LESIJ NO. XXVI, VOL. 2/2019
THE EFFECT OF TRADITIONAL AND MODERN POLICIES O N
TERMINATION OF EMPLOYMENT CONTRACT
∗
Omed A . ISMAIL
∗∗
Abstract
This paper is looking for the best model of articulating termination rules of employment contract
by referring to the most popular policies on this regard. Meanwhile, it tests how the provisions of such
policies affect termination rules in terms of rigidity and flexibility. An acceptable degree of rigidity and
flexibility of termination rules can be tested based on the possibility of combination between the basic
argumentations of job security policy and what has been promoted by labour market flexibility in a
new era. The policy of job security in regards to the termination of employment has taken a various
forms. One form is termination costs including severance pay, notice periods for employees and
compensation for dismissal based on the seniority. From an individual perspective, it is crucial for
employees to be protected from the employers’ arbitrariness, while, from an economic perspective, the
rate of employment and job turnover can be affected nega tively. A balance, then, is needed by reducing
the degree of job security provisions to an acceptable level according to the policy of flexibility in the
labour market.
Keywords: job security, workers’ right, flexibility, termination rules, employment composition,
severance pay.
1. Introduction
The formulation of rules and
regulations is hig hly effected by policies and
regimes followed by a state in reaction of
political, cultural, economics, and social
needs from time to time. Philosophically, the
law can be investigat ed within the context of
above categories to examine its root and the
logic of its adaptation. From this point, the
governmental policies and patterns for the
process of articulating law also might be
analyzed in light of political and social
needs, meaning that t he distinguish between
different policies which impact formulating
∗ The study was made under the scope of the Ministry of Justice’s programmes on aiming the strengthening of
the quality of legal education.
∗∗ PhD Candidate, Universi ty of Debrecen, Marton Géza Doctoral School of Legal Studi es.
1 Axel, B., Bengt, F., & Leif, J., (1997) “Labour Market Regi mes and Patterns of Flexibility : A SwedenCanada
Comparison”, Archiv Förlag, p. 35.
law in a state to another, depends on social,
economic and political changes.
The variety of policies, however, can
serve different aspects, and reflect the
strategy of government in dealing with
labour markets. In this regard, t he number of
regimes and policies that could affect
regulating the subject of termination of
employment contract is numerous.1
Accordingly, termination rules of
employment contract may differ in terms of
rigidity and flexibility due to the different
policies involved with labour markets.
Rigidity and flexibility in termination rules,
then, can be interpreted by referring to
adopted policy in responding to the social
variables. The classification of involved
Omed A ISMAIL 35
LESIJ NO. XXVI, VOL. 2/2019
policies at that area to distinguish between
the traditional and modern one, rely on the
historical background of emerging those
policies in the past and ongoing effect on the
future of enactment towards sustainable
developments.
It is apparent that the major policies
provided in the field of labour law, are the
policy of “job security” and “labour market
flexibility” in which the terminati on rules of
employment contract, internationally or
locally, can be regulated. Though, the
boundaries between job security and labour
market flexibility are complex, and
debatable, theories and justifications
concerning both of them are clear. It is worth
mentioning that job security initiates from
the point aims at providing more protections
to workers, in contrast, labour market
flexibility tends to reduce the level of
protections based on different
argumentations.2 An examination of the
basic elements of job security and labour
market flexibility, with examining the
necessity of emerging such those policies,
will respond the real questions about how
rules of termination of employment contract
have been changed and developed in
different ways and in multiple periods
between states. Another question also could
be answered is to what extent should
employees be protected under those policies
from not been fired unfairly in the job, and
the negative or positive impact for providing
2 Tamas Gyulavari, Gabor Kartyas, (2015), “The Hungarian Flexicurity Pathway? New Labour Code after
Twenty Years in the Market Economy”, Pazmany Press – Budapest, p. 47.
3 See Termination of employment instruments, Background paper for the Tripartite Meeting of Experts to
Examine the Termination of Employment Convention, 1982 (no. 158), and the Termination of Employment
Recommendation, 1982 (no. 166), prepared by; International Labour Organization, International Labour Standards
Department, Geneva, 18–21 Apri l 2011, p. 3.
4 Adriana D. Kugler. (2004). The Effect of Job Security Regulations on Labor Market Flexibility. Evidence from
the Colombian Labor Market Reform. University of Chicago Press, Volume ISBN: 0-226-32282-3, p. 183. Available
at: https://www.nber.org/chapters/c10070.pdf. Accessed: 28-02-2019.
5 Molz, R. (1987). Employee Job Rights: Foundation Considerations. Journal of Business Ethics, 6(6), 449-458.
Retrieved from http://www.jstor.org/stable/25071683 Accessed: 27-03-2019.
6 Clark, A., & Postel-Vinay, F. (2009). Job Security and Job Protection. Oxford Economic Papers, 61(2), new
series, 207-239. Retrieved from http://www.jstor.org/stable/20529416. Acc essed: 27-02-2019.
such a high protection of employees on
labour market activities.
2. “Job Security” and Termination
of Employment Contract
The most common policy that would
impact termination of employment contract
is the policy of job security, which
establishes its argument based on the
necessity of providing social and legal
protections for employees in their
relationship with employers. It is essentially
intended to provide protection for employee,
since loss of his job will causes loss of his
and his family’s livelihood.3 In general, job
security requires government imposing
adequate regulations to reduce the ability of
employers to hire and fire employees.4
Considering what has b een said above, Molz
has defined employee job security as “the
degree to which an employee can be certain
of retaining his job in the future.”5
Accordingly, this policy is used “to
protect workers against labour market
risks”6 where the protection legislations are
needed to protect workers against arbitrary
dismissal. The term of employment
protection legislations (EPL), then, refer to
the entire set of legislations, regulations, and
court rulings that place some restrictions to
the employers’ willing in the employment
contract. Such those regulations and
restrictions are, of course, serving workers in