Employment protection - THEORETICAL FRAMEWORK

THEORETICAL FRAMEWORK

2.3. Employment protection

2.3.1. What is employment protection?

of strategies that prevent employers from [imple de

which is “one of the central factors in an employment relationship”,¹⁸⁵ goes beyond the prevention of employers from implementing redundancies. Employment protection is all about the “absence of fear of employment loss – that is not having the threat of loss of employment.”¹⁸⁶ With that in mind, it can thus be said that employment protection refers, in general terms, to a wide array of measures and policies that are aimed at ensuring continued employment of employed persons. Even so, employment protection does not necessarily

181 Kolm A and Larsen B “Moral, the informal sector, and unemployment” (2001) – accessed at http://www.nek.uu.se/Pdf/2001wp9.pdf.

182 Chen MA et al Supporting Workers in the Informal Economy: A Policy Framework (ILO Working Paper on the Informal Economy no. 2002/2 (2002)) 11.

183 Ibid.

184 Seifert A “Employment protection and employment promotion as goals of collective bargaining in the

abour Market Research Federal Republic of Germany” (1999) 15 International Journal of Comparative Labour Law and Industrial Relations 343 at 347.

185 Walwei U Flexibility of Employment Relationships: Possibilities and Limits (IAB L Topics no. 22 (1997)) 5.

186 Dasgupta S Employment Security: Conceptual and Statistical Issues (ILO (2001)) 2.

mean a total proscription of dismissal or unrestricted legal protection against dismissal. As Walwei points out:

“Employment security does not necessarily imply legal protection against dismissal. It is very obvious that certain employees (e.g. in certain small firms) in fact enjoy a high degree of employment security without any formal regulations; legal protection against dismissal, however, does not provide absolute security of employment. It simply means that there is economically viable dismissal protection in place to prevent arbitrary lay-offs. Employers must therefore justify redundancies on objective grounds and respect certain procedures (e.g. giving notice). ¹⁸⁷

In addition to the abovementioned definitions, there is a definition which appears to enjoy ide usage: “…employment security means that workers have protection against arbitrary

and short-notice dismissal from employment, as well as having long-term contracts of employment and having employment relations that avoid casualisation.”¹⁸⁸ Notwithstanding the foregoing, the crux of the matter is that “[e]mployment protection encompasses any set of regulations, either legislated or written in [labour] contracts, that limit the employer’s ability to dismiss the worker without delay or costs.”¹⁸⁹

2.3.2. Defining employment protection: A critique

Defining employment protection is not an easy task – so is developing a cutting edge definition that is suitable for different economic and labour market situations. This, it may be opined, explains the proliferation of ‘employment protection’ or ‘employment security’

definitions. However, the importance of employment protection in an unemployment protection system cannot be stressed enough. This is primarily because employment protection is an “important dimension of quality of employment and secure employment is the main means to secure income.”¹⁹⁰ Nevertheless, employment protection stands accused of

187 Walwei U Flexibility of Employment Relationships: Possibilities and Limits (IAB Labour Market Research Topics no. 22 (1997)) 4.

188 Dasgupta S Employment Security: Conceptual and Statistical Issues (ILO (2001)) 2.

189 Pissarides CA “Employment protection” (2001) 8 Labour Economics 131 at 136.

190 Dasgupta S Employment Security: Conceptual and Statistical Issues (ILO (2001)) 2.

protecting those who are employed at the expense of the unemployed masses.¹⁹¹ Even though there are views to the contrary, this implies that employment protection is bad for job creation. The reason often advanced is that it makes employers to be reluctant to employ new employees¹⁹² in view of the difficulties associated with firing employees. This could, it is often argued, lead to the exclusion and marginalisation of vulnerable groups (such as the long-term unemployed and the hard-to-place groups of persons) from the labour market.¹⁹³ Employment protection is, among other reasons, criticised for and/or accused of hindering labour market flexibility because (it is believed that) employment protection laws and practices favour employees above employers by giving them more rights.¹⁹⁴ In addition, it is argued that employment protection promotes inequality.¹⁹⁵

In spite of the foregoing, employment protection remains desirable, particularly when it is eing observed from a developing country’s perspective. The criticism that employment protection provides more rights to employees presupposes that the relationship between employers and their employees is that of equals. The truth of the matter is that in practice b

employers wield more power and influence than their employees in as far as the employment relationship is concerned. Therefore dismissal protection is needed. In developing countries, where unemployment (as well as exclusion and marginalisation)¹⁹⁶ levels are very high,

191 Rutkowski J Does Strict Employment Protection Discourage Job Creation?: Evidence from Croatia (World Bank Policy Research Working Paper 3104 (2003)) and Lazear EP “Job security provisions and employment”

(1990) 105 Quarterly Journal of Economics 699 at 699.

192 See, for example, Bentolila S and Bertola G “Firing costs and labour demand: How bad is Eurosclerosis?”

(1990) 57 Review of Economic Studies 381,

193 A study by Acemoglu and Agrist (Acemoglu D and Agrist J “Consequences of employment protection? The case of the Americans with Disabilities Act” – accessed at http://econ-www.mit.edu/faculty/angrist/files/jpefnl1.pdf), for example, maintains to have discovered that the introduction of the Americans with Disabilities Act was followed by a drop in the employment of disabled men aged 21-39.

194 See, for example, Abraham KG and Houseman SN Does Employment Protection Inhibit Labor Market Flexibility?: Lessons from Germany, France and Belgium (Upjohn Institute Staff Working Paper 93-16 (1993)).

195 Heckman JJ and Pagés C The Cost of Job Security Regulation: Evidence from Latin American Labour Markets (NBER Research Working Paper 3104 (2003)).

196 See, for example, Ghai D Social Security Priorities and Patterns: A Global Perspective (Institute for Labour Studies Discussion Paper DP/141/2002 (2002)), ILO Decent Work and the Informal Economy (ILO (2002)), Canagarajah S and Sethuraman SV Social Protection and the Informal Sector in Developing Countries:

Challenges and Opportunities (World Bank Social Protection Discussion Paper Series no. 0130 (2001)), Beattie R “Social protection for all: But how?” (2000) 139 International Labour Review 129 at 129-133, Bhalla AS and Lapeyre F Poverty and Exclusion in a Global World (Macmillan (1999)) 131-165, Gore C Social Exclusion and Africa South of the Sahara: A Review of Literature (Labour Institutions and Development Programme DP/62/1994 (1994)), Burgess R and Stern N “Social security in developing countries: What, why, who and how?” in Ahmad E et al (eds) Social Security in Developing Countries (Claredon (1991)) 40 and Turnham D

supply exceeds demand. This means that very often it is a jobseeker or an employee who eeds an employer and not the other way round. Another crucial point is that most

ount of these realities at employment protection remains important, for it secures one’s – at times – only source developing countries where effective social surance systems do not exist, the poor have to work in order to support themselves and n

developing countries are reeling from a disastrous history of colonialism and imperialism which paved a way for human misfortunes such as civil wars and apartheid.¹⁹⁷ The point to be observed is that at some stage in the history of most developing countries there were gross violations of employees’ employment (and other fundamental) rights. Employment protection is put in place to prevent employers from violating the employment rights of their employees and, in certain instances, those of jobseekers.¹⁹⁸ It is on acc

of livelihood. The bottom line is that “in in

their families.”¹⁹⁹

and Eröcal D Unemployment in Developing Countries: New Light on an Old Problem (OECD Development Centre Technical Papers no. 22 (1990)).

197 See, generally, Shivji IG “Law’s empire and empire’s lawlessness: Beyond the Anglo-America law” (2003) 1 Law, Social Justice & Global Development Journal – http://elj.warwick.ac.uk/global/issue/2003-1/shivji.html, Ndulo M “Constitution-making in Africa: Assessing both the process and the content” (2001) 21 Public Administration and Development 101, Aliber M “Chronic poverty in South Africa: Incidences, causes and policies” (2003) 31 World Development 473 at 474-475.

198 For example, the Constitution of the Republic of South Africa, which provides every person with the right to fair labour practices (s 23 of the Constitution), states in its preamble the following: “We, the people of South Africa, Recognise the injustices of our past; Honour those who suffered for justice and freedom in our land;

Respect those who have worked to build and develop our country; and Believe t who live in it, united in our diversity. We therefore, through our freely e

hat South Africa belongs to all lected representatives, adopt this onstitution as the supreme law of the Republic so as to – Heal the divisions of the past and establish a society ased on democratic values, social justice and fundamental human rights; Lay the foundations for a democratic nd open society in which government is based on the will of the people and every citizen is equally protected y law; Improve the quality of life of all citizens and free the potential of each person; and Build a united and democratic South Africa able to take its rightful place as a sovereign state in the family of nations. May God protect our people.” It goes without saying that it is because of the unpleasant past practices that the drafters deemed it fit to include such a preamble and also entrench the right to fair labour practices in the Bill of Rights.

See Olivier M “Constitutional perspectives on the enforcement of socio-economic rights: Recent South African Also see S v Makwanyane 391 (CC); 1995 6 BCLR 665 (CC)) where the Constitutional Court remarked that “the Constitution trife, conflict, untold e, class, belief or unfair labour practice provisions contained in Chapter 8 of the Labour Relations Act 66 of 1995)

199 Majid N “The working poor in developing countries” (2001) 140 International Labour Review 271 at 271.

C b a b

experiences” (2002) 33 Victoria University of Wellington Law Review 117 at 117.

(1995 3 SA

…provides a historic bridge between the past of a deeply divided society characterised by s

suffering and injustice, and a future founded on the recognition of human rights, democracy and peaceful co-existence and development opportunities for all South Africans, irrespective of colour, rac

sex.” For this reason, it does not come as a surprise that employment protection laws (such as the unfair dismissal and

were enacted to give effect to the provisions of s 23 of the Constitution.

2.3.3. Types of employment protection

Employment protection is all about rules and regulations, which may be in the form of legislation or embodied in labour contracts such as a contract of employment or collective agreements which limit the employer’s freedom to dismiss an employee without reason, delay or cost.²⁰⁰ There are several kinds of employment protection and they include, among others, the following: administrative procedures, notice of termination, severance payment, curb on dismissal, and additional measures for collective dismissals.²⁰¹

2.3.3.1. Administrative procedures²⁰²

These are the procedures to be followed prior to a dismissal. An employer who desires to ismiss an employee, irrespective of the presence of a valid reason for the envisaged step, is teps. The goal is to satisfy the procedural fairness of a ismissal.²⁰³ The employer must, for example, provide an employee with an opportunity to

onsult workers (or workers representatives)²⁰⁵ and to (in ertain jurisdictions such as Germany) notify a public authority.

required to follow certain procedural s d

defend him- or herself. Disciplinary hearings may, in dismissal matters involving misconduct, be cited as a platform from which an employee may defend him- or herself. In cases of dismissal on the ground of incapacity (dismissal due to poor work performance), an employer is required to consult with and afford the affected employee with an opportunity to improve.²⁰⁴ Employers are, in the event of dismissals on the basis of operational requirements, inter alia, required to c

200 Pissarides CA “Employment protection” (2001) 8 Labour Economics 131 at 136.

201 Ibid.

ood Practice: Dismissal so see Grogan J Workplace Law (8 ed) (Juta (2005)) 188-206.

ce Law (8^th ed) (Juta (2005)) d) (Juta (2005)) 229-232.

202 See, for further reading about the situation in South Africa, paragraph 3.1. in chapter

203 See s 188 of the Labour Relations Act (LRA) and item 4(1) of the Code of G (Schedule 8 of the LRA)). Al th

204 See item 8 of the Code of Good Practice: Dismissal. Also see Grogan J Workpla 208-215.

205 See 189(1) of the LRA and Grogan J Workplace Law (8^th e

2.3.3.2. Notice of termination²⁰⁶

This is in most instances embodied in legislation, employment contracts or even in employment policies of an employer. This is a period which is given by one of the parties to an employment contract prior to the termination of an employment contract. The notice of rmination, under normal circumstances and depending on the required notice period, is

t the the termination of employment

ontracts. That is why notice of termination normally involves a waiting period – even

ice is issued but does ot become effective.”²⁰⁷ It should be noted, however, that an employer might pay an

eration instead of notice.²⁰⁸

payment²⁰⁹

This kind of employment protection, as Pissarides puts it, “includes mainly the possibility of a challenge by the employee for “unfair dismissal” and the leniency with which the law and te

geared a elimination of the element of surprise during c

though the length of the notice period may vary form one employer to another or one employment contract to another. This is a period “during which the not

employee his or her remun

2.3.3.3. Severance

Sometimes referred to as redundancy payment or (in a casual manner as) retrenchment package, severance payment is an amount of money which is paid to redundant employees as an indemnity for dismissal.²¹⁰ The amount payable, however, often depends on past earnings and the length of service.²¹¹ The cost of redundancy payment is in most instances born by

“employers, either individually or with the assistance of a special fund to which employers as a whole contribute.”²¹²

2.3.3.4. Curb on dismissal

206 See, as regards notice of termination in South Africa, paragraph 3.1.1. in chapter 3.

207 Pissarides CA “Employment protection” (2001) 8 Labour Economics 131 at 136.

208 See s 38 of the BCEA.

209 See, as regards severance payment in South Africa, paragraph 3.2. in chapter 3.

210 See Grogan J Workplace Law (8^th ed) (Juta (2005)) 232 and 237.

211 ILO Social Security for the Unemployed (ILO (1976)) 27.

212 Ibid.

courts in different countries deal with such appeals”.²¹³ Generally there are three internationally recognised grounds upon which an employee may dismiss an employee,²¹⁴

amely dismissal for misconduct, dismissal for incapacity and dismissal for operational en made between lawful dismissals, unfair dismissals²¹⁶ nd automatically unfair dismissals.²¹⁷

.3.3.5. Additional measures for collective dismissals

.1. Introduction

this chapter, a conceptual and theoretical framework within which an unemployment n

requirements.²¹⁵ A distinction is oft a

Certain countries, in addition to normal responsibilities, require employers to comply with several additional obligations when they plan to retrench employees.²¹⁸

3. SUMMARY

protection system operates has been set out. It attempted to highlight the often ignored and different conditions that exist in developed and developing countries. These differences underscore an important principle, namely that concepts and theories which function well in developed countries are not always similarly relevant for developing countries.

Notwithstanding the foregoing, this chapter pointed out challenges which face unemployment protection systems throughout the world (such as globalisation), as well as those that are peculiar to developing countries (such as declining formal employment as well as the rise in informal activities, which exclude and marginalise many people from

213 Pissarides CA “Employment pro

214 See the Termination of Employm

tection” (2001) 8 Labour Economics 131 at 136.

ent Convention 158 of 1982. Also see paragraph 1.2.3.2. in chapter 4.

5 See s 188(1)(a) of the LRA and Grogan J Workplace Law (8^th ed) (Juta (2005)) 155-243.

6 See s 188 of the LRA and Grogan J Workplace Law (8^th ed) (Juta (2005)) 155-243.

Protection Legislation: Its Economic Impact and the Case for Reform (European Commission – Directorate for Economic and Financial Affairs (2003)) 21-28. See, as regards additional measures for collective dismissals in South Africa, paragraph 3.1.2. in chapter 3.

21 21

217 See s 187 of the LRA and Grogan J Workplace Law (8^th ed) (Juta (2005)) 137-154

218 See, for example, Morin M and Vicens C “Redundancy, business flexibility and worker’s security: Findings of a comparative European survey” (2001) 140 International Labour Review 45 and Young D Employment

unemployment protection systems). Key issues and findings (conclusions) arising from the discussion of the conceptual and theoretical framework are summarised below.

ent-related ardships (such as poverty).

ttempts to combat social exclusion require a variety of policy interventions which should, inter alia, include labour market interventions, employability interventions and social 3.2. Conceptual framework

3.2.1. Concept of unemployment

While it is acknowledged that the definition of unemployment varies from one area of study to another, it nonetheless follows that it is often couched in narrow terms. This results in exclusions and marginalisation of certain groups and categories of persons (particularly in developing countries such as South Africa). People who are engaged in care work and informal economy activity, for example, are the usual victims of the effects of this narrow approach.

3.2.2. Social exclusion in unemployment protection systems

Despite the importance of an unemployment protection system as a tool to curb or minimise social exclusion, many unemployment protection systems (particularly those in developing countries) are yet to come to grips with the prevention of the exclusion and marginalisation of certain categories of persons. The main problem as it is argued in this chapter is that they pay too much attention to the replacement of income with little regard to the (re)integration of the unemployed into the labour market. In addition, they concern themselves only with those who are in the labour market. The effect of this approach is that those who find it difficult to secure a berth in the labour market due to age (foreign and native youth, and the aged), gender (single or married females of a child-bearing age) and disability (people living with disabilities) are left at the mercy of unemployment and other unemploym

protection interventions (to cater for the social protection needs of the socially excluded through, inter alia, social insurance, social assistance and social integration).

d to redesign unemployment protection systems

o unemployment as well as what should be garded as employment and the dictates of the information age require unemployment 3.3. Theoretical framework

3.3.1. The nee

Changing societal views on what amounts t re

protection systems to undergo a serious and continuous process of change if they are to provide full employment protection. The need to redesign unemployment protection systems is even stronger when it comes to developing countries, such as South Africa, due to the limited scope of protection they offer.

3.3.2. Improving the economic security of unemployed persons

There are a variety of means of improving the economic security of unemployed persons.

They include, inter alia, the following: unemployment insurance benefits, unemployment assistance, labour market policy, workfare, employment or wage transfers, and citizenship income grants.²¹⁹ While some of the foregoing means of improving the economic security of unemployed persons may be found in developing and developed countries,²²⁰ many are yet to be implemented in developing countries. The reluctance of many developing countries to experiment with some of these means is fairly understandable. Firstly, what works for country A does not mean that it will work for country B. Secondly, varying socio-economic situations found in different countries need to be taken into account before any attempts are made to transplant unemployment protection policies from one system to another.

219 Standing G Unemployment and Income Security (ILO (2000)) 5.

220 Unemployment insurance benefits are a common example.

3.3.3. Growing informal economy as a challenge to unemployment protection

The growing informal economy and the changing nature of work prove to be some of those ajor challenges facing unemployment protection systems. The problem with the informal conomy is that it provides little social protection to those who participate in it as well as

eir families.

.3.4. Importance of employment protection

mployment protection is, among other reasons, criticised for and/or accused of hindering bour market flexibility because (it is believed that) employment protection laws and ractices favour employees above employers by giving them more rights. In addition, it is rgued that employment protection promotes inequality. In spite of the foregoing, mployment protection remains desirable, particularly when it is being observed from a eveloping country’s perspective. The criticism that employment protection provides more

In document Redesigning the South African unemployment protection system: a socio-legal inquiry (Page 74-85)