What ethical issues are involved when laying off employees?

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gsenviro | College Teacher | (Level 1) Educator Emeritus

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Laying off employees is never an easy exercise and is typically undertaken due to economic considerations, market factors, etc. There are a number of ethical issues related to laying off employees and they mostly relate to how and why.

  • Ethics of laying off workers: Why a company is laying off employees is an ethical concern. Typically companies do not lay people off just for the sake of it and in general, it is an exercise to downsize in order to increase productivity/competitiveness.  There should be good reasons for laying off workers.
  • Ethics of the process: When a person has to be laid off (except for breaking company policies, security concerns, etc.), it must be done in an ethical way. The person should be given the news away from other employees and in presence of his/her immediate supervisor. The person should be given appropriate reasons for the action, without going into discussion of why him and not others. Any personal comments should be withheld. Feedback should be provided to the person and he should be informed of the process for a seamless departure.
  • Preventing issues at a bigger level: Employees, naturally, feel insecure when people are being laid off and in such an environment productivity can be adversely affected. It is the ethical responsibility of the management or supervisors to assure the employees about their future in the company and they should be given the real reason for layoffs and their importance to the company's growth and future should be stressed. 
  • Alternate options: companies may also search for other options such as voluntary retirements, time off for skill development, switching people to an hourly payroll basis, etc. in order to reduce the number of layoffs. 

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