Declines in employment protection may have disproportionate effects on employment opportunities of workers with low education and poorer health. This study investigates the impact of changes in employment protection levels on employment rates according to education and health in 23 European countries.

Data were taken from the 4-year rotating panel European Union Statistics on Income and Living Conditions study. Employed participants aged 29–59 years (n = 334 999) were followed for 1 year over an 11-year period, from 2003 up to 2014. A logistic regression model with country and period fixed effects was used to estimate the association between changes in the Organisation for Economic Co-operation and Development (OECD) employment protection index and labour market outcomes, incorporating interaction terms with education and health.

15 of the 23 countries saw their level of employment protection decline between 2003 and 2014. Reduced employment protection of temporary workers increased odds of early retirement (OR 6.29, 95% CI 3.17 to 12.48) and unemployment (OR 1.37, 95% CI 1.07 to 1.76). Reduced employment protection of permanent workers increased odds of early retirement more among workers in poor health (OR 4.46, 95% CI 2.26 to 8.78) than among workers in good health (OR 2.58, 95% CI 1.30 to 5.10). The impact of reduced employment protection of temporary workers on unemployment was stronger among lower-educated workers (OR 1.47, 95% CI 1.13 to 1.90) than among higher-educated workers (OR 1.21, 95% CI 0.95 to 1.54).

Reduced employment protection increased the odds of early exit from paid employment, especially among workers with lower education and poorer health. Employment protection laws may help reduce the employment disadvantage of workers with low education and poorer health.