The OECD indicators of employment protection legislation measure the procedures and costs involved in dismissing individuals or groups of workers and the procedures involved in hiring workers on fixed-term or temporary work agency contracts. It is important to note that employment protection refers to only one dimension of the complex set of factors that influence labour market flexibility. For information on other labour market policies and institutions in OECD countries, see the OECD Employment Database.
The indicators have been compiled using he Secretariat’s own reading of statutory laws, collective bargaining agreements and case law as well as contributions from officials from OECD member countries and advice from country experts.
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Chapter 2 of the 2013 OECD Employment Outlook: Protecting jobs, enhancing flexibility: A new look at employment protection legislation (read this chapter)
This chapter presents a review of Employment Protection Legislation for 34 OECD countries and 9 emerging economies (including all G20 countries), with a special focus on reforms undertaken between 2008 and 2013. It also presents updated estimates of the OECD employment protection indicators to cover, for most countries, the legislation in force on January 1st 2013. It also provides evidence on the enforcement of EP rules through courts and dispute resolution procedures
Protection of regular workers against individual and collective dismissals, 2013*
(see figure in excel)
*Data refer to 1 January 2013 for OECD countries and Latvia, 1 January 2012 for other countries.The figure presents the contribution of employment protection for regular workers against individual dismissal (EPR) and additional provisions for collective dismissal (EPRC) to the indicator of employment protection for regular workers against individual and collective dismissal (EPRC). The height of the bar represents the value of the EPRC indicator.
Regulation on temporary contracts, 2013*
(see figure in excel)
* Data refer to 1 January 2013 for OECD countries and Latvia, 1 January 2012 for other countries. The figure presents the contribution of the indicator of regulation for standard fixed-term contracts (EPFTC) and the indicator of regulation for TWA employment (EPTWA) to the indicator of regulation on temporary contracts (EPT). The height of the bar represents the value of the EPT indicator.
- Venn, D. (2009), "Legislation, Collective Bargaining and Enforcement: Updating the OECD Employment Protection Indicators", OECD Social, Employment and Migration Working Papers, No. 89, OECD Publishing.
- Employment Protection regulation and Labour Market Performance, OECD Employment Outlook, 1999
The OECD employment protection indicators are compiled from 21 items covering different aspects of employment protection regulations as they were in force on January 1st of each year:
Individual dismissal of workers with regular contracts, incorporating three aspects of dismissal protection: (i) procedural inconveniences that employers face when starting the dismissal process, such as notification and consultation requirements; (ii) notice periods and severance pay, which typically vary by tenure of the employee; and (iii) difficulty of dismissal, as determined by the circumstances in which it is possible to dismiss workers, as well as the repercussions for the employer if a dismissal is found to be unfair (such as compensation and reinstatement).
Additional costs for collective dismissals. Most countries impose additional delays, costs or notification procedures when an employer dismisses a large number of workers at one time. The indicator measuring these costs includes only additional costs which go beyond those applicable for individual dismissal. It does not reflect the overall strictness of regulation of collective dismissals, which is the sum of costs for individual dismissals and any additional cost of collective dismissals.
Regulation of temporary contracts, including regulation of fixed-term and temporary work agency contracts with respect to the types of work for which these contracts are allowed and their duration, as well as regulation governing the establishment and operation of temporary work agencies and requirements for agency workers to receive the same pay and/or conditions as equivalent workers in the user firm, which can increase the cost of using temporary agency workers relative to hiring workers on permanent contracts.
For full details on the methodology and weights used to compiled the indicators, click here
Detailed information on employment protection
For more information on employment protection legislation, visit the International Labour Organization’s employment protection legislation database EPLex. It provides detailed information on more than 50 variables relating to employment protection regulation in 72 countries, although limited to statutory law.
Contact: Andrea Bassanini (Andrea.Bassanini@oecd.org)
OECD Employment Outlook
OECD Employment protection indicator published in 2009 (excel)