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DISMISSAL POLICIES:

ETHICAL BOUNDARIES AND LEGAL FRAME

Supervisor: Dr. Olga Epitropaki

Student: Eleni Gaki

January 2011

Dissertation submitted in partial fulfillment of th e degree of

Master of Science in S-HRM

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Table of Contents

Abstract 3

1. Introduction 3

2. Business Ethics and Corporate Social Responsibilities Concepts 5

2.1 Ethics and Human Resource Management 5

2.2 Corporate Social Responsibility: Reason and Concepts 6

3. Legal Frame 11

3.1 Greek Labor Legislation provisions 12

3.2 Recent Deregulation of the legal provisions regarding dismissals 14

4. Ethical Concepts and Human Resource Management:

A conceptual analysis 19

4.1 Kantian Perspective 20

4.2 Utilitarianism 24

5. Ethical Frame of the Dismissal Process 28

5.1 Decision Makers Moral Principles: Motive for action 28

5.2 Ad-hoc Dismissals: Decision Making and Fair Process Elements 31

5.2.1 Conduct of the employee 31

5.2.2 Incapability of the Employee 34

5.2.3 Performance Appraisal as a tool for ethical dismissal conduct 36

5.2.4 Code of Practice 40

5.3 Dismissals due to Organizational Restructuring:

Ad-hoc Redundancies Decision Making and Ethical Conduct 47

6. Dismissal Policy HR Tool:

Termination of Employment Request Form (TER) 56

6.1 The application of TER and Ethical Process 57

7. Conclusion 61

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Dismissal Policies: Ethical Boundaries and Legal Frame

Abstract

The present study argues the importance of ethical principles in human resource management systems, especially in decision making and treatment of employees during involuntary dismissals in reference to the Greek legal deregulations and local business practice. The fundamental conceptual ethical theories, Kantianism and Utilitarianism are presented. The role of HR Professionals, as well as Direct Managers during Dismissals is argued and a fair decision making and process frame for ad-hoc dismissals and redundancy conduct is developed. The introduction of a Termination of Employment Request (TER), as a necessary HR tool to preserve ethical conduct of ad-hoc dismissals is further applied in a real business case and comparative analysis is presented to prove that there is an Organization’s social responsibility to establish HR Policies that protect the psychological contract more than legal regulations.

1. Introduction

There are two fundamental approaches regarding the appliance of ethics in

business. On the one hand, the view that corporations have only the obligation of

making profit within the framework of the legal system and nothing more, which

supports the reduction of ethics to abidance to laws and customs. On the other hand,

the view that management in the knowledge-based society must take responsibility

and consider, as well, the impact of every business policy and business action upon

society and individuals; whether the action is likely to promote the public good, to

contribute to the society’s stability, strength and harmony. In our research, the latter

approach prevails and the ethical criteria are reviewed in relation to dismissal

processes. The lack of social responsibility and structured dismissal policies may lead

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Managers to unethical decision making and actions, which can apparently be

compliant with the legal provisions.

The on-going debate over increasing demands for deregulation in the field of

employment relations, restructure of the labor law provisions regarding employees’

dismissals and diminishing welfare state services appear to be contradictory to the

development of corporate social responsibility and shared value concepts, which,

consequently, end being not much more than rhetoric. The fact that the definitions of

Corporate Social Responsibility refer to actions beyond legal requirements indicates

that there is a challenge for the Human Resource Professionals to act as Ethics Agents

and preserve the psychological contract between the employee and the employer.

Hereafter, we introduce the significance of applied ethics in human resource

management. The fundamental ethical theories, Kantianism and Utilitarianism, as

well as Stakeholders’ and Shareholders’ theories, are critically reviewed within a

post-capitalist society framework in relation with involuntary termination of

employment in Greece. The recent legal deregulations are briefly presented, in order

to focus on the latest restructures and their consequences for individuals and society.

Ad-hoc dismissals are distinguished as follows, due to employee’s incapacity,

misconduct or employer’s organizational needs and a Fair Decision Making Criteria

and Process Elements are presented from the HR Professional and the Direct Manager

perspective. Findings are discussed as they relate to the implicit contract between

employee and employer and concrete HR tools are proposed to ensure an ethical

approach of the dismissal process.

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2. Business Ethics and Corporate Social Responsibility Concepts

2.1. Ethics and Human Resource Management

Ethics is about how people ought to behave and so it focuses on duty and

boundaries of right and wrong. However, ethics focus on shared value systems that

serve to direct the behavior of individuals in organizations in a productive direction in

order to resolve moral problems that commonly arise. The task of applied ethics, such

as Business Ethics, is to say and define what kind of action is Good Business Life.

The task is twofold: on the one hand business practices are described and analyzed,

and on the other hand advice is given to business practitioners on how to make good

choices and decisions (cf. Beauchamp and Bowie, 1979; De George, 1989).

Normative moral philosophy aims at determining what ought to be done, which needs

to be distinguished from what is in fact practiced. Deontological and Utilitarian

perspective will be reviewed in this study, in order to assess their applicability in

functioning fair HRM practices related with dismissals.

Ethical dilemmas in HRM can be seen as multifaceted, involving personal,

professional, and organizational considerations. In this pursuit, ethics focuses on the

shared value systems that serve to guide and direct the behavior of Organization

members. Essential for shared systems is a need to support the alignment of individual

behavior with those shared systems, and this is the domain of accountability (Frink &

Klimoski, 1998). Accountability is the perceived need to defend or justify behaviors

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to an audience with sanction authority and the standards used are based on shared

value systems. (Buckley, 2001, p.16) According to this interpretation, our research

emphasizes that HR Professionals are expected to become accountable for developing

ethically structured Organizations.

2.2. Corporate Social Responsibility: Reason and Concepts

Corporate Social Responsibility (ISO 26000:13) refers to the activities of an

organization aimed at contributing to a sustainable society and environment, as well

as maintaining the organization’s continued existence, by minimizing negative

impacts and maximizing positive impacts on the society and environment through

proactive stakeholder communications and engagement throughout the organization’s

sphere of influence. Social responsibility is about organizational initiatives that start

with, but go beyond meeting legal requirements and contribute to the social

acceptance. An organization only obtains its social acceptance by observing national

laws and applicable international agreements and by responding to an ever changing

society that has constantly changing expectations.

The main issue in a strategic inside-out approach of CSR is describing and

strengthening the organizational identity, and then communicating it to the outside

world. Despite the fact that there may be no huge risks or immediate urgency that

needs to be taken care of, an organization may adopt a CSR strategy in order to define

the corporate identity, make the company more transparent, or simply, try to develop

a system of accounting for one’s actions (Driscoll and Hoffman, 2000). It is about

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exploring and defining CSR above all internally and then informing stakeholders.

Typical questions for organizations working on CSR from an identity orientation are:

“What is our role in society?”, “What are our values?” and “How can we incorporate

and strengthen our values in our operations? “ Given its internally value driven focus

this strategic approach is closely related to the value-driven and moral organizational

approach. (Schoemaker, Nijhof, Jonker, 2006) Under this frame, the impact of

identity-orientation on CSR is primarily observed in internal processes and policies.

There is an on-going debate between two different approaches about the

social responsibilities of a corporation. The view that “a corporation has the

obligation to make a profit within the framework of the legal system, nothing more”

supports the reduction of ethics to abidance to laws and customs and was held by

Milton Friedman (1970). With his article “The social responsibility of Business is to

increase its profits”, Milton Friedman emphasizes on the fact that an organization’s

responsibility is to use its resources and engage in activities designed to increase its

profits so long as it stays within the rules of the game, which is to say, engages in

open and free competition without deception or fraud."

The stakeholder theory of the organization, as developed by Freeman (1984),

is characterized by the notion that managers have a duty to attend to all those who

have a stake in or claim on the Organization. Generally, stakeholders may be seen in

one of two manners: instrumental or functional; or normative. It was noticed by

Goodpaster (1991) that stakeholders may be considered in a manner that has nothing

to do with ethics. In the present study, stakeholders are considered from an ethical

approach apart from their instrumental, economic, or legal potential to affect the

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organization. Under this moral view of the stakeholder, the primacy of the manager’s

relationship with the shareholder is no longer assumed and is replaced with the notion

that the managers must act in the interests of all stakeholders in the Organization

(Evan and Freeman, 1984). Stakeholder theory is cast as a form of deontological

principles, such as no individual should be used merely as a means to an end.

Combining the kantian terminology with the stakeholder’s theory, we admit that each

of the stakeholder groups within an Organization has the right to not be treated merely

as a means to some end, and therefore must participate in determining the future

direction of the firm in which they have a stake. This approach of interpreting

Organizational life values and priorities further implies a reconceptualisation of

capitalism. ( Greenwood, 2002)

Peter Drucker’s approach, hereafter, further expands the Organization’s social

responsibility description and introduces a broader understanding. Responsibility,

versus power, must be the principle which prevails and organizes the contemporary

management approach. The society of organizations, the knowledge society, demands

a responsibility-based organization. Our discussion regarding the speculation whether,

an organization should apply ethics and operate on a socially responsible manner,

beyond profit-centered objectives, or not, is accelerated by the fact that most market-

leading Organizations and multinational corporations have, already, prioritized

adopting CSR policies and moral code of conducts. Organizations in the Society of

Organizations have a responsibility to try to find an approach to basic social problems

which fits their competence and which, indeed, make the social problem into an

opportunity for the organization (Drucker, 1993). This perception emphasizes on the

advanced role that Organizations should undertake in a free-market society, and from

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this perspective we analyze the implication for HR Professionals, who are called to

establish the frame and create the tools for the Management to respond to this

demanding role. Indeed, for an organization or an executive, who has decision making

role, it is not at his expense to “take leadership”, but to accept responsibility.

From the employees’ point of view, in contemporary business, they primarily,

expect to be treated as persons who are partners in the business enterprise. Nowadays,

knowledge-workers are interested in participating in planning the future directions of

the company, defining the public responsibilities of the corporation, evaluating the

role and quality of the management, and – most especially- help to set the tasks

assigned to their jobs. They want decent salaries and job security, as well as

appreciation from supervisors, a sense of accomplishment and fair treatment to

display their talents. These new developments in labor relations are all to the good,

and imply a constant developing human resource management frame and business

ethics application in order to turn philosophical concepts into business process to

reach human value management.

According to the following framework we observe the role of HRM Policies

and Corporate Social Responsibility, in relation with Legal Provisions and Decision

Makers’ moral principles, as a means to protect employees’ individual right and

preserve job security.

More analytically, in the center of the target there is the Individual Right of

Employment, as well as any right related to the individual that can be violated during

the dismissal process. According to this interpretation, we observe that HR Policies

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and, especially, the existence of any official policy that has been ethically established

may provide the maximum protection for the employee (i.e. financial aid,

outplacement program, etc) while in case it does not exist the decision maker’s

motives are the ones that may set a more protective frame for the employee (i.e. fair

decision making elements, involve the employee in the process, etc) and finally,

legal provisions set the minimum standard of protection for the employee (i.e.

minimum remuneration, etc)

Diagram 1: Individual Rights protection during Dismissals.

Legal Provisions

Decision Makers Moral Principles

HRM Policies: Dismissal Process

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3. Legal Frame

Despite which of the two controversial approaches on applied ethics and CSR

someone adopts, it is commonly accepted that the legal regulations are the ones that

establish the bottom line which the Organizations should respect and comply with.

According to this acknowledgement, it is of a cornerstone importance to admit that

job security has been turned into the most contradictory employee relations issue due

to the constant deregulation of labor legislation in Europe, and consequently, Greece.

This fact consequents to looser legal processes for involuntary dismissals, compared

with previous decades.

As stated in the Article 22 par.1 of the Greek Constitution, “Work constitutes

a right and shall enjoy the protection of the State, which shall seek to create

conditions of employment for all citizens and shall pursue the moral and material

advancement of the rural and urban working population.” Therefore, according to the

Greek Constitution, employment is considered to be an individual right protected by

the state, not just an agreement between the two parties (employer and employee).

From this perspective, the Greek Labor law is primarily a law restricting the freedom

of contract to the benefit of the employees and, thus, it is dominated by provisions

serving the public order or social public order.

In our study, we focus on the termination of employment agreement, as a

unilateral legal action (declaration), which is addressed to the other party of the

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employment agreement. (I. Koukiadis, 2009) We are, further, interested in the

preexisting legal frame of the involuntary dismissals and the recent deregulations

affecting the content of the legal requirements and provisions.

3.1.Greek Labor Legislation provisions

According to the legal provisions, termination of a work agreement of

indefinite time by an employer is subject to certain conditions such as written

notification or adequate warning; compensation used to be doubled when the proper

notice period is not observed (Laws 2112/1920 and 3198/1955). Termination may be

nullified when these terms are not observed, and the employer is compelled to

continue to pay the wages so long as he does not establish a legal basis. The amount

of compensation due to termination for employees begun at a monthly wage that

increases progressively depending on service time (e.g., after ten years of service it

amounts to six months’ wages) and ends at twenty-four monthly wages for those with

over twenty-eight years of service. For manual workers it is much less. The obligation

of compensation is not terminated in case of neglect of responsibilities but only in the

commitment of criminal acts. Contrary to most legislation in Western Europe (I.

Koukiadis, 2009), it is worth mentioning that termination of employment is permitted

without the employer having to justify his action or invoke some reason.

Consequently, an employer can dismiss freely according to his financial requirements,

e.g., to reduce labor costs. However, the courts have raised a significant barrier in

order to prohibit abuse of right (Art. 281 CC). Consequently, termination of

employment is invalid when not done in the interests of the business but because a

wage earner has behaved in a manner disapproved of by the employer (i.e. dismissals

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due to lawful trade union or political involvement not welcomed by the employer, or

because an employee resorted to an intervention by work inspectors or the courts, or

generally exercised his rights in a manner that dissatisfied the employer). Specifically,

dismissals due to redundancy are treated by the courts as abusive when an employer

does not follow the proper social order. In order for them to be valid, according to a

descriptive approach the employer should take into consideration a table of wage

earners classified into four categories on the basis of objective criteria, namely work

output, period of service, family responsibilities, and general financial condition.

In Greek law, contrary to most European countries, the possibility of

preventing mass dismissals remains valid by decision of the Minister of Employment.

Special legal and practical rules applied to a redundancy that was created by a

unilateral harmful change of working conditions by the employer. Within his

managerial rights, an employer may make decisions that modify the terms of

employment (ius variandi). It is, however, obvious that this power must not harm any

legal rights and must conform to the conditions of the work agreement. When it

exceeds these limits, it is considered as a violation of working conditions. The

employee then has the right to accept or decline. In the former case, the agreement is

considered to have been modified by new terms. In the latter case, according to

Article 7 of Law 2112/1920, the modification is considered as a unilateral harmful

change of working conditions and the employee can disjunctively either seek

compensation and leave, or consider the dismissal invalid and ask for overdue wage

payments. If the employer wants to alter the working terms in a valid way, he has the

right to propose a change for redundancy, where the employee will not be able to

accept the new terms.

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Regarding the fixed-term agreements, premature dismissal for redundancy can

take place only for very significant reasons (Art. 672 CC); otherwise, compensation is

due. On the one hand, when the needs of a company are constant, a fixed-term

agreement is considered to violate provisions for compensation and is treated as an

indefinite one. This long tradition, which goes back to Article 8 III of Law 2112/1920,

has been strengthened by Directive 1999/70,3 incorporated by virtue of Presidential

Decrees 81/2003, 164/2004 and 180/2004 (Koukiadis, 2009). On the other hand, for

enterprises employing stable personnel, like banks and the public sector, the

retirement age provides the end of the term. In such situations, dismissal for

redundancy is possible for serious concrete reasons.

3.2 Recent Deregulation of the legal provisions regarding dismissals

According to the recent law 3863/2010, as well as 3899/2010, the required

notice period about the dismissal was significantly reduced (it varies among 1-4

months), compared to the previously required (1-24 months), which will, in fact, not

only prevent but, instead, it will make it very attractive for the employer, following

this legal provision of shorter notice period, to warn the employee and, thereby

reimburse half of the compensation, compared to the previous provision amounts.

Furthermore, this reduced compensation may not be paid off by the date of the

dismissal but in bi-monthly installments. Consequently, on the one hand the

dismissals compensation was reduced by 50%, while, on the other hand, the employer

has the option not to pay the total amount of compensation, which is already divided

in installments, but only a small part of it.

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Furthermore, layoffs remain "unjustified”, which in most cases means,

contrary to what prevails in various other EU countries that no judicial control lies on

the reasons of the dismissal, and thus, an employer is not obliged to explain or justify

a dismissal.

This dramatically onerous situation for the employees overturns any guaranteed

in international conventions fundamental civil and social rights. Furthermore, it is

absolutely incompatible with the European Convention on Human Rights, which

guarantees the right of property or the right to private and family life, with the

European Social Charter, which enshrines the right to fair and decent working

conditions, the Charter of Fundamental Rights EU, which recognizes the right for

decent employment, as well as the International Labour Conventions with similar

settings. (Vlachos, 2010)

Under these circumstances, it is reasonably expected to have strong reactions

from those affected, even at a legal and litigation level. It is likely that Greek courts

would refuse to implement these or similar settings, which confront constitutional

individual rights. (Vlachos, 2010). In any case, any "benefit" of the economy will be

negligible compared to the excessive damage that would hurt workers and social

cohesion.

Collective dismissals are due to economic or technical reasons, and exceed the

dismissals limit specified in the relevant law per month. Traditionally, in Greece, this,

so-called, employee-centric protective frame against collective dismissals, consists on

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the power for the Administrative Authority to act decisively in order to prevent them.

When Greece joined the European Union, this context expanded to consultation in

order for the employee representatives and employers to reach a mutual agreement,

prior to the Administrative Authority dismissals approval. It is common practice that

the Administrative Authority does not approve the collective dismissals, unless an

agreement between employer and employee representatives is reached, which rarely

happens.

Nevertheless, the recent law 3863/2010 as well as 3899/2010 does not change

the nature of the aforementioned protection; more specifically it does not remove the

decisive intervention of the Administrative Authority, since, according to the new

regime, collective dismissals cannot be fulfilled, unless agreed by employees’

representatives or administrative authority. This is particularly positive, given that in

all EU countries except for Spain, the Administrative Authority cannot thwart the

collective dismissals, since the employer decides on his own.

Nevertheless, the main drawback remains the significant reduction of the legal

provisions and boundaries beyond which redundancies are characterized as collective

and, consequently, become subject of consultation and Administrative Authority

intervention. Of course, this expansion seems to be quite mild, applicable in large-

sized companies, without exceeding the framework of European law and without

violating any fundamental rights, to the extent that the redundant would not receive

greatly reduced reimbursements, according to what is already reported in the previous

section.

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Previous Legal Frame

(1387/1983)

Existing Legal Frame

(3863/2010 – 3899/2010)

� Unjustified Dismissals in Private Sector

(not applicable in short term contracts, as well

as in

The Public and Banking Sectors)

� Unjustified Dismissals in Private Sector

(not applicable in short term contracts, as

well as in the Public and Banking Sectors)

� Written Notification � Written Notification

� Adequate Warning period (1-24 months,

depending on years of employment) affects

the redundancy reimbursement

� Significantly Reduced Adequate

Warning period (1-6 months) affects the

redundancy reimbursement

� Doubled reimbursement, in case of no

adequate warning period, paid by the date of

the dismissal

� Doubled reimbursement, after the first

year of employment, in case of no

adequate warning period, paid in bi-

monthly installments

� Dismissals Limit per month

(4 employees per month for Organizations that

employ 20-200 employees and 2%-3%,

and up to 30 employees for Organizations that

employee more than 200 employees)

� Increased Dismissals Limit per month

(6 employees per month for Organizations

that employ 20-150 employees and 5%,

and up to 30 employees for Organizations

that employee more than 150 employees)

Table 1: Major deregulations of the dismissal process according to the Law

3863/2010.

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According to the aforementioned comparative table, the legal framework

imposes the dismissals process-related issues in a sense that Organizations should

follow the minimum legal provisions. This constantly looser legal frame leads to less

ethical processes and decision making and consequents to increase relevant ethical

problems that have a negative impact upon people in ways that are outside their own

control. Furthermore, according to recent reports, job security emphasizes on the type

of employment contract (CSR Europe 2000b) and the restructuring in a social

responsible manner (Vuontisjarvi, 2006) (CEC 2001, see also CEC 1998a, CSR

Europe 2000a.c). Meanwhile, we further observe that a series of measures are taken in

order to deregulate the whole field of labor relations, including fixed term contracts,

flexible working time, increased part-time employment, general labor time reduction,

diminishing collective agreements and decrease in pay and benefits.

In the field of labor law deregulation, the term of “flexicurity” is, primarily,

presented by Wilthagen and Tros, referring to “a degree of job, employment, income

and combination security that facilitates the labor market careers and biographies of

workers with a relatively weak position and allows for enduring and high quality

labor market participation and social inclusion, while at the same time providing a

high degree of numerical (both internal and external), functional and wage flexibility

that allows for labor markets’ (and individual company’s) timely and adequate

adjustment to changing conditions in order to maintain and enhance competitiveness

and productivity’. Despite the official description of the term “flexicurity”, it is

widely perceived as a way for the Western labor markets to respond successfully to

the claim for cheaper labor, which remains the major accelerator to increase

competitiveness and productivity.

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Under the frame of constant debate over labor market flexibility (see for

example, Dearden 1999) and increasing demands for deregulation in the field of

employment relations, it is a prerequisite to analyze the ethical concepts applied in

dismissals decision making and process. According to Taru Vuontisjarvi, the

treatment of employees can be an indicative precondition regarding CSR at the sense

that, if a company doesn’t assume a high level of responsibility to its employees, it is

unlikely to do so to its customers or to the social and natural environment in which it

works (Johnston, 2001).

In fact, there is no evidence of recent research in Greece relating Business

Ethics to Human Resource Management and Dismissals. Meanwhile, most

researchers approach this field with emphasis on the manager’s (or decision maker’s)

moral perception (see for example (Kujala, 2004)), as well as the psychological and

financial impact of involuntary dismissals on individuals (see for example (Lamsa,

2001) . Our study considers the aforementioned research elements and emphasizes on

the role and impact of Human Resources Professionals on the dismissals decision

making and process.

4. Ethical Concepts and Human Resource Management: A conceptual

analysis

The two major traditions which dominate current thinking in normative ethics

are deontology and utilitarianism. These traditions have been applied in attempts to

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construct ethical models for managers and decision-makers, while the major elements

applicable in order to construct an ethical frame are presented, hereafter.

4.1. Kantian Perspective

Kant holds that the fundamental principle of our moral duties is a categorical

imperative. It is an imperative because it is a command and it is summarized as “one

ought never to act unless one is willing to have the maxim on which one acts to

become a universal law”. More precisely, it commands us to exercise our wills in a

particular way, not to perform some action or other. It is categorical in virtue of

applying to us unconditionally, or simply because we possesses rational wills, without

reference to any ends that we might or might not have. The proper way to interpret the

universalizability formulation of the categorical imperative is that if the maxim for an

action is self-contradictory, then the action would be morally wrong. (Bowie, 1999)

According to this interpretation, it should be considered morally wrong, as being self-

contradictory that within all the Organizations employees may be dismissed,

irrespectively to their capabilities, motivation, expectations, or without previous

notice or reasonable justification for this action. Nevertheless, we notice that

categorical imperative cannot be applicable in every situation, especially when we

move from evaluating the actions or practices of an Organization to describing how

an Organization ought to interact with its stakeholders. Due to the fact that some

actions are of such nature that their maxim cannot even be thought as a universal law

of nature without contradiction. For this reason, our perception is that kantian ethics

should be perceived as a system of moral values. The principles of a moral

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Organization, were coded by Norman Bowie (1999), they are briefly presented,

hereafter.

1. Kant’s respect-for-persons principle says that persons should be treated as

ends and never purely as means. Indicatively, Kant's maxim is to "act so that

you treat humanity, whether in your own person or in that of another, always

as an end and never as a means to someone’s ends only". According to this

interpretation, failure to respect persons is to treat them as means in

accordance with one’s owns ends, and, thus as if they were not independent

agents. Most philosophers agree that the moral point of view involves at least

a commitment to take into consideration the interests of the stakeholders

affected by our actions. Therefore, to exhibit a lack of respect for a person is

either to reject the person’s considered judgments, to ignore the person’s

concerns and needs, or to deny the person the liberty to act on those

judgments.

2. The Organization should have those affected by the Organization’s rules and

policies participate in the determination of those rules and policies before they

are implemented.

3. It should not be the case that for all decisions, the interest of one stakeholder

takes priority.

4. When a situation arises where it appears that the humanity of one set of

stakeholders must be sacrificed for the humanity of another set of

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stakeholders, that decision cannot be made on the grounds that there are a

greater number of stakeholders in one group than in another.

5. Every profit-making Organization has an imperfect duty of beneficence.

6. Each business Organization must establish procedures designed to ensure that

relations among stakeholders are governed by rules of justice. These rules of

justice are to be developed in accordance with the aforementioned Kantian

principles and must receive the endorsement of all stakeholders. They must

involve principles that can be publicly accepted and thus be objective in a

Kantian sense.

In cases of conflict between the interests of various stakeholders, as it happens

most of the times with dismissals, the whole system of principles should be taken into

consideration in order to assure an ethical approach.

Kant’s principle finds motives for actions morally important, in that it expects

persons to make the right decisions for the right reasons. According to Kantian

thinking, if a corporation does the right thing only when (and for the reason that) it is

profitable or when it will enjoy good publicity, its decision is prudential, not moral. It

is worth-mentioning that Kant insisted that all persons must act not only in

accordance with obligation, but for the sake of obligation; that is, the person’s motive

for action must be recognition of the duty to act.

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Despite the aforementioned analysis, there are several critics against

Kantianism; more specifically, John Mc Dowell and Jonathan Dancy, contemporary

philosophers argue that generalizations and moral values have a relatively minor role

to play in ethical decision making and ethical justification (Bowie, Beauchamp,

1999). Several commentators have further argued that Kant is an absolutist in ethics;

that for Kant being ethical is a matter of following a set of moral rules that has no

room for exceptions. At the same time, his conclusions are based on two

acknowledgments, that the only possible basis for establishing a moral tradition is

human reason or logic, as well as whether an action can be universalized. Modern

interpretations of deontological ideals suggest that the ideals may be considered

"universal" in character but not necessarily "absolute" (e.g. Ross, 1961). The major

difference between absolute and universal ideals is the recognition that in some

situations a universal statement of "right" or "wrong" might be inappropriate. The

strict absolutism of early deontological thinking did not accept the non-absolute

character of certain rules. However, the modern versions, such as that put forth by

Ross, consider possibly controversial statements prima facie universal in character

and allow exceptions, which, according to our interpretation tend to moderate Kant’s

deontological approach of “right” and “wrong” in order for Kantianism to be

applicable in contemporary competitive business environment.

Nevertheless, in the real business world, deontological principles tend to

moderate the utilitarian perspective, for instance principle 4 tends to prohibit a

manager from taking the utilitarian approach, where the interests of some could be

sacrificed for the greater benefits that others may enjoy.

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4.2.Utilitarianism

On the contrary, utilitarian theories hold that the moral worth of actions or

practices is determined solely by their consequences. As summarized by Bowie and

Beauchamp, an action or practice appears to be right if it leads to best possible

balance between good consequences for all the parties affected. According to this

perspective, utilitarians believe that the purpose or function of morality is to promote

human welfare by minimizing harms and maximizing benefits. This teleological

ethical system — focusing on net consequences, not individual intentions — is termed

Utilitarianism, derived from the word "utility," which had an 18th century meaning

that referred to the degree of usefulness of a household object or a domestic animal;

that is, a horse could be said to have a "utility" for plowing beyond the cost of its

upkeep. "Utility" has this same meaning, and this same derivation, in microeconomic

theory; it measures our degree of preference for a given good or service relative to

price. In Utilitarian theory, it measures our perception of the net benefits and costs

associated with a given act. (Hosmer, 1987)

In other words, utilitarianism asserts that “society” always ought to produce

the greatest possible balance of positive value or the minimum balance of harm for all

persons affected. According to Bowie and Beauchamp, efficiency is the prevailed

means for an Organization to higher profits and lower prices, and the struggle to be

maximally profitable seeks to obtain maximum production from minimum economic

resources. Nevertheless, the utilitarian commitment to the principle of optimal

productivity through efficiency remains an essential part of traditional business

conception of society and a standard part of business practice. This principle focuses

25

exclusively on judging the ethics of the action in terms of the results produced by the

action (in terms of the means vs. ends, it focuses exclusively on the ends, not the

means). It is worth-noticed that significant number of HRM practices and tools, such

as Management by Objectives, Risk Assessment or costs/benefits analysis, are often

justified as a means to improve organizational efficiency and maintain profitability,

according to the aforementioned utilitarian sense.

Utilitarianism is obviously close to the economic concept of cost/benefit

analysis, particularly as the benefits are not to be confused with pragmatism, and have

to be calculated for the long-term consequences as carefully as for the short-term

outcomes. This interpretation creates itself ethical dilemmas, due to the fact that short-

term and long-term outcomes may vary and lead to morally contradicted results. For

instance, we may reach a decision that may lead to a morally wrong outcome in the

short-term, which may prove itself morally right in the long term. Utilities, both

benefits and costs, have to be computed equally for everyone. One’s satisfactions and

one’s costs cannot be considered to be more important in some way than someone

else’s satisfactions and someone else’s costs. The decision rule that is then followed is

to produce the greatest net benefits for society; an act is "right" if, and only if, it

produces greater net benefits for society than any other act possible under the specific

circumstances. Nevertheless, utilitarianism differs from the economic concept of

cost/benefit analysis in that the distribution of the costs and benefits has to be

included as well. That is, these are net benefits to society, and each individual within

the society has to be considered equally, and treated equally in the distribution. "The

greatest good for the greatest number" takes precedence in utilitarian theory over "The

greatest good for a smaller, more elite group." This approach is further combined

26

with the Stakeholder’s theory perspective in order to originate a wider framework for

dismissals decision making.

Despite the aforementioned interpretation, in recent utilitarian philosophy

there is a traditional deviation between two types – act utilitarianism and rule

utilitarianism. An act utilitarian argues that in all situations, one ought to perform the

act that leads to the greatest good for the greatest number. The act utilitarian would

not hesitate to break a moral rule, if breaking it would lead to the greatest good for the

greatest number in a particular case. Rule utilitarians, however, reserve a more

significant place for rules, which they do not regard as expendable on grounds that

utility is maximized in the circumstances. In contrast to the position of act utilitarians,

rule utilitarians hold that rules have a central position in morality that cannot be

compromised by the demands of particular situations. Such compromise threatens the

general effectiveness of the rules, the adherence of which maximizes social utility.

Utilitarian rules are in theory strict and protective of all classes of individuals, just as

human rights are rigidly protective of all individuals regardless of social convenience

and momentary need. At the end of the day, the act utilitarian view seems to invoke a

prediction that society will be improved, if people sometimes disobey rules, because

this kind of conduct will not fundamentally erode either moral rules or the general

respect for morality (Bowie and Beauchamp, 1979).

The major concern in utilitarian ethical theory is the possibility of exploitation.

In the majority of cases, where no one is going to be hurt very badly, and particularly

where it is possible to use financial equivalents for both the costs and the benefits, it is

a familiar and useful form of analysis. But, there is always the possibility of justifying

27

benefits for the great majority of the population by imposing sacrifices or penalties on

a small minority. This is a common justification for applying ad-hoc dismissals,

downsizing or even outsourcing of Functions. Utilitarianism fails because in reality it

involves two principles: greatest good and greatest number; at some point, in the

decision process on dismissals, these two principles come into conflict, and then one

has no single means of determining what is the "right" or "best" or "proper" act.

Utilitarianism prevails in the current business environment, which may in part

be due to its tradition in economics. The fore coming economic philosophy of

capitalism, alongside Adam Smith (1776), provides a rich traditional heritage to the

utilitarian concepts. Capitalist systems, if we accept that they provide the greatest

material good for the greatest number, are thus considered ethical from the

perspective of the traditional capitalistic economic philosophy. It should be opted here

that the Utilitarian analyses of moral philosophers extend beyond material good to the

much broader concept of utility, from which the term utilitarianism is derived. Two

points of criticism are relevant to the above discussion. First, there is the

aforementioned problem of unjust distribution of utility. Even though one form of

utilitarianism (i.e. rule utilitarianism) allows constraints so that negative outcomes

could be eliminated, the criticism is still valid. The second problem with utilitarianism

is the concern for individual acts. If each act is judged by its own cost/benefit

outcome, there is no consistency between acts and thus results in a lack of

generalizability. In spite of its weaknesses, utilitarianism is still a major tradition in

moral philosophy and maintains substantial support.

28

Of the two dominant traditions, deontology is favored by many moral

philosophers today. Deontological reasoning offers many people, who are critical,

means for justifying their attacks. Utilitarian arguments are also used historically to

provide much of the ethical justification for the modern economic systems of

capitalistic democracies. The major concern and unit of analysis of deontology is the

individual whereas utilitarianism is decidedly social in character and focuses on the

welfare of the society as a unit. This difference in focus can, in a number of situations,

put the two traditions at odds with each other (Lamsa, Takala, 2000).

Given the fact that there is no any universally accepted, absolute statement of

what is and what is not ethical - but important and carefully reasoned traditions, our

aim is to combine the aforementioned elements and further develop an ethical

evaluation framework regarding the dismissal process, broader than the relevant legal

frame.

5. Ethical Frame of the Dismissal Process

5.1. Decision Makers Moral Principles: Motive for action

The deontological perspective indicates that a critical element for the

development of an ethical framework applicable to dismissals is the motive for action.

The deontological perspective is pertinent due to the fact that the individual remains

the major unit of analysis during dismissals decision making and process, at least it

should be, from the Direct Managers and the HR Professionals perspective. Contrary

to the utilitarian perspective and the teleological approach in evaluating morality of

29

actions and decisions, deontology emphasizes on the principle that right decisions

should be made for the right reasons. Consequently, a dismissal is unfair, if it is not

conducted for a fair reason and in accordance with a fair procedure, even if it

complies with any prerequisite recorded in a contract of employment or in legislation

governing employment. Whether a dismissal is conducted for a fair reason, or not, is

determined by the facts of the specific case, and the appropriateness of dismissal as a

penalty for misconduct or solution for organizational restructuring or employee

incapacity.

According to this interpretation, dismissals decision making should be related

with an actual “problem”, while the correlation between the dismissal and the

“problem’s” resolution should justify the dismissal. For instance, in real business

world, it is observed that when an Organization needs to improve its profitability, ad-

hoc dismissals take place; nevertheless it is worth-mentioning that there are many

cases where the dismissed employees are mainly wage workers and, consequently,

their dismissal cannot affect, significantly, the Organization’s financial condition in

order to be justified, not even with the utilitarian sense. Furthermore, according to

deontology, this motive (i.e. to improve Organization’s profitability) does not justify

ad-hoc dismissals of wage workers. This discussion would be different, if there was a

decision for a structured downsizing procedure, in order for an Organization to deal

with a significant reduction in production demand. Under these circumstances,

indeed, at least in the utilitarian sense, there is a fair reason for downsizing and

collective dismissals, but still specific actions, which will be discussed, hereafter,

need to occur in order for this procedure to be ethical.

30

Given the aforementioned analysis, we observe three reasons on which a

termination of employment might not only be legitimate, but also ethical. These are:

the conduct of the employee, the capacity of the employee, and the operational

requirements of the employer’s business. In reference to the latter, downsizing and

collective dismissals are widespread, as an effective restructuring for an Organization

to increase its efficiency. (Burke and Cooper, 2000; Drew, 1994) Despite the fact that

there are significant studies in relation with downsizing and ethics (Lamsa, 2001;

(Eby & Buch, 1998); (Feldman, 2006), yet there is no recent research relevant to an

ethical approach of ad-hoc dismissals. For this reason, this study is not extended on

collective dismissals or downsizing policies, yet, emphasizes on ad-hoc dismissals

process and decision making based on the aforementioned three dimensions.

If a dismissal is not automatically unfair, the employer must show that the

reason for dismissal is a reason related either to the employee's conduct or capacity,

either it is based on the operational requirements of the business. If the employer fails

to do that, or fails to prove that the dismissal was effected in accordance with a fair

procedure, the dismissal is unfair. The fact that, according to the Greek labor

legislation, termination of employment is permitted without the employer to be

obliged to justify his action or invoke some reason cannot be compliant with the

deontological ethical theory. Deontology requires right decisions for the right reasons,

while labor legislation diminishes the importance of invoking a reason for

employment termination and the consequences upon the dismissed employees. It is

worth-mentioning, though, that court decisions attempt to balance this legal

“inadvertency” , in order for the labor legislation to remain employee-protective,

despite the recent deregulations. According to recent court decisions, a dismissal is

31

automatically unfair, if the reason for the dismissal is one that amounts to an

infringement of the fundamental rights of employees and trade unions, which include

indicatively participation in a lawful strike, intended or actual pregnancy and acts of

discrimination.

5.2. Ad-hoc Dismissals: Decision Making and Fair Process Elements

Decision making for termination of employment varies whether the reason of

termination is related with the capacity of employee (performance criteria) or the

conduct of employee (behavioral criteria). In each of these cases, HR Professionals

need to identify the motive for dismissal and take any potential corrective actions

before the termination of employment. Consequently, the HR Professionals should

support the Direct Managers in order to assure that the necessary prerequisites, as

described in Diagram 2, have been followed before they reach to the termination of

employment decision making.

5.2.1 Conduct of the employee

Constructing a motivational and shared value working environment is the

challenge for the HR Professionals in contemporary Organizations. Nevertheless,

employers may further adopt disciplinary rules in order for them to communicate the

corporate code of conduct, assure both individuals’ alignment to the organizational

goals and employees empowerment, as well as respect the employees “freedom to

act”. Fairness and transparency are promoted by developing and using rules and

procedures for handling disciplinary situations. The code of conduct must create

32

certainty and consistency in the application of discipline. This requires that the

standards of conduct are clear and made available to employees in a manner that is

easily understood. This approach regards the purpose of discipline as a means for

employees to know and understand what standards are required of them. Efforts

should be made to correct employees' behavior through a system of disciplinary

measures such as counseling and warnings. Employees and, where appropriate, their

representatives should be involved in the development of rules and procedures. It is

also important for the HR Professionals to assist employees and managers in order to

understand what the rules and procedures are, and, how they are to be used.

Formal procedures do not have to be invoked every time a rule is broken or a

standard is not met. Informal advice and correction is the best and most effective way

for a Manager to deal with minor violations of work discipline. Repeated misconduct

will warrant warnings, which themselves may be graded according to degrees of

rigorousness. More serious infringements or repeated misconduct may call for a final

warning. Dismissal should be reserved for cases of serious misconduct or repeated

offences.

The aforementioned elements are aligned with the deontological perspective

of having those affected by the Organization’s rules and policies participate in the

determination of those rules and policies before they are implemented. The employees

have the opportunity to adopt publicly accepted principles, the liberty to act on any

potential judgments, to develop themselves within an open communication

environment, as well as to be aware of the expectations settled by the Organization.

Managers are the accelerators of this process; they need to communicate the

33

Organization’s expectations to their subordinates, advice and guide them, accordingly,

during their employment. On the other hand, HR Professionals should assist the

Managers towards this struggling process; “Codes of Conduct” are the tools that most

Organizations adopt in order to communicate the values and expected behavior, while

participation in team-building activities further enhances employees attributes.

With reference to the decision making elements, both HR Professionals and

Direct Managers determining whether a dismissal for misconduct is unfair should

consider whether or not the employee contravened a rule or standard regulating

conduct in, or of relevance to, the workplace; and if a rule or standard was

contravened, whether or not the rule was a valid or reasonable rule or standard; the

employee was aware, or could reasonably be expected to have been aware, of the rule

or standard; the rule or standard has been consistently applied by the employer; and

dismissal was an appropriate sanction for the contravention of the rule or standard.

Nevertheless, when deciding whether or not to impose the penalty of

dismissal, the Manager should in addition to the gravity of the misconduct consider

factors such as the employee's circumstances (including length of service, previous

disciplinary record and personal life circumstances), the nature of the job and the

circumstances of the infringement itself. The Manager should apply the penalty of

dismissal with the way in which it has been applied to the same and other employees

in the past, and consistently as between two or more employees who participate in the

misconduct under consideration. This latter approach is drown by the utilitarian

approach of balancing consequences for all the parties affected. HR Professionals

should even suggest a rotation program for the employee, due to the fact that in

several cases (VM, individual conversation) misconduct may occur due to

34

`interpersonal relations with the Direct Manager. In those cases we may introduce a

rotation program in order to give the employee the alternative to work in a different

environment, develop her qualities and prevent termination of employment

5.2.2. Incapability of the Employee

In cases of termination of employment due to poor performance of the

employee, the decision maker, who is the Direct Manager, should consider a series of

actions that should be followed in order to assure the ethical conduct of the dismissal.

From the HR Professionals perspective, given that a competency-based recruiting and

selection process has been followed, the right candidate should be selected for the

right position, based both on her capacity and her motivation. The Direct Manager

should be also involved in this process, in order to eliminate the potential of having

wrong employee-position matching, one of the most commonly observed reason for

poor performance (VK, individual conversation).

Furthermore, according to our labor legislation and common business practice,

a newly hired employee can be placed on probation for a period that is reasonable

through a short-term employment contract, which may turn into an unlimited time

contract under the condition of satisfactory performance. It is worth - mentioning that,

according to the previous legislation provisions, it was required two months probation

period for indefinite time employment contracts, while the new legislation turned it to

one year, which means that if there is an involuntary termination of employment

during the first year of employment there is no employer obligation for remuneration.

It is worth-mentioning that, still, Organizations adhere to the previous legal frame as

35

observed in recent incidents, creating in this way a more protective frame for their

employees than the legal provisions; nevertheless, this legal deregulation is recent, so

it is not accurate to evaluate the effect of such a hostile measure for the employment

security on real business world. In any case, probation period is further determined

by the nature of the job, and the time it takes to determine the employee's suitability

for continued employment. When appropriate, an employer should give an employee

whatever evaluation, instruction, training, guidance or counseling the employee

requires rendering satisfactory service. Dismissal during the probationary period

should be preceded by an opportunity for the employee to state a case in response and

to be assisted by fellow employee or supervisor.

Given that the probation period is successfully completed, an employee should

not be dismissed for unsatisfactory performance, unless the employer has given the

employee appropriate evaluation, instruction, training, guidance or counseling; and

after a reasonable period of time for improvement, the employee continues to perform

unsatisfactorily. Nevertheless, HR Professionals along with the Direct Manager and

the employee should investigate the reasons for unsatisfactory performance and

further consider other ways, short of dismissal, to remedy the matter. The employee’s

Performance Appraisal should be reviewed in order to identify weaknesses, while

adequate training or even job redesign should precede the decision for dismissal. It is

of a cornerstone importance to involve the employee throughout the evaluation

process in order to assure a fair performance management process.

36

5.2.3. Performance Appraisal as a tool for ethical dismissal conduct.

Performance Appraisal is the most commonly adopted HR tool in relation with

employees’ performance management. In fact, it is observed that in U.S., as well as in

many other countries with different employment relations regulations, performance

appraisal is, primarily, used as an official legal document (Byham, 2004), rather than

a complementary HR tool for decision making or development. As discussed during

the theoretical part of our research, there are several human resource management

systems based on ethical principles, indeed, more utilitarian, than deontological

oriented. For our common reference, among the prevailed evaluation criteria for the

performance appraisals effectiveness, we highlight strategic congruence, procedural

justice, interactional justice, distributive justice, in which we clearly observe the

correlation with the afore-presented moral principles frame.

The aforementioned contemporary performance management elements,

further, require employees’ involvement in the assessment process, either by

introducing the employee self-assessment, or, even, peers evaluation model. This fact

is further aligned with the deontological perspective of establishing procedures

designed to insure that relations among stakeholders are governed by rules of justice.

Given this acknowledgement, a performance appraisal model designed and based on

both democratic values and objectivity is applicable for decision-making purposes, as

well as, it can play a significant role as an HR tool, in order to protect individual’s

rights and, at the same time, promote organizational objectives.

37

According to our research, decision makers consider an established

performance appraisal process as the most significant tool in order for a dismissal to

be conducted ethically. (VK, individual conversation). Making the “right” decisions

for the “right” reasons, as the major deontological principle, can be achieved under

the condition that both the HR Professionals and Direct Managers are committed in

establishing procedures that link Performance Appraisal with Dismissals. This fact

requires a more responsible approach from all stakeholders during the performance

evaluation process, which implies the need for mature organizations, reliable

Managers and committed HR Professionals.

We introduce this procedure in order to eliminate the potential of dismissing

employees who perform according to the settled objectives and dimensions, as well as

to identify any poor performers’ competencies and qualities that may be proven

valuable in a different role within the same Organization. The HR Professionals are

expected to construct the performance appraisal process, according to the needs of

their Organizations, with the objective to support the Direct Managers to make ethical

decisions at any level. To achieve this, we suggest that the appraisal process should

be part of a structured human resource management system based on the relative

forced distribution model that enables the Direct Manager to assess comparatively her

subordinates, as well as to identify their qualities and create awareness of any

potential weaknesses. Given that the HR Professionals, with the cooperation of the

Direct Managers, have created this necessary tool to encompass a comparative

analysis of high-performers and low-performers per Function, a second level analysis

can be introduced in order to prevent potential dismissals of employees ranked above

average based on their current assessment.

38

Despite the fact that in various countries the employer is not allowed to

dismiss an employee that performs in the average of the settled performance standards

constitutes a legal prerequisite for a dismissal to be considered fair; there are still

significant limitations in the Greek business practice and legislation. According to our

observation, the main reason is the fact that the needed HR tools are not developed in

the direction of individual rights protection. For the moment, HR Professionals are

expected to coordinate ad-hoc dismissals requests, while their involvement is limited

at the level of supporting the Direct Manager to conduct a legally compliant dismissal

without affecting the Organization’s performance.

In terms of practicality, the employee who has been ranked below average

during the performance appraisal process should know that his performance is

unsatisfactory and corrective measures should be taken. Given this acknowledgement,

the employee himself has the opportunity to control the next steps of the performance

management process, before the dismissal decision making, by requesting any

additional support from the Organization in order to meet the organizational

expectations. Furthermore, the performance appraisal in those cases may have the

same impact on the process, as a written notification.

The fact that the HR Professionals still hold a coordinator role, does not mean

that they do not have the responsibility of identifying weaknesses and consulting the

Direct Managers in order for them to take any corrective actions (such as internal

transfers, training programs, etc) before the dismissal decision making. From the HR

Professionals perspective, poor performers should be considered as important, as

high-performers, in terms of performance management practices in order to prevent

39

dismissals. The afore-described approach of the HR Professionals responsibility in

order to establish corrective actions process in terms of an ethical dismissal policy is

aligned with the imperfect duty of beneficence, according to the deontological

approach, which represents the duty of the HR Professional to provide to both the

employees and the Direct Managers the necessary tools in order to reach alternative

practices of managing their subordinates efficiently.

With reference back to the decision making elements, both HR Professionals

and Direct Managers determining whether a dismissal for poor work performance is

unfair should consider whether or not the employee failed to meet a performance

standard; if the employee was aware, or could reasonably be expected to have been

aware, of the required performance standard; if the employee was given a fair

opportunity to meet the required performance standard; and if, at last, the dismissal

was an appropriate sanction for not meeting the required performance standard.

40

Reasons for Ad-Hoc Dismissals

Conduct of Employee

Ele

men

ts to

ass

ure

Eth

ical

D

ecis

ion

Mak

ing

Performance of Employee

Code of Conduct – (HR)

Warnings / Counseling – (M)

Behavioral PMP – 360 Evaluation – (HR)

Rotation Program – (HR)

Competency Based R&S Process – (HR)

Probation Period – (HR)

Performance Appraisal Process/MBO – (HR-M)

Employee’s Involvement/Feedback – (M)

Training – (HR - M)

Wrong Employee – Job matching ���� Job Redesign – (HR - M)

Decision for Dismissal

Diagram 2: Corrective Actions prior to Decision for Dismissal

5.2.4. Code of Practice

It is required to further assure a fair procedure in order for ad-hoc dismissals to

be ethical. According to our research there are several Institutions in both developed

and developing countries, either governmental or non-governmental that raise issues

of fair procedures in businesses under the frame of general advisory and conciliation

services for Organizations (i.e. ACAS in UK, CCMA in South Africa). Nevertheless,

in Greece we are missing a structured Institution to promote deontological business

practices and corporate social responsibility to corporations or enterprises. Both

employers’ and employees’ representative bodies use the legal frame as a common

reference to function employment relations; nevertheless, as described at the

41

beginning of this paper, the legal frame sets nothing but the minimum level of

employees’ rights protection, while as previously discussed there is a significant

number of legal provisions that do not even comply with morality, neither in the

deontological nor, at least, in the utilitarian approach.

Given the aforementioned reasons, we strongly support that rationalization of

the employment relations in an ethical, not only legally compliant, direction is the key

objective that the corporations, the government and the employees in Greece should

prioritize. HR Professionals, acting as Ethics Agents, are expected to develop policies

and processes, which, eventually, will accelerate the adaptation of ethics in business

practices, not only in employment relations and dismissal processes. Our descriptive

analysis, based on real business case-studies, emphasizes on a combination of

applying deontological directions in both decision making and practices. Hereafter,

we set the outline of a fair dismissal procedure combining fundamental process

elements that, indicatively, ACAS included in the “Code of Practice on discipline”

(ACAS, 2009) in correlation with the afore analysed conceptual ethical frame. Our

aim is to further apply this frame in the real business world in Greece and evaluate the

outcome in a real dismissal case.

42

Process Of Dismissal

Ad – Hoc Dismissals

Fair

Pro

cess

Ele

men

ts

� Employers and employees should raise and deal with issues promptly and should not unreasonably delay meetings, decisions or confirmation of those decisions

� Employers and employees should act consistently

� Employers should carry out any necessary investigations to establish the facts of the case

� Employers should inform employees of the basis of the problem and give them an opportunity to put their case in response before any decisions are made

�Employers should allow an employee to appeal against any formal decision made

Prerequisites based on the Code of Practice on discipline (ACAS, 2009)

Diagram 3: Fair Dismissal Process elements based on the Code of Practice on

discipline (ACAS, 2009)

In reference to the dismissal process, according to the aforementioned

framework, employers and employees should, primarily, raise and deal with issues

promptly and should not unreasonably delay meetings, decisions or confirmation of

those decisions. The employer should further conduct an investigation to determine

whether there are grounds for dismissal. As already mentioned, this does not need to

be a formal enquiry. The Manager, with the cooperation and consultancy of the HR

Professional, should notify the employee of the allegations using a form and language

that the employee can reasonably understand. In the meantime, the employee should

be entitled to a reasonable time to prepare the response. After the enquiry, the

employer should communicate either the corrective measures taken or the final

43

decision, and, preferably, furnish the employee with written notification of that

decision.

Mutual Communication

Direct Managers are the ones responsible to conduct these meetings, while

HR Professionals should coordinate this process, provide feedback and advise the

decision maker on the discussed issues. The meeting with the Direct Manager and the

HR Professional should have the form of an informal interview conducted in order to

assure that the employee acknowledges the situation and give him the opportunity to

state a case in response to the allegations, as well as, observe her motivations.

Written Notification for Misconduct

Following the meeting, the Direct Manager needs to decide whether or not the

action of dismissal or any potential disciplinary action is justified; in the latter case

she should inform the employee, accordingly, in writing. Where misconduct is

confirmed or the employee is found to be performing unsatisfactorily it should be

usual to give the employee a written warning, as discussed the performance appraisal

document may be also considered as written notification. A further act of misconduct

or failure to improve performance within a set period would normally result in a final

written warning. Despite the fact that, according to our observation, misconduct is not

the most common reason for dismissal, comparing with organizational needs or

employees incapacity, we need to highlight that it is the most sensitive cases from the

HR Professionals to handle.

44

For this reason, we would like to underline that, in case of an employee’s first

sufficiently serious misconduct, it may be appropriate to move directly to a final

written warning. This might occur where the employee’s actions have had, or are

liable to have, a serious or harmful impact on the organisation. A first or final written

warning should set out the nature of the misconduct or poor performance and the

change in behaviour or improvement in performance required (with timescale). The

employee should be told how long the warning will remain current. The employee

should be informed of the consequences of further misconduct, or failure to improve

performance, within the set period following a final warning. For instance that it may

result in dismissal or some other contractual penalty such as demotion or loss of

seniority.

Given that the Organization follows the aforementioned procedure, it gives the

opportunity to the employee to participate in the decision-making process, to

acknowledge her weaknesses and the Organization’s expectations, and therefore, to be

aligned with one of the major principles of the kantian perspective for morality.

Nevertheless, Organizations appear reluctant to adopt procedures that require bottom

– up employees’ involvement or even to inform them officially about misconduct

issues. According to our observation, in cases of misconduct the direct manager is

used to commenting on the employee’s behaviour, but not in the aforementioned

officially interactive way, due to the fact that he does not want to cause any

confrontation. In several cases this reaction does not allow the employee to identify

the impact of the misconduct and, consequently, to adopt any development or

corrective actions.

45

Direct Manager’s Decision

Despite the aforementioned analysis of the HR Professionals responsibility, it

is of a cornerstone importance to underline that the decision to dismiss an employee

should only be taken by a manager who has the authority to do so. Despite the fact

that the opinions of various Stakeholders’ (i.e. dotted line reports, co-workers, clients)

should be taken into consideration seriously, the direct manager is the one

accountable for her team members to be treated ethically. Given that the

aforementioned HR tools are provided to the Direct Managers, the HR Professional

should act as a coordinator, not as a leader of this process, while in case of

disagreement between the Direct Manager and various stakeholders, we need to

assure that the related parties have clearly communicated their approaches and

contributed in order for them to reach a consensus for the specific situation.

Appropriate Notice and Right to Appeal

Furthermore, the employee should be informed as soon as possible of the

reasons for the dismissal, the date on which the employment contract will end, the

appropriate period of notice and their right of appeal. Nevertheless, contemporary

businesses are not really willing to adopt any early notice policies, despite the afore-

presented deregulations in the labour legislation that attempted to make early - notice

cost-effective dismissals more attractive for the employers. Indeed, at least the

organized and economically healthy Organizations have not applied, yet, this

measure. Under this interpretation, we need to include those cases in which an

Organization acts free will, acknowledging that operates in a closely-complementary

46

system in the kantian perspective (Gounaris, 2008). This acknowledgement requires

that the motive for those Organizations remains the fair treatment of the dismissed

employee, in contrary to the ethically problematic utilitarian legal approach.

Nevertheless, Organizations are reluctant to adopt an early-notice practice,

primarily due to the impact that the dismissal may have on dismissed and remaining

individuals’ performance and motivation. For this reason, Organizations avoid early

notice in cases of involuntary termination of employment, which in fact is not

compliant with the ethical principle of deontology. Indeed, this is a problematic area

also for HR Professionals. Alternatively, we suggest that in order to balance this

ethical weakness in the real business world, at least, feedback should be provided to

the employees, as discussed either through the written notification or performance

appraisal, regarding the organizational expectations and the consequences of potential

misconduct or poor performance before the Direct Manager reach a decision for

dismissal.

Furthermore, the right for the employees to appeal is effective in Greece,

primarily, juristically and applicable on legally unfair dismissals. According to the

proposed model, hereafter, dismissed employees should have the right to appeal for

unfair dismissal, also internally in the Organization Committee, while this process

should be clearly provisioned and communicated in the Code of Conduct.

47

5.3. Dismissals due to Organizational Restructuring: Ad-hoc Redundancies

Decision Making and Ethical Conduct

The psychological contract refers to an “individual’s beliefs regarding the

terms and conditions of a reciprocal exchange agreement between that focal person

and another party” (Rousseau, 1999). A typical issue in a psychological contract is the

promise of job security by the Organization, that makes the employees feel a sense of

ownership and entitlement about their jobs, while they tend to expect their

employment to be guaranteed.

Meanwhile, with the term redundancy we define dismissals for a reason not

related to the dismissed employee or for a number of reasons all of which are not so

related.” This definition might include, for example, a situation where dismissals are

not related to the conduct or capability of the individuals but are part of an

Organisational restructuring. Furthermore, we need to clarify that the scope of

research may involve organizational downsizing, defined as a planned elimination of

roles and jobs, abrogation of entire units, and flattening organizational structures or

reducing costs, all of which engender downscaling of organizational activities

(Cascio, 1993).

Risk Shifting

Given the current dynamic and competitive market place, Organizations in

Greece tend to struggle to establish flexible procedures and structures in order to be

able to compete and remain profitable. The result of recent changes in contemporary

48

business environment has been to substantially shift economic, financial and social

risks from businesses and government to the individual. (Rafferty & Yu, 2010) This

fact is evident on the impact of the afore-presented legal deregulations related with

ad-hoc redundancies policies, as well as collective dismissals. In the present study,

hereafter, we emphasize on the actions that HR Professionals may undertake in order

to balance the risk shifting by establishing ad-hoc redundancies avoidance practices,

decision making criteria and ethical conduct elements.

Reason for Ad-hoc Redundancies

Operational Needs of Employer

Dec

isio

n M

akin

g E

lem

ents

Strategic HR Planning (HR – CoM)

Efficient Workforce Allocation (HR – M)

Objective Criteria : Compulsory Redundancies

Internal Transfers instead of recruiting employees (HR)

Redundancies Avoidance Actions

Redundancies Selection Criteria•Standard of Work Performance or Aptitude for Work

• Employees Skills and Experiences

• Employees Individual Status (Financial Condition, years of employment )

Decision for Redundancy

Diagram 4: Corrective Actions and Selection Criteria prior to Decision for Ad-hoc

Redundancies

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HR planning

Organizations are responsible for deciding the size and most efficient use of

the workforce. Effective human resource planning can help to determine existing and

future staffing needs. In turn this can lead to an improvement in job security for

employees and to the avoidance of short-term solutions which are inconsistent with

longer-term needs. The HR Professionals are expected to act as Business Partners in

order to identify those organizational needs, both short-term and long-term and

contribute to the most efficient workforce allocation in order to eliminate any

potential need for redundancies. Meanwhile, any potential recruiting needs should be

carefully evaluated, while internal recruitment processes, as the part of a broader

human resources management system, should be adopted in order for an Organization

to avoid overstaffing and, consequently, to minimize the potential uncertainty about

future employment.

Furthermore, in order to assure ethical and socially responsible management, it

is of a cornerstone importance for an Organization to identify and determine the

desired staffing levels, as well as, any company expansion or rationalization plans.

According to our research, most Organizations tend to make decisions related with

staffing planning during the annual budgeting process, without correlating this

process with long-term strategic planning and being able to assure efficient manpower

allocation. On the contrary, we suggest the establishment of a committee that would

normally meet regularly and consider information on the company’s current

performance, trading position and future plans to further enable Direct Managers to

monitor the need for changes in the size of the labor force. The participation of the

50

HR Professional in those meetings is mandatory in order to assure alignment with the

organizational objectives.

The aforementioned analysis is in accordance with Kant’s respect-for-persons

principle, which indicates that persons should be treated as ends and never purely as

means. According to this deontological principle, the moral point of view involves at

least a commitment to take into consideration the interests of the stakeholders

affected by our actions. Therefore, under this interpretation in order to act with

respect for a person, it is a prerequisite to respect the person’s concerns and needs.

Efficient manpower allocation and alternative methods of Organizational

Restructuring are critical elements in order to avoid redundancies and build ethical

Organizations. Internal Transfer programs and Job Redesign are HR tools that can

substantially contribute to this direction.

Communicated Formal Redundancy Policy

Despite any attempts to avoid redundancies, Organizations ought to establish

formal policies setting out the approach to be adopted by Management. In such cases

it is of a cornerstone importance for the Management to secure involvement of the

employees during this process, in the deontological sense. Nevertheless, currently, the

ad-hoc approach prevails whereby there are no formally established arrangements,

with the practice varying according to the circumstances of each redundancy. There

may be occasions when the circumstances of a particular redundancy can be met by

an ad hoc approach. However, in the interests of good employment relations it will be

prudent to consider the establishment of a formal procedure on redundancy.

51

This procedure should be functioned in relation with the official corporate

policies, when redundancies are not imminent so that the involved parties can

consider the long-term consideration rather than being preoccupied with immediate

issues. Nevertheless, Organizations should ensure that the procedure is communicated

to all employees. The aforementioned proposal is in accordance with the legal frame

regarding collective dismissals; nevertheless, in this case, the number of dismissed

employees is not a prerequisite in order for an Organization to adopt a fair and openly

communicated procedure. As a minimum, all employers should proceed with the

establishment of a formal policy on redundancy as this will help to ensure that

employees are aware before redundancies occur of the procedure to be followed.

Whichever approach is adopted it should be a reasonable one and every attempt made

to adhere to it, at least by the HR Professionals.

The contents of a formal procedure on redundancy may vary according to the

Organization’s standards, while it would normally contain the following elements: an

introductory statement of intent towards maintaining job security, the measures for

minimizing or avoiding compulsory redundancies, the general guidance on the

selection criteria to be used where redundancy is unavoidable that will be further

discussed, hereafter, any details of the severance terms, any details of any relocation

expenses, details of any appeals procedures and the policy of helping redundant

employees obtain training or search for alternative work.

Nevertheless, it is worth mentioning that it is not meant that all measures for

minimizing or avoiding compulsory redundancies may be compliant with the ethical

52

standards of the deontological theory. There are specific cases, where Organizations

introduce short-term working and temporary layoffs. These practices are related

mostly to the risk shifting practices discussed in the previous paragraph, rather than to

an ethical deontological approach of treating employees as ends and not as means

only. For this reason, we suggest that such practices should be further avoided, while

restrictions on recruitment, retraining and redeployment to other parts of the

organization, reduction or elimination of overtime, seeking applicants for early

retirement, or voluntary redundancy are ethically acceptable practices observed in real

business world.

An officially established procedure giving details about retraining, transfers

and redeployment demonstrates the company’s commitment to continued employment

and concern for the welfare of its employees. It is likely to increase the sense of

stability and security of employment.

The importance of objective criteria

As far as possible, objective criteria, precisely defined and capable of being

applied in an independent way, should be used when determining which employees

are to be selected for redundancy. The purpose of having objective criteria is to ensure

that employees are not unfairly selected for redundancy. Examples of such criteria are

attendance record, experience and capability. The chosen criteria must be consistently

applied by all Organizations irrespective of size.

53

Hereafter, we distinguish non-compulsory from compulsory selection criteria

on redundancies. The former involve voluntary redundancy or early retirement

programs that give the alternative to the Organization to select from a list of

volunteers the ones who are to be dismissed. This kind of redundancies proves to be

an expensive method since additional compensation is a prerequisite to attract

employees’ interest in participating in a voluntary redundancy program.

Nevertheless, in our study we emphasize on cases of redundancies based on

compulsory criteria and their ethical conduct.

The most commonly used selection criteria are, employees skills or

experience, standard of work performance or aptitude for work, attendance or

disciplinary record (ACAS, 2009). The standard of work performance or aptitude of

work of those selected may be an important consideration, nevertheless there should

be an objective evidence to support selection on this basis; performance appraisal may

play a significant role also in decision making. Furthermore, according to our research

Direct Managers may consider criteria, such as the time that an employee is employed

by the Organization, or his attitude. (VK, individual conversation). It is worth

noticed that the potential of an employee, may affect decision making as well as high

performance. Specific skills, flexibility, adaptability and an employee’s approach to

work may be the most relevant considerations, which in fact implies the significance

of HR feedback during the decision making process. HR Professionals should be in

the position to suggest alternatives, in order to support the Direct Managers and

employees during this struggling process. The individual needs of the employees,

meaning family situation, financial condition, years of employment may play a

significant role during decision making process.

54

Right to appeal

The establishment of a redundancy appeals procedure to deal with complaints

from employees who feel that selection criteria have been unfairly applied in their

case. This can be achieved by involving a more senior member of management or by

setting up a committee of management and employee representatives, to consider

individual grievances. As discussed in the ad-hoc dismissals section of the current

study, HR Professionals should act a coordinator role among Management and

employees, while an advantage of such a procedure is that complaints about selection

for redundancy may be resolved internally and thus reduce the likelihood of

complaints to employment tribunals.

Policies that support Laid off employees

Contemporary business practice, as well as Direct Managers and HR

Professionals approach ad-hoc redundancies in a utilitarian sense, meaning that for

them economic consequences justify dismissals.(VK, individual conversation) Given

this approach there are less that can be done to eliminate ad-hoc redundancies;

nevertheless, Organizations may adopt policies that balance the risk shifting to

support the laid off employees. Such policies may involve severance pay and

extended benefits, so that displaced employees will have an economic safety net to

prevent them from catastrophic financial losses. Further financial assistance programs

that provide extended benefits, protect pension plan funding, and take advantage of

available government aid entitlement funds, as well as outplacement programs that

include skills assessment, training in job, search skills, job referral services, and job

search support services.

55

In order to assure that the risk will not be shifted to the employees, the most

important element is to preserve the employees’ individual right to work in the sense

that a suitable alternative work should be provided through an outplacement program.

No other benefit could be considered as important as outplacement service for a laid

off employee, in order to eliminate moral and financial impact and retain their sense

of dignity.

Process Of Redundancies

Ad – Hoc Dismissals

Fai

r Pro

cess

Ele

men

ts

� Employers ought to establish and communicate a formal redundancy policy that clearly states the selection criteria, as well as severance terms details, appeal procedure and displaced employees benefits package� Employers and employees should act consistently

� Employers should proceed with internal restructuring and rationalization of alternative costs,before they proceed with redundancies.

� Employers should inform employees of the basis of the problem and give them an opportunity to put any alternative in response before any decisions are made

�Employers should consider the objective criteria during decision making

� Employers should allow an employee to appeal against any formal decision made

�Employers should provide financial aid, training or outplacement services to the displacedemployees, in order to assure that their individual rights are not violated during this process.

Diagram 5: Fair Ad-hoc Redundancies Process elements

NDANCY HANDLING

56

6. Dismissal Policy HR Tool: Termination of Employment Request Form

Indeed, the elements of the afore-presented fair dismissal process can be

applicable, basically, to corporations, either multinational, or functioned in a Matrix

structure, which require different decision making centres to consent in order for the

dismissal to be effective. HR Professionals should adopt such policies in order to

assure that no employee will be dismissed without, previously, having followed an

ethically developed process, in order to eliminate the potential of manager’s ad-hoc

action and inadequate handling of dismissed employees.

For this reason, we introduce the Termination of Employment Request form

(TER) (Appendix 1), which summarizes the aforementioned elements for a fair

dismissal process. The Human Resources Professional receives the “Termination of

Employment Request” completed by the Direct Manager, who is responsible to lead

this process. We have to highlight that TER is an HR tool useful to be consulted,

during the decision making process, as a final confirmation that the steps indicated in

the Dismissal Policy have been followed. This approach requires that HR

Professionals will actively participate in the decision making process, at least

indirectly, via HR tools and processes, in order to limit Direct Manager’s freedom to

dismiss employees unjustifiable and employees from being treated as means only.

In fact, the presented form involves a Questionnaire that both Direct Managers

and HR Professionals need to fill in order to assure that basic fair process elements

and decision making tools have been taken into consideration. Ηereafter, we applied

the proposed “Termination of Employment Request” form in the real business world,

57

in order to assess any potential weaknesses and its outcome compared to the initially

followed process.

6.1. The application of TER and Ethical Process

The following case is drown by real business incidents, which we consider

that raise moral issues from both the HR Professionals’ and the Direct Managers’

perspective. Those incidents could have been avoided, if the afore presented elements

of the ethical process had been applied.

Termination of Employment Request due to Incapacity of the employee

The incident, hereafter, took place in a technology-based organization, which

operates in Greece and South Eastern Europe providing high-end technology solutions

and services. According to the case, MK was hired in the Group Headquarters in

Athens, in September 2009 in order to undertake the role of Group Solutions

Manager, a senior product-sales oriented position with emphasis on product and

business development. This position was directly reporting to the Group Sales

Director.

The recruitment process for the specific position was internally coordinated

and the HR Department had assessed various candidates, before MK. MK seemed to

be a promising candidate, as he was, also, recommended by a Senior Manager of the

Organization. Nevertheless, in fact he was not mature enough to undertake such a

58

senior role; for this reason, the HR Professional suggested to conduct a three-month

short-term contract, which will be turned into indefinite time under the condition of

satisfactory performance. Indeed, MK was hired in the position of Group Solutions

Manager with a three-month short-term contract. During the first months of

employment, this lack of meeting expectations was obvious, while he was struggling

to deal with demanding tasks and coordinate efficiently his responsibilities.

It was commonly accepted that he could not deliver the required results and it

was more than clear to everyone that the job role was far too senior compared to MK’

s skills. Given that this sense was clear also to the Human Resources Department, the

HR Professional consulted his Direct Manager to renew MK’ s contract for another

six months, instead of turning it into indefinite time, in order to, further, notify MK

that the performance standards have not been met, so corrective actions should be

made. Nevertheless, the Direct Manager considered more appropriate to renew the

contract for indefinite time, which according to the effective legislation meant that, he

would have the right to dismiss him at any time with no need for justification. Indeed,

this fact does not justify an ethical “motive for action” and raises further ethical issues

related with decision maker’s moral principles. Furthermore, the fact that there was

no official discussion with MK about the raised performance issues, but only informal

recommendations and comments from the Direct Manager, did not highlight the

impact of this weakness for the continuity of the employment relation. Given the fact

that MK was notified that his contract was renewed for indefinite time, he considered

that he successfully meets expectations and any potential conflict between him and his

Manager was not related to objective criteria.

59

During this period there was an organizational restructuring that lead to the

separation of the Sales force from the Product Specialist department, this consequent

to the establishment of a Group Solutions Manager role with broader responsibilities

and different direct report. Under these circumstances, MK incapacity to respond to

the required performance standards led his Manager to dismiss him without previous

discussion or notification.

Given that the HR Professionals were capable of applying an HR tool, such as

TER, the Direct Manager should have notified the HR Department, officially,

regarding the actual situation. Furthermore, the HR Department would have been

informed that there was no official appraisal document, which implies that the

performance appraisal process was never conducted thoroughly. For this reason, a

discussion about MK’ s performance should have been reconsidered under the

potential of taking any corrective actions in cooperation with his Direct Manager. The

Manager is requested to respond in questions such as, “Please, briefly, analyze the

weaknesses of the employee compared to his current position, as well as any

competencies or qualities you have identified “, “Please, briefly, present the

employee’s poor performance indicators”, as well as, “ Did the employee attend any

training programs relevant to his tasks and specialties?”. Meanwhile the Human

Resource Professional is requested to respond in questions such as “Did the employee

perform satisfactorily during the probation period?”, “Was the employee adequately

notified for this lack to meet Organizational expectations? What was her/his

feedback?”, as well as, “Would you recommend proceeding with job redesign in

order to take advantage of alternative employee’s demonstrated skills and

competencies?”

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The Direct Manager and HR Professional have had to conduct a meeting with

MK, which ideally, should have been taken place during the discussion for the

renewal of his contract and his mid-term performance appraisal. Given that the

meeting takes place, at least during the decision making process for his dismissal, MK

should have been, officially, notified for the lack of performance in order to suggest

any corrective actions. The HR Professional’s contribution is critical in order to

coordinate a potential internal transfer process in order to cover a position that suits

MK’s skills.

In that time, there was a vacancy of an Account Manager position that fit

MK’s profile and background. Nevertheless, the decision for dismissing MK was just

announced to the HR Professional, without involving her or MK in the decision

making process, or even giving him the chance to take any corrective actions. This

fact deprived MK from the alternative of being internally transferred in a different

position within the same Organization, that may have been proven himself successful

performer.

On the contrary, he was dismissed without any further notification, which in

fact is compliant with the Greek labour legislation, thus far from the ethical approach

of a fair dismissal.

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7. Conclusion

The present study introduces the importance of applying ethical concepts in

fair dismissals conduct, while revealing labour legislation’s inadequacy to establish an

ethical frame for employment relations and protect individuals’ constitutional rights.

The relevant literature is a combination of various studies in relation with

employment relations trends and globally identified problematic areas. Due to the lack

of relevant literature in Greece, we attempted to combine both decision making and

process elements and develop a model that suits the standards of the local market.

The proposed model demands that the HR Professionals will undertake a more

active and strategic role, acting as Business Partners in order to identify weaknesses

and take the necessary actions to ensure ethical conduct during the dismissal decision

making and process. Nevertheless, there are several restructures that need to occur in

order for this model to be applicable in contemporary Organizations: the way that HR

Professionals perceive their role in Organizations, as well as, their commitment to act

as Ethics Agents and contribute both for Management and employees.

Furthermore, this study justifies that an officially communicated process for

employment termination should be part of a human recourse management system that

links HR Planning, Performance Management, Training and Development in order to

avoid redundancies and employees dismissals.

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