Question

In: Economics

what are the moral obligations of a company planning to engage in downsizing and layoffs? What...

what are the moral obligations of a company planning to engage in downsizing and layoffs?

What rights and obligations do the management have?

What rights and obligations do the workers have?

What must they tell their shareholders and other stakeholders?

Which of these are social obligations?

Which should be legal obligations?

Solutions

Expert Solution

Moral obligations of the company

  • Onsite employee support and counseling. Onsite professional counseling on the day of layoff announcements can help affected employees process their immediate reactions and feelings and set them up for longer-term outplacement support.
  • Outplacement counseling.14 Depending on the needs of the employees, this type of resource can emphasize rapid re-employment with effective self-marketing tools and techniques or a process of career evaluation, education, and training.15 In addition to oneon-one counseling, outplacement centers can also be a gathering place for socializing, networking, and support for groups of affected employees.16
  • Retraining. Companies can contribute to outplaced employees’ education, or in training to enhance their skills and help make them marketable for employment elsewhere. This can be accomplished through education fairs or tuition assistance.17
  • Paid insurance benefits. Some companies provide incentive programs such as continuing health and/or life insurance benefits for a specified period of time for employees who voluntarily resign.
  • Referrals, company-to-company loans of employees, and job fairs. Companies can form alliances with their sister companies or other area businesses to help displaced employees find employment and provide references.

Moral obligations of the management

  • Communicate more to minimize uncertainty.

Provide as much information and fair warning as possible. Some companies provide “pre-layoff” workshops designed to help employees understand the why, when, and how of being downsized. Regular, open, honest communication is critical to foster employee trust that is crucial during downsizing efforts.

  • Strive for process fairness.

Procedures are perceived as fair if they are made consistently, without self-interest, on the basis of accurate information, with opportunities to correct and the interests of all concerned parties represented and following moral and ethical standards.12 Not only is it the right thing to do; a significant business case can also be made for process fairness.

  • Treat employees with dignity.

Allow employees the opportunity to say goodbye. Resist the temptation to suspect or devalue employees who have been cut because of business necessity.

Rights and obligations of workers

Rights:

  • Right to receive final paycheck

In general, the employee's rights to receive a final paycheck depend on whether the employee quit or whether the employer fired the employee. These conditions are to be specified in contractual agreement between an employer and an employee.

Right to receive severance pay

A severance agreement is a contractual agreement between an employer and an employee. The agreement typically entails the following terms: the employer will provide the terminated employee with a severance package in exchange for the employee's promise not to sue the employer.

Right to health coverage

Terminated employees have the right to health insurance coverage after separation from their employer. The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986, grants terminated employees and their families the right to continued healthcare coverage for a limited period.

Unemployment Compensation

A terminated employee may be able to replace some lost income by receiving unemployment compensation. If qualified, the unemployed worker may receive compensation while searching for employment.

Obligations:

Honour restrictive covenants.

Some issues can be addressed at the start of employment, by negotiating restrictive covenants that impose confidentiality, non-competition and non-solicitation obligations on the employee.

Social obligations of company towards their employees

  • Management needs to ensure that individuals associated with their organization are actually enjoying what they are doing and also growing with time.
  • Provide healthy working conditions to your employees.
  • It is the responsibility of the management to look after the safety of its employees.
  • Till the time an employee is on official duty, it becomes the responsibility of the organization to assist him/her in case of a medical emergency or other serious concern.

Note: I haven't answered 2 questions as the context is not specified accurately.Hope you find other answers helpful.


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