Costs of dismissal: An analysis in community justice and efficiency

Abstract

The problem of collective dismissal-dismissal in the context of technological change, reorganization, or plant closure-has received much attention in recent years in both Europe and the United States. Statutory measures as well as collective bargaining arrangements have been introduced to alleviate employee suffering through payment of severance compensation, and provision has been made for consultation with unions or employee committees and for placement or retraining schemes run by state or employer/union agencies. The purpose of this paper is not to discuss the various measures but, rather, to explain the theoretical basis for allocation of the costs of dislocation engendered by collective dismissal. There has been little systematic, theoretical identification of the basic theoretical question: Should the employer, society, or the employee bear the costs of dismissal? In the case of individual dismissal, a theory of job security has been invoked, justifying an employer’s responsibility for unjust dismissal on grounds of the employee’s property right in the job. Accordingly, the employer is required to bear responsibility for the costs engendered by its unjustified unilateral termination of the employment relationship. No parallel theory has been developed for collective dismissal. On the contrary, the employer’s entrepreneurial freedom to make economic decisions that entail collective dismissal has generally been regarded as unassailable. European courts have described the employer as “sole judge and uncontested master of the economic destiny of his property.“’ Similarly in the United