Scholar

⁷⁷ This opposition is used as the fundamental structuring device in “Rights Paradigm and the Efficiency Paradigm,” supra note 37.

⁷⁸ From the wealth of new public management literature, see e.g. Aucoin, P., The New Public Management: Canada in Comparative Perspective (Ottawa: Institute for Research on Public Policy, 1995).Google Scholar

⁷⁹ See Collins, supra note 27.