An evaluation of employment protection legislation in New Zealand.

Abstract

Much debate and a growing body of research have been generated over the concern for potential incompatibility of Employment Protection Legislation (EPL) with labour market flexibility. The central question is whether or not excessively strict employment protection legislation contributes to a reduction in labour market performance as some studies suggest. Survey data from 27 OECD countries and 10 Latin American Countries from the early 1980's through to the late 1990's is evaluated to assess labour market effects in general and then New Zealand's employment legislation is evaluated against international indices. The data suggests that the strictness of employment protection legislation has a strong association with demographic composition of employment and unemployment but appears not to effect overall unemployment. Noted is also a general liberalisation of regular employment for temporary employment over the past ten years. While some countries have liberalised major components of their employment protection legislation, some specific components appear to have been tightened. The evidence suggests that employment protection legislation tends to increase self-employment and lower turnover rates in the labour market. More specifically is the value of Employment legislation and its enforcement in relation to unjustified dismissals. EPL supports unjustifiable dismissals and influences court interpretation in a limited fashion. Case law lays the foundation of employment law in New Zealand and influences court decisions to a greater extent. Remedies awarded for unjustifiable dismissals do not appear to compensate an employee for the loss of work and do not appear to be on a case-by-case basis but appear capped by previous remedies awarded.