The Employing Workers project measures the flexibility of regulation of employment, specifically as it relates to the areas of hiring, working hours and redundancy. The data on employing workers are based on a detailed questionnaire on employment regulations that is completed by local lawyers and public officials. Employment laws and regulations as well as secondary sources are reviewed to ensure accuracy.
To make the data comparable across economies, several assumptions about the worker and the business are used.
Assumptions about the worker
- Is a cashier in a supermarket or grocery store, age 19, with one year of work experience.
- Is a full-time employee.
- Is not a member of the labor union, unless membership is mandatory.
Assumptions about the business
- Is a limited liability company (or the equivalent in the economy).
- Operates a supermarket or grocery store in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.
- Has 60 employees.
- Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and apply even to firms that are not party to them.
- Abides by every law and regulation but does not grant workers more benefits than those mandated by law, regulation or (if applicable) collective bargaining agreements.
Data on employment cover three areas: hiring, working hours and redundancy rules.
Data on hiring cover five questions: (i) whether ﬁxed-term contracts are prohibited for permanent tasks; (ii) the maximum cumulative duration of ﬁxed-term contracts; (iii) the length of the maximum probationary period (in months) for permanent employees; (iv) the minimum wage for a cashier, age 19, with one year of work experience; and (v) the ratio of the minimum wage to the average value added per worker.
Data on working hours cover eight questions: (i) the maximum number of working days allowed per week; (ii) the premium for night work (as a percentage of hourly pay); (iii) the premium for work on a weekly rest day (as a percentage of hourly pay); (iv) the premium for overtime work (as a percentage of hourly pay); (v) whether there are restrictions on night work; (vi) whether there are restrictions on weekly holiday work; (vii) whether there are restrictions on overtime work; and (viii) the average paid annual leave for workers with one year of tenure, five years of tenure and 10 years of tenure.
Data on redundancy rules cover eight questions: (i) whether redundancy is allowed as a basis for terminating workers; (ii) whether the employer needs to notify a third party (such as a government agency) to terminate one redundant worker; (iii) whether the employer needs to notify a third party to terminate a group of nine redundant workers; (iv) whether the employer needs approval from a third party to terminate one redundant worker; (v) whether the employer needs approval from a third party to terminate a group of nine redundant workers; (vi) whether the law requires the employer to reassign or retrain a worker before making the worker redundant; (vii) whether priority rules apply for redundancies; and (viii) whether priority rules apply for reemployment.
Redundancy cost measures the cost of advance notice requirements, severance payments, and penalties due when terminating a redundant worker, expressed in weeks of salary. The average value of notice requirements and severance payments applicable to a worker with one year of tenure, a worker with five years and a worker with 10 years is considered. One month is recorded as 4 and 1/3 weeks.