Business Decisions and The Principle of Justice

by | Mar 10, 2015

Is it ethical to fire employees who are on a leave?

Recently, I was interviewed for a national TV network’s local evening news on a case of two women who had been fired by their companies while on a maternity leave. This is permitted by law in the province of Alberta, but the reporter asked me if it is right. In other words, is it ethical to fire employees who are on a leave? This is the 15 second sound bite that was aired (as I recall it): … “It is in employers’ self-interest to treat their employees justly, so if they have to fire someone, they should wait until that person is back from a leave.” So let me elaborate to answer the question fully, considering the context of terminating employees.

Companies exist to produce and trade material values—goods and services—for a profit. To pursue this purpose and to carry out the work, they need competent, productive employees. Companies do not “create” jobs as a service to those who need them. A job is a privilege; there is no such thing as a right to a job. An employment contract is based on trade: an exchange of value for value, for mutual benefit, by mutual consent. An employer hires an employee for his contribution (labor) for the company’s profitability and pays him for his services. This is an important part of the context that must be considered when assessing whether firing an employee who is on a leave (whether maternity or any other kind). If a company has such a severe cash flow problem that its survival is imminently threatened, it must cut costs drastically, including terminating employees—even those who are on a leave. (In Alberta, parents of newborn children are entitled by law, absent the employer’s financial exigency, to one year of unpaid parental leave that can be divided between the parents. The government provides unemployment benefits for a part of it to those who have paid employment insurance premiums. Some employers pay a reduced salary for portion of the maternity leave.)

However, outside of a company’s dire financial situation, terminating an employee who is away on a leave is not consistent with the principle of justice—assuming that the employee has been a productive contributor (i.e., there is no performance- or conduct-related just cause). Morally, justice guides us to assess people objectively and to grant them what they deserve. An employee is not entitled to a given job, but she deserves to be treated decently, based on her contribution to her employer. At the minimum, if the company has deemed a termination urgently necessary due to its financial situation, decent treatment means a notification and a face-to-face discussion before the termination, where the company’s situation is explained, the employee is thanked for her services, and reference for a future job is offered. If the company can afford it, severance pay and out-placement counseling should be provided.

In most cases, particularly when an employee is on an unpaid leave, a termination for other than a just cause should wait until the employee is back at work and the supervisor can deliver and explain the bad news in person. I suspect that the reason behind written termination notices to employees on a leave is the supervisor’s cowardice (or the HR department’s incompetence). Having to fire an employee, especially a productive one, is always difficult and unpleasant. Sending a letter (o worse, an email) allows the supervisor to avoid facing the employee, explaining the reasons for the termination, and possibly dealing with an upset employee and a stressful situation.

However, handling terminations in an honest, straightforward, and just manner in all situations (whether maternity or other leaves are involved or not) is in the employer’s self-interest. It affects the morale of the remaining staff and the reputation of the company as a fair, desirable employer, which boost productivity, loyalty and ability to attract good job applicants in the future.

Violating the principle of justice has negative consequences (poor employee morale, low productivity, or high turnover, etc.)–adhering to it helps companies create material values and achieve long-term profitability.

Jaana Woiceshyn teaches business ethics and competitive strategy at the Haskayne School of Business, University of Calgary, Canada. How to Be Profitable and Moral” is her first solo-authored book. Visit her website at profitableandmoral.com.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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