The Law and Economics of Dismissal Regulation - A Comparative Analysis of the US and UK Systems

This paper analyzes competing models of dismissal regulation from a Law and Economics perspective, using the contemporary US and UK dismissal regimes as a comparative benchmark. The regulation of dismissals in the UK and US differs widely in spite of their joint common-law tradition. Whereas the UK places great reliance on statutory law, the dismissal regime of the US emphasizes individual court action. Underlying these variations are broader differences which originate from historical trajectories of legal development as well as far reaching choices about economic governance. This paper revews the development and the key characteristics of the US and UK systems of dismissal protection. We then discuss some of the views which dominate the contemporary debate on dismissal protection. Analyzing conventional arguments for and against dismissal regulation, we conclude that, due to its focus on efficiency calculus, this debate has entererd a conceptual deadlock. This deadlock, we suggest, can be overcome by moving from arguments which are principally based on economic efficiency to a property rights view of job security.