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Of the various forms of regulations examined in this project we would argue that the regulation concerning, what we call the transition conditions15_{, i.e. the working condi-}

tions for workers who are notified as redundant, is of most interest and worth special attention in this final chapter. There are several reasons for this. First of all, dismis- sal is the ultimate outcome of restructuring and also the most politically sensitive issue. Second, during the financial crisis the number of dismissed workers has in- creased dramatically. Even if dismissal, in most Member States, is seen as the last resort and something that should be avoided, dismissals have been executed to an extent never seen before. Collective redundancies increased dramatically during and after the financial crisis in 2008-2009, implying that more workers than ever were experiencing the conditions of transition. As Knuth (2008) expresses it, job loss is not only about changing jobs, “it touches people’s perception of identity”. It is also the kind of regulation, with the most importance for the dismissed workers chances to find new employment. It is therefore relevant to consider the legal regulations provid- ing the basic conditions, though temporary and transitive, that this group of workers endures. It is a field of regulation not covered by the European Directive of collective redundancy16_{. From a policy perspective, it has been the object of much innovation the}

last 15 years, both in terms of legal amendments and agreements between social partners. In this area there are several examples of innovative measures and amend- ments of labour law provisions that could be generalized across European labour markets.

Finally, and perhaps of most interest and importance is its potential to contribute to one of the major issues in the last fifteen years of European debates on restructur- ing, namely how to anticipate and manage restructuring in a way that mitigates the negative consequences for workers and facilitates the transfer of dismissed workers to new jobs. We argue, if appropriately designed, that the regulation of transition condi-

15 _{We use the term “transition conditions” to point out the specific impact of the regulation of the obligations placed on the}

employer when terminating the employment relationship, from the point of view of the worker. Employment protection is often evaluated either as a cost to bear by the employer or the protection it provides for the employees. However, we believe this gives a somewhat biased view of how employment protection is seen from the point of view of the worker who is being notified as redundant. Thus, focusing on the conditions provided to workers to transfer to new employment gives a different perspective on how to evaluate employment protection in times of restructuring.

16 _{The only provision in the directive that refers to the conditions for transition is article 4(1) which refers to the time period}

between the notification to the public authorities and the actual termination of employment relationships: “Projected collec- tive redundancies notified to the competent public authority shall take effect not earlier than 30 days after the notification referred to in Article 3(1) without prejudice to any provisions governing individual rights with regard to notice of dismis- sal.”(Article 4(1)) From the point of view of the individual 30 days gives very little scope for anticipating and preparing for the coming termination of the employment relationship.  

tions for workers in the period after the notification of redundancy until the final ter- mination of the employment contract should be the starting point when considering harmonization of European labour laws regarding collective redundancies.

Do the dismissed workers find new jobs?

A central question in assessing the impact of transition conditions is to examine to what extent and how dismissed workers find new jobs. It is difficult to find data on re- employment of dismissed workers and this was not the main objective of this project. In a recent study by OECD, however, the re-employment rates of dismissed workers in a number of European Member states were analysed (OECD, 2013). In this study the re-employment rates, measured as the proportion of dismissed workers who are employed within one and two years after displacement, i.e. have found new jobs after their jobs have been terminated, vary considerably across countries.17 _{For example,}

re-employment rates within one year of displacement range from around 30-40% in France, the UK and Portugal to more than 80% in Sweden. In Germany re- employment rates within one year were around 60%, see figure 12. They also noted that re-employment rates improved between the first and second year after displace- ment and that re-employment rates fell markedly across all countries during the re- cession. The biggest falls in their sample of countries were in Denmark and Portugal, which both suffered a large increase in unemployment. Of course it is difficult to draw too strong conclusions from this comparison, due to the weakness of the data. Howev- er, we may ask questions about the reasons for the different re-employment rates in different member states.

17 _{This implies for example that a worker who is observed in April each year and who is displaced between April 2007 and}

April 2008 is said to be re-employed within one year if he/she is employed in April 2008 and to be re-employed within two years if employed in April 2009 (regardless whether or not he/she was employed in April 2008). It should be noted that this method of estimating re-employment rates tends to underestimate true re-employment rates because workers may be em- ployed for some of the period following displacement, but not in the month when they are observed again. By contrast it may overestimate the extent of stable re-employment because workers may be employed in the month when they are observed but lose their new job quickly afterwards (OECD, 2013).

Figure 12: Proportion of displaced workers re-employed within one and two years, 2000-08 and 2009-10, averages.

Source: Adapted from OECD (2013)

Despite the growth and availability of jobs in the labour market, there are many fac- tors that may explain re-employment rates for dismissed workers. The most obvious explanatory factor would of course be the availability of jobs, the number of vacancies and the general growth in the economy. Re-employment may also be dependent on the different measures available and the support provided to dismissed workers. On the one hand, re-employment may be higher in countries where there are generous condi- tions for transition support provided to dismissed workers. It may also be dependent on how much time dismissed workers have available to devote them selves to job- search activities. On the other hand, re-employment rates may be dependent on who is dismissed, the dismissed workers employability.

There is limited data available on the demographic characteristics of dismissed workers. The same study (OECD, 2013), found that dismissed workers were concen- trated among the young and the oldest in the labour force. Workers aged 20-24 years faced displacement rates for the period 2000-2008 approximately 20-70% higher than those for prime-aged workers, with the gap growing during the recession in most of the countries. According to this study, older workers (aged 55-64 years) also had a higher incidence of displacement than prime-aged workers in France, Germany and the United Kingdom, but not in Sweden. The different outcome in Sweden is probably associated with the additional protection provided to workers with longer seniority due to selection rules of last in first out principle in the Swedish employment protec- tion legislation. 0   10   20   30   40   50   60   70   80   90   100  

Re-­‐employed  within  one  

year  (2000-­‐2008)  %   Re-­‐employed  within  two  years  (2000-­‐2008)  %   Re-­‐employed  within  one  year  (2009-­‐2010)  %  

Portugal   UK   Germany   Sweden   France  

The OECD study also showed that displacement rates for men were, on average, higher than for women in most countries. This may be driven by differences in the types of jobs that men and women hold, rather than any underlying discrimination against men when it comes to dismissal. Anecdotal evidence suggests that the gender distribution of dismissals can largely be explained by the sectors in which the two sexes work, because this particular crisis primarily hit industrial and manufacturing sectors in most Member States. Unfortunately, there is no statistics available to ena- ble more specific data on the demographic characteristics of dismissed workers. It is clear that developing such databases would significantly improve the understanding of the consequences of restructuring in times of economic crisis.

As our national reports show, the emphasis on measures to support dismissed workers in their efforts to find new jobs varies considerably across countries. There are also, as we will se below, considerable differences in the legal provisions defining the conditions offered to those workers who are made redundant. More efforts should be made to investigate the impact of both the legal conditions for dismissed workers and the measures (aimed at supporting dismissed workers transition to new jobs) on the re-employment rates of dismissed workers. This is probably the most important issue to consider when identifying issues for future legislative amendments on the European level as well as the improvement of active labour market policies.

Working conditions for dismissed workers

It is obvious that the increase in dismissals during and after the financial crisis was an exceptional situation. More workers were announced redundant than ever before and many of them were in fact dismissed and left to search for a new job. It is there- fore relevant to consider the legal provisions available that regulate the conditions for those workers who are dismissed?

A definition of dismissed worker, though one that does not apply fully to all coun- tries and all situations, is a worker employed on an open-ended contract who has been notified by the employer that the employment relationship is terminated via a process of collective redundancy.

Our review of the national reports show that there are at least two means of regu- lating the transition conditions for dismissed workers, the regulation of the notifica- tion period, and the regulation of duties and obligations of both parties (employers and dismissed workers) during and after the notification period (for example economic

compensation, severance payments, social plans and employee rights to leave the workplace to be able to search for jobs before the contract is terminated). In the fol- lowing sections we will compare these provisions and some of the recent legislative developments.

Notification  periods  

The notification period is primarily regulated by means of specifying how long before the actual termination of the contract the individual worker should be notified as re- dundant. There is great variation among Member States as to the length of the notifi- cation period. The maximum legally required length of the notification period varies between 30 days in Spain and Czech Republic and up to 210 days maximum in Ger- many.

Figure 12: Min and max days before termination workers should be notified

Source: ERM legal database and national reports

Not all workers, in fact very few, are eligible to the maximum notification period. In most countries, the notification period varies dependent on the seniority of the work- er. More senior workers are eligible to longer notification periods, assuming that noti- fication periods are seen as a compensation for loyalty and service to the employer. But it can also be seen as a compensation for the assumed difficulty of more senior workers to re-enter the labour force and to find new employment.

0   50   100   150   200   250   Min   Max  

Table 4: Legal provisions for notification periods Countries Notification period

BE The period of advance notice that employers are required to give to employees whom they decide to make redundant depends on the length of service, and varies significantly between blue and white collar workers.

BG Employers must give notice of 30 days for employees with permanent contracts and up to three months if agreed by both parties (according to length of service).

CZ Legislation requires that employers give prospective redundant employees one month notice.

FR The length of notice varies according to the employee's seniority in the company. If the length of service is between six months and two years, the employee is entitled to one month’s no- tice; if the length of service is longer than two years, the employee is entitled to two months’ notice; if the length of service is less than 6 months, the length of notice is set by collective agreement or by the company's practices.

DE Affected employees have to be informed by at least one day after the announcement of collec- tive redundancies to the public authority.

NL The statutory notice period that needs to be given to the employee is related to the length of service of the employee.It is one month for less than five years of service, two months for service between five and 10 years, three months for 10–14 years’ service and four months for 15 or more years of service.Both parties may agree as an exception that the notice period for the employee is longer than the legal period however, it cannot exceed six months. In this case, the employer must give a notice period that is double the statutory notice period (inde- pendent of years of service).

PT Employers need to notify those employees who are to be made redundant at least 60 days beforehand.

SI Employers are required to notify employees between 30 and 120 days before the termination of contract (depending on length of service).

ES Employers must notify employees whom they plan to make redundant 30 days in advance (or 15 days if fewer than 50 people are employed in the company).

SE The notice period for collective (and other) dismissals is 1 month for all employees with less than 2 years of service. This is extended to 2 months for those with 2–4 years' service, 3 months for workers with 4–6 years' service, 4 months for those with 6–8 years' service, 5 months for employees with 8–10 years' service and 6 months for those who have worked at the company for 10 years or more.

UK The advance notice that employers must give to employees depends on the length of service – it is one week for each year of service, up to 12 weeks.

Source: ERM legal database and MOLIERE national reports

Severance  payments  

Another form of transition condition is severance payments. Many Member States stipulate severance payments to be paid to the dismissed worker after the contract is terminated. This does not exist in all Member States, but is more common in those countries with relatively short notification periods (see for example UK, France and Belgium). Severance payments most often vary dependent on seniority, again assum- ing that severance payment is a compensation for work done and not a compensation to ensure transition to a new job. In fact, as noted in the ARENAS project, in some countries where employers are required to offer dismissed workers severance pay- ments, social partners have agreed upon transforming parts of the severance payment to activating measures to support workers transition to new jobs. In the Netherlands, for example, severance pay will transfer into an instrument for transition to new jobs. It may be used before the moment of actual dismissal or after. The employee and/or

the employer can use the budget to finance training and mobility programs enabling the employee to be employed in other jobs or even other industries. From 1 January 2016 this legal transition budget will replace severance pay for most employees.18 _The

budget will be maximized at €75,000 or one year income sum. Only the judge will be entitled to increase or decrease this maximum in individual cases, depending special circumstances (Sprenger, 2014).

Table 5: Legal provisions for severance payments Countries Severance Payments

BE The legislation requires employees to be compensated in the event of being made redundant, subject to certain conditions. For example, certain categories of worker are excluded, such as those on fixed-term contracts, workers in construction, and port and ship workers.

BG Redundancy compensation is paid by the employer for up to one month's wages (unless higher compensation is agreed between employer and employee) and by the social funds (for employees with benefits - 4-12 months depending on the length of service). Unemployment benefits amount to 60% of average earnings over the previ- ous 9 months. Those eligible for old-age pensions are due two month's wages, and six months' wages where they have worked for 10 years with the same employer.

CZ Employees must be compensated in the event of being made redundant, in the form of severance pay equal to three months average monthly wage. However, collective agreement can determine a higher amount.

FR Anyone who has worked for one year or more for the same employer on an open- ended contract is entitled to legal severance compensation of a fifth of the monthly salary per year of service, to which two-fiftheens of the monthly wage is added per year of service over 10 years.This is applicable for workers made redundant except for cases of gross misconduct or negligence.

DE The maximum payment stipulated by law is equal to 12 months’ salary. This is in- creased to 15 months’ salary for employees aged 50 or older, with at least 15 years of continuous service, and to 18 months’ salary for employees aged at least 55 and with at least 20 years of continuous service.

NL Once a dismissal is permitted, the judge operates with standard compensation amounts, depending the length of service and other factors

PT In the event of being made redundant, employees are entitled to compensation equivalent to one month's salary plus an additional amount for each year of service.

SI In the event of being made redundant, employees are entitled to a severance pay- ment of between one-fifth and one-third of the average wage of the last three months, depending on length of service.

ES In the event of their being made redundant, legislation requires that employees be paid a minimum of 20 days' pay for each year of service, up to maximum of 12 months' pay.

SE No severance pay required

UK The specified compensation for redundancy depends on an employee's age and length of service – up to 30 weeks' pay (at a maximum of GBP 260 a week) for 20 years' service.

Source: ERM legal database

In several Member States provisions for severance payments have been amended in the last five years, primarily in a direction of reducing the employers requirements to pay severance to redundant workers. There is also a movement to also require em- ployers to pay severance to workers on fixed term contracts.