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Employment at will: Good deal or raw deal?Peter Gray
"Employment at will" is a legal term that applies to most of us in nonunion, private-sector American jobs. It basically means that we can be fired at any time, for any reason, or even for no reason at all. The only exceptions are illegal reasons, such as racial or gender discrimination. Pretty harsh, don't you think? From our perspective as individual employees, employment at will certainly seems like a raw deal. People have asked me how they can negotiate a better employment contract that gives them more protection, such as a minimum term of employment (say two years) with heavy severance pay if the employer terminates them early. But if you take that approach, you take on two big risks: Em-ployers may simply balk at hiring you, or that once hired with your unusual contract, you may face tougher scrutiny of your job performance than your at-will colleagues. Face it: Where employment at will is the rule, it's hard to make yourself the exception. So, what is there to say in defense of employment at will? Actually, quite a lot. But to see its benefits, we need to shift our perspective from the individual to the system as a whole. The main advantage of living in an employment-at-will environment is that jobs are easier to come by, because it's less costly and risky for employers to hire people. That point was made by New York Times columnist Thomas Fried-man, author of "The Lexus and the Olive Tree," among other books, in his case study of Ireland. In a column last year, Friedman wrote about how Ireland transformed itself in less than 20 years from one of the poorest countries in western Europe to one of the richest, with a higher per-capita GDP than France, Britain or Germany. In terms of jobs, Ireland changed from a bleak job market that drove most college graduates to emigrate, into a global talent magnet with enviable growth in high-paying professional and technical jobs. There were many ingredients in Ireland's recipe for economic success, but employer flexibility to shed workers was one of them. Friedman's conclusion: "The easier it is to fire people, the more willing companies are to hire people." Unemployment rates in 2005 were 4.2 percent in Ireland, and 5.1 percent in the U.S. Compare that with France, where mass protests recently deep-sixed a government effort to weaken some of the strongest employment protections in the world, but where job growth is lower and high unemployment is chronic. France's 2005 unemployment rate was 10 percent, where it has been more or less stuck since the 1970s. So a French employee may be at less risk of getting fired, but if he does - or if he decides to change careers or move to a different city - he is likely to have a harder time finding a new job. The bottom line: Employment at will makes it easier to lose your job but also makes it easier to find your next one. Things could be a lot worse. Peter Gray is the head of executive recruiting at QTI Professional Staffing in Madison. If you have a question or idea for a future column, contact him at peterg@qstaff.com peterg@qstaff.com madison.com ©2009 Capital Newspapers. All rights reserved. |
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