key topic

Employment protection

Employment protection laws and regulations deal with the rights of employees, including the right to advance notice of termination, the right to redundancy payments upon termination, rights to leave for maternity, disability, and other medical issues, and many others.

  • The economics of employment tribunals

    Understanding how employment tribunals make decisions can guide reforms of employment dispute settlement

    Paul Latreille, January 2017
    Employment tribunals or labor courts are responsible for enforcing employment protection legislation and adjudicating rights-based disputes between employers and employees. Claim numbers are high and, in Great Britain, have been rising, affecting both administrative costs and economic competitiveness. Reforms have attempted to reduce the number of claims and to improve the speed and efficiency of dealing with them. Balancing employee protection against cost-effectiveness remains difficult, however. Gathering evidence on tribunals, including on claim instigation, resolution, decision making, and post-tribunal outcomes can inform policy efforts.
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  • Health effects of job insecurity

    Job insecurity adversely affects health, but fair workplace practices and employee participation can mitigate the effects

    Francis Green, December 2015
    Research has shown that job insecurity affects both mental and physical health, though the effects are lower when employees are easily re-employable. The detrimental effects of job insecurity can also be partly mitigated by employers allowing greater employee participation in workplace decision-making in order to ensure fair procedures. But as job insecurity is felt by many more people than just the unemployed, the negative health effects during recessions are multiplied and extend through the majority of the population. This reinforces the need for more effective, stabilising macroeconomic policies.
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  • A flexicurity labor market during recession

    Long-term unemployment did not rise under the flexicurity model during the great recession, despite the large drop in GDP

    Torben M. Andersen, July 2015
    Before the great recession of 2008–2009, the “flexicurity” model (with flexibility for firms to adjust their labor force along with income security for workers through the social safety net) attracted attention for its ability to deliver low unemployment. But how did it fare during the recession, especially in Denmark, which has been highlighted as having a well-functioning flexicurity model? Flexible hiring and firing rules are expected to lead to large adjustments in employment in a recession. Did the high rate of job turnover continue or did long-term unemployment rise? And did the social safety net become overburdened?
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  • Employment protection legislation in transition and emerging markets

    Although market failures mean employment protection is necessary, excessive protection can be counterproductive

    Alexander Muravyev, September 2014
    Employment protection legislation aims to shield employees against unfair dismissal and earning reductions at the time of job loss. Theory suggests that employment protection stabilizes employment over cyclical upturns and downturns without necessarily increasing general unemployment. However, recent evidence from transition and emerging economies shows that employment protection legislation tends to raise unemployment among disadvantaged groups, particularly youth, and may increase informal work. Employment protection policies thus require careful consideration of their unintended effects.
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  • Short-time work compensations and employment

    Temporary government schemes can have a positive economic effect

    Pierre Cahuc, May 2014
    Government schemes that compensate workers for the loss of income while they are on short hours (known as short-time work compensation schemes) make it easier for employers to temporarily reduce hours worked so that labor is better matched to output requirements. Because the employers do not lay off these staff, the schemes help to maintain permanent employment levels during recessions. However, they can create inefficiency in the labor market, and might limit labor market access for freelancers and those looking to work part-time.
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  • Employment protection

    Policymakers need to find the right balance between protecting workers and promoting efficient resource allocation and productivity growth

    Stefano Scarpetta, May 2014
    Laws on hiring and firing are intended to protect workers from unfair behavior by employers, to counter imperfections in financial markets that limit workers’ ability to insure themselves against job loss, and to preserve firm-specific human capital. But by imposing costs on firms’ adaptation to changes in demand and technology, employment protection legislation may reduce not only job destruction but also job creation, hindering the efficient allocation of labor and productivity growth.
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