Law commentary: Unjust dismissal laws

in other countries: some cautionary notes *

In this article the author provides a view from the USA on the workings of unfair dis- missal legislation in a number of countries.

N this paper 1 intend to (1) discuss the role I consideration of foreign unjust dismissal laws plays in the current U S debate over whether to enact general statutory protection against unjust discharge; (2) offer a sketch of the pro- tective regimes in Canada, Great Britain, Ger- many, France, Italy, and Japan; (3) identify some of the common characteristics of these largely statutory schemes; and , finally (4) raise a number of questions for further research and reflection as to whether any of these schemes are capable of being transplanted on to American soil[ll.

American exceptionalism We have always felt a measure of pride in

American exceptionalism. By and large, out- side of the issue of race, our society has been largely free of the rigid class barriers and per- vasive class consciousness that mar the indus- trial history and continue to rend the social fabric of many of the European countries I will be discussing. Some explanation can be found in Frederick Turner’s ‘open frontier’, the oppor-

~~~ ~~~~ ~ ~ -~ ~~ ~~ ~~~~~ ~ ~~~ ~

’ From a n address to the Committee on Development of the Law of Individual Rights and Responsibilities in the Workplace. Section of Labor and Employment Law, American Bar Association. Scottsdale. Arizona. March 2. 1984. 0 Samuel Estreicher is Professor of Law. New York University School of Law.

tunities afforded by our ever-expanding frontier (often working considerable injustice to native Americans) [21, Immigration, providing a con- tinuous supply of unskilled laborers who saw America as a land of opportunity - whatever the reality - also provides a key. Whatever the reason, our relatively open society, or at least the widespread perception of openness, has acted as a continuing corrosive on class divisions (in the European sense of the term).

We have also been blessed with a relatively responsible labor movement, committed to improving the lot of its members but by working within the system. In place of government stipulation of the terms of employment, we have a significant measure of voluntarism and worker self-representation. The picture is, of course, not completely rosy, as Clyde Sum- mers, with his characteristic passion and eloquence, often reminds us, but there is much that rightly has earned the envy of other nations. [31.

Increasingly, however, our exceptionalism has come to be viewed in negative terms. We seem to stand virtually alone among the nations of the Western industrialised world in not providing general protection against unjust discharge for private sector employees who either cannot or d o not choose unionism. We also appear to be unique in failing at the government level to provide meaningful pro-

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tection for employees displaced by economic dismissals and plant terminations. * Compara- tive labor law permits us to re-examine deeply embedded assumptions about our own em- ployment law system. If we are indeed ‘back- ward’ in these areas as some have claimed, we must ask why. As Mark Twain put it, ‘Few things are harder to put up with than the annoyance of a good example.’ The question is, should we be ‘annoyed’?

Overview of protections available in other countries I think it useful to begin with a straight-

forward account of the unjust dismissal statutes in Canada and some of the Western European countries.

A. Canada With the legal culture and collective bargain-

ing system most like our own, Canada would seem the most promising example for our pur- poses.

In Canada, labor legislation operates on two levels: federal and provincial.

1. Federal legislation. In 1978, the Canadian Labour Code was amended to pro- tect against unjust dismissal employees who have been with the same employer for at least twelve months and are not subject to a collective agreement [4]. This measure applies only to industries within the federal sector - largely the transportation, communications and atomic energy fields - comprising a thin layer, about one tenth of the non-agricultural work- force (which, in turn, is n o more than one tenth of our own labour force).

A discharged employee may bring his com-

* Unemployment compensation is of course provided in the United States at the state level, but this is also true of Canada and the European countries surveyed here. Although an evaluation of the economic dismissal and plant closing legislation in Western Europe is beyond the scope of these remarks, those measures provide protection against unfair selection for economic dismissal and , in some countries. involve government oversight of the economic justification for the dismissals or shutdowns. It is a subject for further research whether, a s I suspect is the case, these statutes ensure a level of job security or provide compensation that is distinctly superior - from the affected employees’ standpoint - to arrangements in the United States, ranging from unemployment compensation, the seniority principle in unionised employment, supplemental unemployment benefits in some collective agreements, and company retraining and placement policies.

plaint to a government inspector who will attempt conciliation. If that fails, the employees can petition the Minister of Labor who, in his discretion, may appoint an adjudicator to hear the complaint. The adjudicator’s decision is final, binding and unreviewable in any court. These adjudicators, drawn largely from the ranks of private labor arbitrators, apply con- ventional labor arbitration principles and are authorised to award reinstatement with back pay. Reinstatement, though discretionary, appears to be routinely awarded, as in this country; n o statistics are presently available, however, on the survival rate of reinstatees. Canadian labour law specialists tell m e that managerial employees have with increasing success also pursued their common law right to dismissal only upon notice, absent ‘just cause’. In some cases, mid-level managers have secured judgments providing for three years’ salary in lieu of notice.

2. Provincial legislation. Given the limits of federal legislative authority, however, labor law in Canada is largely a provincial matter. Most of the Provinces require that, absent ‘just cause’, significant periods of notice (depending upon years of service) precede discharge. In many, awards of one year’s pay in lieu of notice for mid-level managers are not un- common[5]. Some of the provincial statutes, however, stipulate precise, shorter notice periods (often keyed to regular pay intervals). In 1975, Nova Scotia enacted legislation pro- viding ‘just cause’ protection for dismissal even with notice for employees with ten years of service with the same employer; and , more recently, Quebec passed unjust dismissal legislation for employees with at least five years of service with their employer[61.

B. Great Britain Since 1971 Parliament has provided general

statutory protection against unjust dismissal. The law, which has undergone several re- visions[7], includes professionals and managers, but excludes (i) employees with less than one year’s continuous service (a two-year qualifying period applies, moreover, in the case of dischargees from firms having twenty or fewer employees); (ii) men and women above the normal retirement age for their organisation or men over 65 years of age and women over 60; and (iii) employees under a fixed term con- tract of at least one year’s duration who have waived in writing their statutory claims

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(apparently, such waivers can be secured at the outset of the employment relationship).

The burden is on the employer to show a legitimate reason for the discharge,’ such as lack of competence, misconduct or ‘some other substantial reason of a kind to justify’ dismissal (the latter, a catch-all phrase that in practice gives employers a great deal of leeway). If the employer clears this hurdle, the tribunal must then decide - without allocating the burden of persuasion to either side - whether the dis- missal was fair, taking into account all of the circumstances ‘including the size and adminis- trative resources of the employer’s under- taking’. Studies show that a great deal of defer- ence is paid to managerial prerogative, with little substantive review of reasons given[8]. Moreover, the law has been interpreted to re- quire only good faith and reasonable belief, not that the employee in fact has committed the infraction [91. Also, procedural irregularities are otherwise condoned where such justification is in any event present[lOl.

Complaints are initially referred from the office of industrial tribunals to the Advisory, Conciliation and Arbitration Service (ACAS) for attempted conciliation. Many complaints are resolved at this stage. If unsuccessful, the complaint goes to a tripartite industrial tribunal for hearing. The tribunal is not bound by strict rules of evidence, and counsel in theory are not necessary but increasingly resorted to. Appeals lie on questions of law to an Employment Appeals Tribunal (EAT), then to the general courts.

Reinstatement is authorised but discretion- ary; the tribunal is instructed by statute to consider the employee’s wishes, the practic- ability of reinstatement, and any employee fault. Presently, a majority of complainants apparently prefer compensation, though it has been argued that this preference stems from misinformation about their rights and a sense that reinstatement will ultimately result in another dismissal. 11 1 I.

Even where employees plainly wish to be reinstated or re-engaged (i.e. re-employed elsewhere in the same firm), by all accounts the tribunals are most reluctant, deferring virtually to a man to the employer’s wishes[l21. Despite statutory amendment to make explicit a prefer-

’ Employees carry the burden of persuasion if they are seeking to prove that one of a range of inadmissible reasons, such as union activity or pregnancy, gave rise to the discharge,

ence for reinstatement where practicable, the trend is to avoid this remedy altogether. Bob Hepple, a chairman of industrial tribunals in England and Wales, reports that in 1973, 4 .2% of those whose cases were settled prior to hearing were given back their jobs; this figure dropped to 1.8% in 1979. Similarly, in 1973, 2 .3% of those going to hearing got their jobs back; by 1979 this figure plummeted to 0 . 8 % [13]. Even where reinstatement is ordered, employers can pay an additional award in lieu of reinstatement. And where employers comply with reinstatement orders, only 80% of the employees return and many d o not stay long in the jobI141. Moreover, the statute does not at present monitor ongoing post-award compliance.

Thus, the principal British remedy is a mone- tary award, typically in three segments: (i) a basic award calculated, like a redundancy pay- ment, in terms of age and years of service, subject as of 1985 to a f4,560 maximum; (ii) a compensatory award, subject to deductions for mitigated earnings and other payments from the employer (including state unemployment benefit); and (iii) where compliance with a rein- statement order is not forthcoming, an additional award (of between 13 and 26 weeks’ wages). Actual awards are quite modest. In 1978, despite a potential maximum of f 13,400, the median award was f375 (about five weeks’ net pay at the average wage); and three quarters of the awards were for less than f750. In 1981, the median award was f963, about eight times the average weekly wage; 7% of the awards exceeded f4,000, while about a quarter of the awards were less than f 400 (151.

C. Germany A 1951 statute proscribes ‘socially unwar-

ranted dismissals’, defined as dismissals ‘not based on reasons connected with the person or [his conduct1 . . . or [not based1 on urgent social needs that preclude his continued employment . . .’ In theory, notice must precede most discharges, and dismissals with- out cause of employees with at least six months’ employment with firms having more than five employees are legally ineffective to

. ..~

t Even where a works council has not been established, a period of notice, from between two weeks to six weeks depending on occupational status, must precede dis- charge. A narrow category of ‘exceptional’ dismissals may be effected without prior notice. The tripartite Labor Court is authorised to invalidate ‘socially unwarranted dismissals’.

Law commentary: Unjust dismissal laws in other countries

dissolve the employment relationship. The German scheme is very closely tied to

the works council instituti0n.t Under 1972 legislation, the works council - which is quite widespread though not universally established among all firms with five or more employees - is elected by all employees o n the shopfloor, and is empowered to vote on (and often does veto) many important decisions governing the workplace, e .g . new overtime, piece-work policies. The law requires that employers give advance notice of all dismissals to the council, where one exists. Should the council object, employers are likely, especially in the larger firms, to back down, rather than antagonise a group whose co-operation is essential. If employers, however, persist with the dismissal - usually in the case of an alleged grave offences such as an assault or a wildcat strike - the works council’s objection has the legal effect of forcing retention of the employee pendente lite. Such provisional retention, how- ever, occurs quite rarely[l7l. The works council must give detailed reasons in a very formal manner if it intends to interpose an objection. Moreover, the employer can attempt to convince the tripartite Labor Court that keeping the employee on the job would be unjust o r pose a n intolerable economic bur- den [ l8 ] . Reinstatement is rarely awarded once the Labor court has sanctioned a severance of the relationship; in such cases the employee settles for damages and does not wait for the results of what will often be a prolonged liti- gation. Indeed, mitigation and unemployment insurance policies virtually compel the employee promptly to seek employment else- where[l9l . Even if the court finds that a dismissal has been unjustified, the employer can avoid reinstatement by paying up to twelve to eighteen months’ salary if there is reason to believe that any further co-operation between the employer and the employee is unlikely to serve the purposes of the firm[201. As one observer has noted, ‘the protection against dis- missal does not really preserve the job but gives only a right to compensation”21l.

D. France In 1973, France went beyond its ‘abus d e

droit’ or abuse of right doctrine to provide employees with a right to a pre-dismissal hear- ing and to extend protection against discharge without ‘serious and genuine cause’ to all em- ployees with at least two years’ service at firms having at least eleven employees. Reinstate-

ment may be proposed but (except for dis- charge of worker representatives) compliance is entirely optional and rare. If there is n o reinstatement, a n employer must pay at least six months’ compensation in addition to statu- torily mandated severance pay (though unlike Great Britain or West Germany, without de- duction for mitigating earnings). The awards rendered in lieu of reinstatement rarely exceed the minimum six-month period[22l. Adjud- ication occurs in special labor courts with lay judges elected by employers and employees nationwide and presided over by a professional judge. Quite aside from formal burdens of proof, the court plays an inquisitorial role. To avoid liability, employers often clothe discharge in economic terms to come within less onerous redundancy dismissal rules[23].

Legislation enacted by the Mitterand Government in 1982 prohibits dismissal of employees because of political o r religious con- victions; and requires employers to develop internal rules governing dismissal and to con- sult with newly established enterprise com- mittees (mandatory for all firms with at least 50 employees) or employee delegates prior to effecting the dismissal[24I.

E. Italy All terminated employees are entitled to

severance pay and advance notice of termin- ation. Moreover, all employees in firms with more than fifteen workers, if not under collective agreements, are statutorily protected against unjust discharge. Should a court pro- ceeding, in which the employer has the burden of persuasion, result in a finding of unjustified dismissal, an employee can obtain reinstate- ment and an indemnity award (which at a mini- mum must equal five months’ salary)[25l. Reinstatement appears to be more frequent here than elsewhere on the Continent[26]. Under a separate procedure, executive employees can sue for up to 20 months’ in- demnity, but cannot obtain reinstatementf27 ].

F. Japan Japan’s labor relations system, so much a

part of what appears to be a vastly different social, economic and political culture, at first glance does not belong in this survey. How-

’ When a worker is dismissed for a ‘justified reason’, he must still be given advance notice for six days to four months (depending on the reason for dismissal and length of service). Dismissal with notice IS actionable absent justifi- cation

. -. .~~ _.

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ever, in many ways, post-World War I1 labor law in Japan began with the American model, and thus the Japanese experience should teach us something about the role of socio-cultural variables[28]. Whatever the analytical reason, Japan’s success as our major importer and competitor in so many areas compels inclusion.

Given the present state of scholarship avail- able in English on Japan , and the relatively limited role of formal labor law in defining the Japanese industrial relations system, it is diffi- cult to discern what is in fact happening there.

Statutory law goes n o further than 30 days’ advance notice or pay (in lieu of notice), absent just cause[29]. A number of commentators, however, have identified the emergence of general ‘just cause’ protection for all em- ployees, presumably flowing from academic and judicial elaboration of the ‘good faith’ prin- ciple found in article 2 7 of the Constitu- tion[301. Certainly, where the policy of shusin koyo, or permanent employment, is practised, principally in the larger firms - comprising about a third of the non-agricultural workforce - employers are reluctant to discharge their so-called ‘regular’ worker; and just cause may indeed be implicit in the representations made to those employees.

The underlying reality, however, may not be one of significant job security. In many ways, the shusin koyo sector is run on the same prin- ciples as a Wall Street-type law firm: at some point in the process you learn that you are not on the ‘sure track’ to partnership, and while not dismissed, you are expected - with subtle pressure mounting each year - and out of pride, if nothing more, you very much want to find another niche for yourself in the world; and in time you d o . Early retirement in Japan , secured by financial blandishments ftaishokin) and other pressures, such as the ‘tap o n the shoulder’ system of katatatake, is also an important feature of the system[31]. As one observer has remarked, ‘the Japanese have lifetime employment among the young, and the Americans have it among the old’[32].

One mistake many Americans make about Japan is to assume that the shushin koyo sector is representative of the entire workforce. Life- time employment is confined to large-scale firms (typically with 500 or more employees), comprising no more than one third of the non- agricultural workforce. The overwhelming majority of Japanese workers are engaged by small enterprises or are self-employed. More- over, few private firms admit women to

regular, long-term status, thus excluding from eligibility for shushin koyo about one third of the entire labor force[331. As Professor Roberts has noted, Japan has a pervasive dual labor market, with a secondary sector of temporary workers and employees of sub-contractors providing ‘elements of labor cost flexibility’ n41.

When we depart from shushin koyo and turn to the temporary employees and sub-contrac- tors that serve as ‘shock absorbers’ for the major firms - providing labor and subsidiary services when needed, withdrawing from the picture when not - it is a little difficult to understand the assertion of general ‘just cause’ protection. For employees in the secondary sector, in comparison with their counterparts in the primary sector, Professor Roberts tells us, the situation is one of ‘less employment security, higher levels of labor turnover, less optimum health and safety conditions, weaker employees’ unions, and more aristocratic management”351. Apparently, some judicial decisions have found a ‘good faith’ limitation o n the ability of the major firms to refuse to re- engage temporary workers whose fixed term contracts had been previously renewed - a kind of ‘chain’ theory of job security[361. This may be a harbinger of things to come.

Mention should also be made of the pro- visional injunction practice that may serve to help employees remain on the job pendente lite, and thereby raise the cost of disagreement for the employer[371. I suspect, however, that such employees feel considerabe pressure to effect a prompt lateral transfer even when they get an injunction 1381.

Some general characteristics of unjust dismissal

laws abroad Reinstatement

The most striking point about the foregoing schemes is that, irrespective of formal legal position, reinstatement is simply not an important feature in practice (at least outside of Canada, Italy and perhaps Germany) [391. The measures surveyed here d o not in fact vindi- cate a right to a job. At best, they provide a much needed transfer payment to cushion dis- placement and perhaps an opportunity to clear one’s name.

The evidence from England and from studies of National Labor Relations Board reinstatees, as compared’ with labor arbitration rein-

Law commentary: Unjust dismissal laws in other countries

stateesr401, suggests that the reinstatement remedy is difficult to police effectively outside of the context of union representation. Ger- many’s work councils seem to play a sup- portive role, similar to that of a union, and Italy’s statute is aided by its labor movement’s willingness to assist non-member dischargees (in the hopes of recruiting them). One may venture here the generalisation that perhaps such protective support mechanisms are neces- sary to the success of the reinstatement remedy.

Size of awards Outside Canada and possibly Italy, the

monetary awards, while not insignificant, are at modest, predictable levels - certainly in com- parison to American jury recoveries. The English awards are striking in this regard, which goes a long way toward explaining the English employers’ reluctance to reinstate and the high settlement rate prior to hearing. Punitive damages are also not a significant feature, although punitive concepts explain the addi- tional award in Great Britain’s statute and other similar provisions.

Exclusions from coverage and fixed-term contracts

None of the countries in question provide universal protection; throughout we find quali- fying periods of continuous service (in Great Britain, now one year, or two years for small firms) ; and exclusions or special provision for small sized companies (again, in Great Britain, by doubling the qualifying period).

Managerial employees apparently are not per se excluded from coverage. (Italy does pro- vide a separate set of procedures.) Great Britain’s potential exclusion of employees under fixed-term contract of at least o n e year’s duration may operate to disqualify many managers. Even if formally excluded, how- ever, managerial employees may have common law rights to dismissal only upon notice.

As to fixed-term contracts, Great Britain permits exclusion in the case of employees under a fixed-term contract of at least one year’s duration who sign a written waiver of statutory rights. On the other hand, Germany, France and Italy, sensing here a potentially sig- nificant evasive tactic, seek to discourage repeated renewal of fixed-term contracts.

Delegation of ‘just cause’ criteria to the tribunal

None of the statutes here attempt to spell out the standards, the criteria of ‘just cause’. Rather, they are broad delegations to the tribunals to develop procedural and substantive criteria, usually without guidance from a well- developed body of labor arbitration law.

The British model, as it has evolved, seems to be one of deferential review of managerial prerogative, rather than d e novo review - similar in theory to our judicial review of administrative agency action. This model of thoroughgoing deference seems not to have taken hold elsewhere on the Continent.

Use of specialised tribunals With the exception of Japan and Italy, the

statutes in question all utilise specialised labor tribunals that, at least in theory, are thought t o dispense a cheaper, quicker, more accessible and expert justice. These tribunals, while often tripartite, d o not offer the same opportunity for party selection of decision-maker as would US labour arbitration.

Absence of labor union opposition Although at first unions were sceptical, even

opposed, to these new statutes, the evidence strongly suggests that the European unions have not only made their peace but also have assisted non-member utilisation of the statutory procedures (as a n organising tactic) [411.

Relation to redundancy dismissal legislation

One final general observation before turning to the question of transplantability . Virtually all of the countries under review have also en - acted some protections against economic dis- missals, individual or group. In Great Britain, redundancy laws preceded the unjust dismissal statute. Although I am not sure of the precise relationship between these schemes, I suspect that unjust dismissal laws appeared to many as at least logically inevitable once the inviolability of the at-will concept was breached by redun- dancy laws. Moreover, in many situations, both disciplinary and economic reasons may be potentially available to an employer bent o n terminating an employee. Effective adminis- tration of either scheme may well require enactment of the other.

Some questions concerning transplantability: a partial agenda for future research As a good, risk-averse teacher, I have left the

most difficult for last, and I have only questions concerning transplantability - an agenda for future research - but no answers.

Barriers to understanding the foreign schemes

1. Language. Despite an ever growing com- parative labor law literature in English, in- cluding Roger Blanpain’s invaluable Inter- national Encyclopedia for Labour Law and Industrial Relations. we can never truly be certain that we are getting all of the nuances of language quite right. Blanpain gives some tell- ing examples. ‘Eventually’ means ‘inevitably’ to us, but for the French, ‘eventuellement’ means ‘possibly’. Another: ‘arbitration’ - in French ‘arbitrage’ - usually means a binding decision by an impartial umpire, but in Luxembourg it refers to a recommendation by a government conciliatorl42].

2. Cultural and social context. The socio- cultural barriers are even more formidable. It is difficult to make any sense of positive Japanese law without a deep appreciation of the web of cultural preconceptions and pressures that condition, that frame how the law is in fact experienced in the plant. For example, the dismissed employee’s ability to secure interim injunctive relief may be quite illusory, if the atmosphere at the plant makes life so intoler- able that the employee voluntarily quits. If reported as a voluntary termination, this statistic would be meaningless. German unjust dismissal law may seen quite attractive, but we need to know a great deal more than we presently do , not only about the impact of works councils on economic efficiency, but also about their representative quality, their possible exclusion of disfavoured minorities and the safeguards against reliance on supposedly irrelevant personal, political criteria in deciding whether or not to object to a given dismissal.

Some areas for further research 1 also have a few specific questions for future

research 1. Relationship of unjust dismissal laws to

unemployment insurance and economic dis- missal legislation. (a) Unemployment insur- ance. In a report I drafted for the New York

City Bar Association four years ago, we suggested that in light of the disinclination to award reinstatement and the relatively low monetary awards in Great Britain, perhaps the English scheme might be viewed as simply an expansion of a n unemployment insurance pro- gramme; and indeed one having the undesir- able feature of fostering adversary litigation rather than facilitating recovery through com- pulsory insurance [431. The precise relationship between unjust dismissal laws and the unem- ployment compensation programmes needs to be explored.

(b) Redundancy laws. Perhaps a similar sug- gestion is possible with respect to the redundancy laws. To legislate meaningfully on either front, must we simultaneously proceed o n both?

2. Reinstatement remedies in non-union- ised settings. Although a legal system can certainly take the position that reinstatement should be available if only as a bargaining chip for an employee who cannot realistically return to his former job, I think more work has to be done on whether, and under what conditions, a n effective reinstatement remedy is possible in a non-unionised environment or one without a support mechanism similar to the German works councils. A meaningful reinstatement remedy would also have to provide for post- award policing.

We also have to think hard about the feasi- bility of compulsory reinstatement of high-level executives or other employees whose jobs require maintenance of a high degree of employer trust and confidence. The question of ‘contracting out’ or waiver is of great sig- nificance here. Does a ‘no waiver’ rule make sense in the context of employees who have a fair measure of individual bargaining power? What if waivers are coupled with a meaningful internal grievance system culminating in impartial arbitration?

3. Punitioe, open-ended damage awards or relatively predictable awards based largely on principles of compensation? We have to ask ourselves whether we wish to emulate the European model of unjust dismissal recovery - that is, relatively predictable awards keyed primarily to principles of compensation up to a maximum limit set at a multiple of regular pay - or rather continue with what appears to be a n embryonic American model of open-ended jury recoveries and punitive damages, stressing principles of deterrence. The fairly widespread acceptance by European employers of these

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Law commentary: Unjust dismissal laws in other countries

‘just cause’ regimes may well be attributable to their ability readily to insure themselves without excessive costs.

4 . Nature of the tribunal and criteria for ‘just cause’ determinations. Finally, most of the countries discussed have estab- lished special labor tribunals. What are the costs and benefits for this country, which already suffers from multi-fora remedies and a highly fragmented law of the employment relation? The Canadian federal government’s use of ‘adjudicators’ from the ranks of private. labor arbitrators seems a n attractive possibility, but there are obvious questions of cost. We should also question whether such adjudicators should be permitted freely to rely o n conventional labor arbitration concepts. These are principles developed in a consensual setting as part of an ongoing process of collective bargaining. They d o not apply to disputes typi- cally involving employees whose jobs involve considerable unsupervised time and the daily exercise of discretion and judgmentL441.

Conclusion The moral force of the foreign experience is

unquestionable, at least from the standpoint of fairness to discharged non-unionised or non- organisable employees. These are indeed ‘annoying’ examples, but our’s should not be an uncritical wholesale adoption of any foreign scheme. We have to think hard about certain features of the foreign schemes; about the suit- ability of certain of our own rules developed for unionised settings; and about whether our liti- gious culture and trial-and-jury institutions are likely to upset the delicate balance between fairness and managerial vigour.

References 1. For an earlier effort to survey this terrain, see

Estreicher, At-Will Employment and the Problem of Unjust Dismissal, 36 The Record ofthe Assn. of Bor of the City of New York 170. pp. 175-80, April 1981 (with B. Wolff).

2. The actual extent of social mobility among working people - whether intra or inter-generational - re- mains a subject of dispute. See, e -g . , Thernstrom, S. , The Other Bostonians: Poverty and Progress in the American Metropolis. 1880.1970, 1974; Poverty ond Proaress: Social Mobilitv in o Nineteenth-Centuru Cit; 1964.

3. See. e.s.. Summers, Past Premises, Present Failures, and Future Needs in Labor Legislation, 31 Buffalo L. Rev. 9. 1982.

4. Canada Labour Code Section 61.5; see Statutes of Canada, 1977-1978, pp . 26-27 Eliz. I I .

5. Murg. G. and Fox, J. C . , Labor Relations Law: Canada, Mexico and Western Europe. Vol. 1. p . 160ff.

6 .

7.

8.

9.

10.

11.

12.

13.

Nova Scotia Labour Standards Code, Section 67(A) (l), discussed in England, Recent Develop- ments in Workplace Dismissal Laws and Some Pointers for Reform, 16 Alberta L. Rev. 470, 495. 1978. For a discussion of the Quebec law, an Act Res- pecting Labour Standards, 5.9, 1979, c.45, as amended, 5.124, see Napier, B. W. and Javillier, J . -C. , Comparative Dismissal Law, pp. 127-54, 1982. Industrial Relations Act of 1971, Sections 22-23, 41 Hal. Stat. 2062 (1971 Comp.) . The 1971 Act was repealed in 1974, but the unjust dismissal provisions were carried forward in subsequent legislation that was consolidated in the Employment Protection (Consoli- dation) Act of 1978. The statute was again amended in 1980 and 1982.

For a good general discussion, see Professor Hepple’s chapter on Great Britain in 4 International Encyclopedia for Labour Law and Industrial Relations (R. Blanpain, ed.-in-chief, 1980) [hereinafter cited as Hepple Chapter]; Hepple, The British Experience with Unfair Dismissals Legislation, in Arbitration Issues for the 1980s, Proceedings of the 34th Annual Meet- ing of the National Academy of Arbitrators, May 4-8, 1981 (J. Stern and B. Dennis, eds.) [hereinafter cited as Hepple, The British Experience]; Dickens, Hart, Jones and Weekes, ‘The British Experience Under a Statute Prohibiting Unfair Dismissal’, 3 7 Industrial and Labour Relations Review, 497, July 1984. See, e.g., Bowers and Clark, Unfair Dismissal and Managerial Prerogative: A Study of ‘Other Substantial Reason’, 10 Indus. L.J. 34. 1981. Indeed, employers are able to evade redundancy laws by claiming quasi- economic justification in situations falling short of the type of outright economic dismissal that would trigger statutorily mandated ‘redundancy’ payments. Id. at 36-39. See Hepple Chapter, para. 285, at 129. Reasons that have been found substantial include ‘unreasonable refusal to agree to changes in employment terms, tem- porary nature of employment, and an irreconcilable conflict of personalities’. Id. para. 282, at 128. See Hepple, The British Experience, supra note 7 , at 24. See Williams and Lewis, Legislating for Job Security: The British Experience of Reinstatement and Re- engagement, 8 Employee Relations L.J . 482, Winter

The anti-reinstatement bias of the industrial tribunals is criticised in Dickens, Hart, Jones and Weekes, Re- employment of Unfairly Dismissed Workers: The Lost Remedy, 10 Indust. L.J. 160, September 1981. See Hepple, The British Experience, supra note 7. at 28.

1982-83.

14. See Williams and Lewis, supra note 11, at 485 (‘because the nonresponse element in the survey probably conceals a greater proportion of nonreturns. the true rate of noncompliance for the surveyed popu- lation as a whole is probably closer to one-quarter than one-fifth’); also Williams and Lewis, The Aftermath of Tribunal Reinstatement and Re-engagement, Depart- ment of Employment Research Paper N o . 23. London, 1981. These researchers observe:

The principal explanation for failure to return to work (according to approximately 40% of employer and employee respondents alike) was the unwilling- ness of employers to implement the tribunal recom- mendation. This degree of residual hostility to re- employment is somewhat surprising. since tribunals almost universally ask employers whether they are prepared to re-employ and are reluctant to issue an order where that agreement is not forthcoming.

Williams and Lewis, supra note 11, at 485.

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15. Hepple Chapter, para. 255, at 116: Hepple, The British Experience, supra note 7 , at 28. For 1981 figures, see Department of Employment Gazette. Vol. 90 No. 12, p.520. December 1982, as reported in Dickens, Hart, Jones and Weekes, supra note 7 , at 509.

16. The Works Constitution Act of 1972, para. 102(5). 17. ‘In about 28 .5% of all protection against dismissal

suits the employee is kept in his employment.’ T . Ramm, Federal Republic of Germany, para. 393. at 136, 5 International Encyclopedia for Labour Law and Industrial Relations (R. Blanpain, ed.-in-chief. 1979) [hereinafter cited as Ramm Chapterl

18. The Works Constitution Act of 1972, para. 102(5) . See Ramm Chapter, para. 393. at 136: M . Weiss. Protection Against Unfair Dismissals in Western Ger- many, App. C . in Protecting Unorganized Employees Against Unjust Discharge 156 (J . Steiber and J . Black- burn, eds.. School of Labor and Industrial Relations. College of Social Science, Michigan State University, 1983) [hereinafter cited as Weiss, Western Germany I .

19. See Ramm Chapter, para. 402, at 138: Weiss, Western Germany, supra note 18, at 156-157. Sherman, Reinstatement as a Remedy for Unfair Dis- missal in Common Market Countries, 29 Am. J . of Comp. Law 467. 484, 1981.

20. Protection Against Dismissals Act. paras. 9-10(1). This award is reduced by mitigated earnings and sums received from unemployment compensation, the latter amounting to about 58% of net income. See M. Heinze, Federal Republic of Germany, 1 1 Bull of Comparative Labor Relations. 63, 74-75, 1980.

21. Ramm Chapter, para. 402, at 138. 22. See J . Rojot. Protections Against Unfair Dismissal in

France. App. C . , in Protecting Unorganized Em- ployees Against Unjust Discharge 147, 150-1 (J . Stieber and J . Blackburn. eds.. School of Labor and Industrial Relations College of Social Sciences, Michi- gan State University, 1983): Sherman, supra note 19. at 475-77, 479; M. Despax and J . Rojot, France, paras. 236-39, at 103-4. 5 International Encyclopedia for Labour and industrial Relations ( R . Blanpain, ed.-in-chief, 1979).

23. See J . Rojot, France, in Protecting Unorganized Employees Against Unjust Discharge 50, 51 (J . Stieber and J . Blackburn. eds.. School of Labor and industrial Relations, College of Social Sciences, Michi- gan State University. 1983)

24. See Le Monde. Dossiers et documents ( N o 102. June 1982).

25. See T. Treu. Protection Against Unjust Discharge in Italy. App. D. , in Protecting Unorganized Employees Against Unjust Discharge 159, 163 (J . Stieber and J . Blackburn, eds., school of Labor and Industrial Re- lations, College of Social Sciences, Michigan State University, 1983).

26. See T. Treu, supra note 25, at 166: Sherman, supra note 19, at 493, 495.

27. See T. Treu. suma note 25. at 167: Sherman. suura note 19, at 493’

28 This is the thrust of Professor Gould’s new book See W. Gould, Japan’s Reshaping of American Labor Law (1984); also Gould, Labor Law in Japan and the United States: A Comparative Assessment, 6 Indus. Rel. L.J . 1. 1984.

29. See T. Hanami, Japan, para. 84, at 54, 7 Inter- national Encyclopedia for Labour and Industrial Relations (R. Blanpain. ed.-in-chief, 1978) lhereinafter cited as Hanami Chapter].

30. See Hanami Chapter, para. 146. at 83; W. Gould, supra note 28. at 106-9. As Professor Suwa has observed:

The Labor Standards Act of 1947 does not impose direct restrictions on employers’ rights to dismiss employees [with some narrow exceptionsl. Statutorily, therefore, the Japanese employer may fire employees at will.

Japanese courts. however, limit these prerog- atives, taking into consideration workers’ basic con- stitutional rights, and their individual socio- economic situation. It holds that a discharge without a socially just cause is to be considered an ‘abuse of right’ (para. 1. 3rd par., Civ. Cod.) : and that in such a case, employment contracts retain validity. Practically speaking, then, it is almost impossible to discharge an employee without ‘just cause’, accord- ing to legal precedent.

Suwa, Recent Cases on Dismissals by Reason of Redundancy: Economic Depression and Labor Law in Japan, Japan Labor Bulletin, February 1, 1979, at 1 , 6 .

31. See W. Gould, supra note 28, at 103. 32. See S. Levine, Japanese Industrial Relations: What

Can We Import?, 26 NYU Annual Conf. on Labor, para. 2.03111, at 2-11 (1983), paraphrasing K . Taira, Output, Productivity and Employment: US-Japan Comparison, in Productivity: A Concept in Political Economy Reconsidered, Wisconsin Humanities Comm.. Madison. Wisconsin (forthcomina). -.

33 Id. at 2-10. 34. See Roberts, ‘Issues in British and Japanese Industrial

Relations Systems’, Journal of Japanese Trade and Industry. No. 2 . 1984, at pp 20-21

35. Id. at 22. 36. See W. Gould. suDra note 28. at 106-7. 37. See id. at 112; Y . Matsuda,’Judicial Procedure in

Labor Disputes, Japan Labor Bulletin, June 1. 1973, at 4 .

38. Professor Matsuda reports that ‘lolne study on cases involving discharges in Kangawa Prefecture found that nearly ninety per cent of all reinstated employees left their company within a year’. Matsuda, supra note 37 , at 7 .

39. See Professor Sherman’s study, supra note 19. 40. Compare Stephans and Charney, A Study of the Re-

instatement Remedy Under the NLRA, 2 5 Labor L.J . 31 (19741, with McDermott and Newhams. Dis- charge-Reinstatement: What Happens Thereafter?, 24 Indus. and Lab. Rel. Rev. 526 (1971): Ross, The Arbitration Discharge Cases: What Happens After Re- instatement?, Proceedings of the 10th Annual Meet- ing of the National Academy of Arbitrators 21-56 (J . Mckelvey, ed . , 1957) See J . Rojot, France, supra note 23. at 53; T. Treu, Italy. in Protecting Unorganized Employees Against Unjust Discharge 59, 61 (J . Stieber and J . Blackburn, eds., School of Labor and Industrial Relations, College of Social Sciences, Michigan State University, 1983).

42 . Blanpain, R., ‘Comparativism in Labour Law and industrial Relations’, chapter 1, in Comparative Labour Law and Industrial Relations 17, pp. 27-28. Blanpain. R. (ed.) . 1982.

43 . See Estreicher, supra note 1, at 180. 44 . See id. at 189. evaluatinq Summers, Individual Pro-

4

tection Against Unjust D i h s s a l : Time for a Statute, 6 2 Va. L. Rev. 481, 519-32. 1976.