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Why the US and Europe differ when it comes to job security

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Opinion: when it comes to job security and layoffs, the US goes with the ‘at-will’ approach, while Europe favors the ‘just cause’ model

When we look at today’s employment relationships, it is important to understand their origins and evolution. These policies, especially in the West, emerged at a time when both the economic structures of the State and the concept of a family were changing and reforming. As such, they reflected the fiscal and regulatory systems of the time. Just like democracy leading the way for political reform, social citizenship was the driving force for the reconstruction of the social and economic participation of individuals in society.

Two ideologies came to the fore as models for employment relations: at-will and just cause. In the United States, the employment relationship took the form of the at-will rule. The at-will rule essentially gives the power to the employer to dismiss an employee at-will, without a cause, hence offering marginal job security.

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From RTÉ Archives, Liam Cahill reports for RTÉ News in 1982 on dockers at Dublin Port’s deep sea docks voting to go on strike over job security

With the introduction of the laissez-faire system of markets in the 1860s, the at-will rule was the most organic outcome as it allowed employers to take advantage of the cheap, unskilled, immigrant labor available without any consequences. This principle was supported by the laws of contract, some forms of property law and the then ethos of American society. Such principles and laws have often found themselves in contradiction to the general ideals of society, arguably making at-will an immoral doctrine and one unsuitable for use in the West.

Following the Great Depression, there was a move away from a laissez-faire economy towards a more regulated one. This transformation only strengthened the resolve of efficiency over all else. With this came the promotion of the dogma that employers should not be limited by the potential of their current employees so it was to be of utmost importance to consider all employees to be easily substitutable.

At the turn of the century, the at-will rule was thought to be limited to unregulated markets and markets for unskilled labour. A key issue with this rule is that it can lead to reputational damage for companies, issues with disgruntled ex-employees and subsequent problems attracting new hires. The recent spate of redundancies at tech giants such as Twitter clearly reflects a resurgence of the at-will rule and we are not yet certain if this has in any way affected the company’s appeal to jobseekers.

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From RTÉ Radio 1’s Morning Ireland, Elaine Burke from Silicon Republic on the exodus of workers from Twitter after Elon Musk’s takeover and ultimatum

The ‘just cause’ model of employment relationship offers a higher level of job security. This requires employers to present a just cause before the dismissal of an employee and can be found in most Western European nations.

In Ireland, the Unfair Dismissals Act 1977, and the Minimum Notice and Terms of Employment Act 1973, ensure that employers must provide a written contract addressing the procedures for dismissal. Following this, an employee can demand a written explanation for the justifications for the dismissal and a failure to provide this can lead to an action for damages. The justifications for dismissal have to be substantial and the onus of proving that the cause for dismissal is fair rests with the employer.

Although this model makes it difficult for an employer to exercise their autonomy, it takes both legal and ethical factors into consideration in the termination process. It also considers the social costs involved in the termination of an employee, including the toll it may take on the family of the terminated employee and other employees. However, it is fair to assume (to some extent) that no amount of social cost will deter an employer from dismissing an employee if that employee is detrimental to their business.

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From RTÉ Radio 1’s Morning Ireland, Una Fitzpatrick from Technology Ireland on the impact of the recent spate of layoffs on the Irish tech sector

Some may argue that the at-will system is better as it helps maintain a high standard of labor and keeps workers from becoming complacent. Given the economic and social changes that we are facing today, especially the rapid move towards human capital development and automation, some of the vices of the at-will system are being internalised.

Others will argue that just-cause is a better model as it offers a higher bargaining power to employees, protecting them from arbitrary decisions for dismissal. The emergence of trade unions has further made the right to a fair contract a basic human right, hence providing a better balance between the needs of the employees and the wants of the employers.

It is apparent that different societies have differing views on job security

It is difficult to pick one model over the other as both have been criticized on grounds of morality, public policy, applicability and human rights. The real crux is that both systems are often pressured to find the right balance between efficiency and morality. The suggested reforms for the models, however, are still misplaced as they aim for unattainable standards for job security.

It is apparent that different societies, even within the west, have differing views on job security. The at-will system seems well suited to American society given the general volatility of their economy, whereas the just-cause doctrine is suited to Western Europe, given the strong market regulatory systems in place.


The views expressed here are those of the author and do not represent or reflect the views of RTÉ


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