![]() ![]() That is why common-law legal systems in Canada and beyond have held that those holding an office, such as a director or an officer of an organization, must act in the interests of that organization and in accordance with its rules. If the governors of a university can arbitrarily decide to convert it into a theme park, say, and divert the resources that the university’s founders provided for higher education to some other purpose, that represents a betrayal of the founders’ purposes. Respect for and observance of these rules and their hierarchy is important for the integrity of an organization’s functioning. Typically, these governing rules are structured in a kind of hierarchy, with some of the rules being fundamental, constraining any lesser rules that may be made – the articles establishing a corporation, for example, or the constituting instrument of a university. Such governance questions include: Will decisions of the collectivity be made by its members, by a representative body, by a majority vote, or by a vote of a special plurality? Will unanimity be required? Will the rules vary depending on the kinds of decisions? If votes are involved, how will such votes be initiated, governed and counted? In fact, one of legal scholar Hans Kelsen’s profound insights was that an “organization” essentially amounts to a set of operational rules – for example, rules that define how the organization will make decisions and how it will acquire and use resources. While CEOs and other officers do serve as leaders of the collectivity, their directions do not override the interests of the collectivity itself for employees of the collective enterprise.Ī group or collectivity must adopt some rules according to which it will operate. When the employer is a collective entity, such as a business corporation, university or charitable organization, the Canadian legal system has long been clear that such employees serve that collectivity as a whole – not its board nor its temporary officers, such as its chief executive officer or its president. In general, the law says that employees owe their loyal service to their employer, within the larger context of the prevailing laws.
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