The Ethics and Legalities of Employee Exit Strategies: A Comprehensive Analysis

The U.S. Supreme Court's Decision on Firing LGBTQ+ Employees

The U.S. Supreme Court is at the verge of deciding whether or not it would be legal to fire someone for being LGBTQ+ (lesbian, gay, bisexual, transgender, questioning or other sexuality) which could set a controversial precedent for US employers (Riotta, 2019). Although the EU legislation clearly states that it is illegal to fire someone based on their sexual orientation (European Commisson, 2019), the US did not include sexual orientation in its Equal Employment Rights (U.S. Department of Labor, 2019). It is to be argued whether the honourable way of firing someone goes beyond lawful restrictions and ethics. And if so, it begs the question if there is a right or wrong way to exit employees from an organisation in general?

Exiting employees from an organisation is often generalised as dismissal, while in fact dismissal can be divided into different categories each accompanied by its own set of regulations. Redundancy, classified as a fair dismissal according to the UK government (2019), is said to be viewed as the last resort in an organisation’s restructuring as it is seen as one of the most distressing experiences an employee can face (CIPD, 2019). Globalisation and increasing international competition cause redundancy to be unavoidable in cases such as bankruptcy or business relocation (Segalla, et al., 2001), and although these circumstances may inevitably lead to fair dismissals, it is the employee that suffers the consequences the hardest. As a reaction to these issues, the European Union has implemented a European Globalisation Adjustment

Fund to support people losing their jobs due to globalisation (European Commission, 2019), but only when a single company makes over five hundred employees redundant or when the laid off workers are from a particular sector in one or more neighbouring regions. In case of mergers and acquisitions the EU states that the company does not automatically have the right to lay off its employees, as all the rights and obligations of the employment contracts are transferred (European Union, 2019), still there are exceptions where the rules waive when the national law of the specific country in question requires otherwise. If the employee refuses the transfer of contract, the dismissal will not be seen as redundancy but as a resignation, in which case the employee has very limited rights to count on (Nidirect Goverment Services, 2019). Retaining employees in an organisation that is going through a merger or acquisition is great for the company’s retention rate and the assimilation of important knowledge, although it may have the opposing effect when the employees are not capable of adapting to a changed environment or an extended skillset.

Fair Dismissals and Redundancy Regulations

Depending on the required change in workforce, the employees may be dismissed based upon technical, economic or organisational grounds (European Union, 2019). This may lead to a higher crude turnover rate as involuntary leavers are included in the calculation. Aside from the beforementioned retention paradox, another critical element to keep in mind when going through a redundancy is the survivor syndrome that is likely to occur in the remaining employees. Not only does the survivor syndrome account for a decrease in work performance (de Jong, et al., 2016), it may even result in an exit strategy from the remaining employees  themselves (Haddon, 2017). Redundancy is an extremely complex and sensitive subject which needs to meet a lot of criteria in order to represent a fair dismissal. If not processed correctly it can soon be followed by claims for unfair selection based on reasons such as pregnancy, being a part-time or fixed-term employee, sexual orientation or UK Government, 2019). But is it ever considered fair or legal to fire someone for old age? Age discrimination is as sensitive as sexual orientation when it comes to hiring, firing or promoting an employee in the EU (European Commission, 2019). As established before, sexual orientation is still up for debate in the US, although age discrimination is protected by the Age Discrimination in Employment Act of 1967 (U.S. Department Of Labor, 2019).

As with any law, there are a few exceptions in which age can be a valid reason not to hire someone, but only when age is an essential part of the job description and the employer can prove that the age limit is required as known by the legal term “bona fide occupational qualification” or BFOQ (Workplace Fairness, 2019). Although, even when an age limit is given for a particular job, a potential employee can still file a claim when proven to be perfectly capable of executing the job. A decorated Navy Seal, for example, filed a claim for being denied to work as a firefighter in The New York City Fire Department (NYFD), for being just a few months beyond the age limit, even though he aced both his written exam and physical test (Edelman, 2019). Retirement, however, is dealt with differently in every country concerning the age, legislation or even gender. As the average retirement age in the EU member states is 65, The Netherlands and Denmark have its retirement age at 70- 72, while

Challenges in Retaining a Multi-Generational Workforce

Sweden and Norway circle around 61 or 62 (Finnish Centre for Pensions, 2019). The legislation for retirement defers as well; where retirement is set on a specific date in Belgium for each individual (Belgian Federal Pensions Service, 2019), the UK has abolished the forced retirement age of 65 (UK Government, 2019). Nonetheless, a State Pension age can be calculated based on gender and one’s date of birth, but the employee can choose to work as long as wanted (UK Government, 2019). The employer is, in some cases, entitled to force one’s retirement when based upon good reasons such as physical abilities or a law set age limit. Compulsory retirement is otherwise not allowed and can be challenged in an employment tribunal if not justified objectively (UK government, 2019).

With the current median age of 42, Europe is the oldest continent in the world (Thyssen, 2019) which has certain consequences for future turnover rates. As a huge older generation – Baby Boomers – is on the verge of retirement, the fear for a knowledge gap only grows with a minor younger generation that will not be able to fill all positions or do not have the needed high level of skills (Dohm, 2000). Where the US has Baby-Boomers that refuse to retire, possibly due to low savings percentage that will not support enough income for retirees (Crudele, 2018), the EU is trying to prevent the knowledge gap by making better use of the existing staff, increasing the workforce and extending working lives (European Commission, 2014). As the Baby-Boomers may cause a numerous change in turnover rate due to retirement, the Millennials generate fluctuating turnover rates by job-hopping (Alsop, 2008). But, why does the Millennial generation resign that easily? Resignation is said to be an example of constructive dismissal, where the employee feels forced to resign due to employer’s conduct (UK Government, 2019). In the face of the Millennial  generation, reasons for resigning often revolve around the work atmosphere, a lack of personal or skill development and thus the perception of having found a more fulfilling job (Accel & Qualtrics, 2017). Although the Baby-Boomer manager is often proven to misunderstand Generation Y (Meister, 2013), the main reasons for  Millennials resigning are not due to the employer’s attitude towards them. In fact, it is stated that Millennials born in the UK would have preferred to live in their parent’s time, as is believed that Gen Y and following generations will have a worse life than their parents. Brexit, for example, is seen as a poisoned gift the Baby-Boomers left the younger generations to deal with (Shaw, 2018).

Concerning the high turnover rate of Millennials, a lot of discontent felt by Generation Y could be dissolved when managers intend to look past the generational differences and focus on the intersection of the culture, structure, practice and individual differences of the organisation (Kowske, et al., 2010). New policies focussed on individual learning and development, combined with an inclusive management style and a promoting CSR are a few examples of creating a workplace retaining the Millennial Generation in one’s organisation (Aruna & Anitha, 2015). Nonetheless, resignation is a voluntary termination of employment by the employee and thus governs no specific laws or regulations to follow – aside from doing so in writing – (European Commission, 2017), meaning that an employee can resign at any time. To avoid a bad reputation or recommendation afterwards, the employee should keep in mind to do so politely, supported by a meeting in which the notice period is discussed with the employer (UK Government, 2019).

It can be concluded that employers can avoid wrongful dismissal merely by following the bare rules and legislations that the overall institutions, such as the EU, or the country concerned provide, although that does not necessarily mean that it is the right way. Including ethics, morals, recent discrimination issues or even generational differences, the right way to exit employees has a numerous of other – social – rules to adhere to, which could easily turn a right way of exiting people from an organisation into a wrong way if not taken into account.