Breach Penalties in Labour Contracts: Advance Notice and Severance Pay

This paper describes the plant closing regulations adopted in Maine during the 1971 – 81 period and documents a pattern of relatively poor compliance with the advance notice and severance pay requirements of the law. Data on the number of workers laid off in major plant closings, on prenotification of workers, and on state and local unemployment rates provide the basis for an econometric estimate of the effects of closings with and without early notification on local unemployment rates and the size of the local labor force. The results suggest that advance notification significantly lowers the unemployment resulting from a closing.

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The Response of Wages to Protective Labor Legislation: Evidence from Canada

ILR Review ◽

10.1177/001979399604900204 ◽

1996 ◽

Vol 49 (2) ◽

pp. 243-255 ◽

Cited By ~ 3

Author(s):

Jane Friesen

Keyword(s):

Severance Pay ◽

Wage Effect ◽

Union Status ◽

Labor Legislation ◽

Severance Payments ◽

Bargaining Position ◽

Advance Notice ◽

Lifetime Earnings ◽

Labour Market Activity ◽

Activity Survey

Using micro data from the 1986–87 Canadian Labour Market Activity Survey, the author examines the wage effect of laws requiring advance notice of layoffs and in some cases also requiring severance payments to laid-off workers. The results suggest that incumbent workers protected by advance notice and severance pay laws were able to extract higher wages than were incumbent workers unprotected by such laws. There is evidence, however, that the ultimate wage effect differed by workers' union status: starting wages of nonunion workers appear to have fallen to offset the subsequent wage increase, indicating that nonunion workers may “pay for” advance notice and severance pay laws, whereas union workers who were protected by such laws seem to have been able to exploit their bargaining position to increase their lifetime earnings.

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Workforce Reductions and Termination Benefits in Governments: The Case of Advance Notice

Public Personnel Management ◽

10.1177/009102609602500205 ◽

1996 ◽

Vol 25 (2) ◽

pp. 183-198 ◽

Cited By ~ 1

Author(s):

Yuan Ting

Keyword(s):

Organizational Commitment ◽

Job Search ◽

Economic Loss ◽

Public Employees ◽

Budget Cuts ◽

Severance Pay ◽

Advance Notice ◽

Workforce Reductions

The prospect of layoffs and ongoing downsizing in governments due to budget cuts has generated growing concern about termination benefits for public employees, such as severance pay, transition assistance, and advance notice. This study analyzes the organizational reasons why governments should provide such benefits. The study also uses advance notice as an example, and the CPS-Displaced Worker Survey to assess whether such a benefit lessens the economic loss of layoffs for affected employees. The findings show that termination benefits are integral parts of organizational commitment to preserve a long-term relationship between the organization and its employees, and serve the purpose of maintaining and reinforcing the organizational commitment and productivity of employees, especially those who survived. The findings from the case study show that advance notice provides terminated employees an early start in their job search and therefore helps lessen their economic loss resulting from layoffs. The study also discusses the implications of mandating governments to provide termination benefits as a strategy for managing workforce reductions.

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An Economic Critique of Current Technological Change Displacement Techniques

Relations industrielles ◽

10.7202/028272ar ◽

2005 ◽

Vol 26 (4) ◽

pp. 924-942

Author(s):

David P. Ross

Keyword(s):

Technological Change ◽

Early Retirement ◽

Displaced Workers ◽

Major Conclusion ◽

Severance Pay ◽

Advance Notice

This study attempts to assess how effective are the present methods employed by private parties for adjusting workers to technological change ; and effective is defined on the basis of the loss that displaced workers are expected to incur. The major conclusion is that if provisions such as advance notice, severance pay, attrition, seniority and bumping, early retirement, reduced work week, joint committees, and retraining are performing effectively it is largely the result of luck and circumstance

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The Effects of Employment Protection legislationon Personnel Policies: A Review of Theoretical Modelsand Empirical results

Voprosy Ekonomiki ◽

10.32609/0042-8736-2014-3-126-140 ◽

2014 ◽

pp. 126-140

Author(s):

O. Mironenko

Keyword(s):

Personnel Selection ◽

Selection Criteria ◽

Theoretical Models ◽

Employment Protection ◽

Empirical Results ◽

Protection Legislation ◽

Labour Contracts ◽

Hiring And Firing ◽

The Impact ◽

Personnel Policies

Employers incur costs while fulfilling the requirements of employment protection legislation. The article contains a review of the core theoretical models and empirical results concerning the impact of these costs on firms’ practices in hiring, firing, training and remuneration. Overall, if wages are flexible or enforcement is weak, employment protection does not significantly influence employers’ behavior. Otherwise, stringent employment protection results in the reduction of hiring and firing rates, changes in personnel selection criteria, types of labour contracts and dismissal procedures, and, in some cases, it may lead to the growth of wages and firms’ investments to human capital.

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