Final answer:
Firms should be cautious about including absolute job security statements in their handbooks because they can be interpreted as implicit contracts, leading to decreased flexibility in workforce management and potential legal challenges. Establishing a probationary period can provide employers with the necessary discretion in early stages of employment.
Step-by-step explanation:
Firms should think twice before including statements such as "No employee will be terminated without just cause" in their handbooks because such statements can create an implicit contract that may limit the firm's flexibility in managing its workforce. There is the risk that employees perceive these statements as a guarantee of job security, which can lead to legal challenges if an employee is terminated for reasons they deem to be unfair or without just cause. This may discourage firms from cutting wages or terminating employees even when necessary, due to the fear of legal repercussions and the potential for decreased employee morale and productivity.
Moreover, employees might avoid the expectation of significant pay increases during strong economic periods as part of this implicit contract, viewing it as a form of insurance against wage cuts in tougher times. This can create an inherent resistance to altering wage structures in response to changes in market conditions. Additionally, legislation that allows employees to lodge confidential complaints can compel the company to maintain a safe and lawful work environment or otherwise face government-imposed fines.
To avoid these complications, employers often establish a trial or probationary period at the start of employment, during which they maintain the right to dismiss an employee for any reason. This helps mitigate the risk of retaining an underperforming employee without facing the legal challenges that might arise from the previously mentioned implicit employment contract statements.