Chapter 2: The Design and Evolution of Employment Protection Legislation
Most countries regulate employment protection by legislation. The regulations imply that employers are restricted in their ability to dismiss employees, in their use of temporary positions or other aspects of the employment relationship. Employment protection legislation may be regarded as one of many so-called institutions on the labour market, that is to say, it creates a framework of regulated terms and conditions which tend to change very little over time. Among other institutions regulating the labour market in most countries, one can name trade unions, collective bargaining systems, designs of active and passive labour market policies and statutory minimum wages. There are great differences across countries in the way these institutions are formed, and this is also holds for employment protection. This chapter deﬁnes the various applicable areas regarding employment protection legislation, which are the same for many different countries. Next is described the evolution over time in the strength and differences across countries in employment 19 PSkedinger_02_Finals.indd 19 2/23/2010 4:37:35 PM 20 Employment protection legislation protection, using the OECD (Organisation for Economic Co-operation and Development) index. The chapter also considers the heterogeneity in regulation as applied to various groups in the labour market and various kinds of ﬁrms and to what degree this is captured by available indices. Finally, the implications of optional regulations in the legislation and the research concerning how far courts in various countries have ruled in employment protection-related cases depending on the state of the economy and legal capacity is...
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