Research Handbooks in Law and Economics series
Edited by Cynthia L. Estlund and Michael L. Wachter
Chapter 11: The law and economics of employment protection legislation
Employment protection legislation (EPL) has a long history in some jurisdictions, having been introduced in Weimar Germany and the French Third Republic in the inter-war period in forms which are recognizable to modern labour lawyers (Vogel-Polskey, 1986). ‘Unjust’ or ‘unfair’ dismissal legislation is the principal example of this type of statutory intervention, but the term ‘employment protection’ is capable of embracing other legal mechanisms aimed at promoting job security, including legislation setting minimum notice periods for dismissal and requiring the payment of redundancy compensation. The rights created generally vest in individual employees, but also potentially relevant in the present context are laws which grant collective information or consultation rights over dismissal, sometimes extending to codetermination or joint decision-making, to worker representatives. EPL is not, generally, taken to include social insurance or other social security legislation, through which unemployment compensation or social assistance is paid to the individual by the state, not the employer, nor does it extend to legislation which mandates basic labour standards on hours and wages. EPL is nevertheless complementary to these forms of regulation and to some extent overlaps with them. In this chapter, for reasons of space, the focus will be on the core of EPL as it is conventionally defined, that is to say, unjust or unfair dismissal laws and laws relating to layoff and redundancy.
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