DISMISSAL POLICIES:

ETHICAL BOUNDARIES AND LEGAL FRAME

Supervisor: Dr. Olga Epitropaki

Student: Eleni Gaki

January 2011

Dissertation submitted in partial fulfillment of the degree of

Master of Science in S-HRM

Table of Contents

Abstract

1.

Introduction

2.

Business Ethics and Corporate Social Responsibilities Concepts 5

2.1

Ethics and Human Resource Management

2.2

Corporate Social Responsibility: Reason and Concepts

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

6.

47

Dismissal Policy HR Tool:

Termination of Employment Request Form (TER)

56

6.1 The application of TER and Ethical Process

57

7.

61

Conclusion

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 Organizations 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 societys 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

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 employees incapacity,
misconduct or employers 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.

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

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 organizations continued existence, by minimizing negative
impacts and maximizing positive impacts on the society and environment through
proactive stakeholder communications and engagement throughout the organizations
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 ones actions (Driscoll and Hoffman, 2000). It is about

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 organizations
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

organization. Under this moral view of the stakeholder, the primacy of the managers
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 stakeholders 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 Druckers approach, hereafter, further expands the Organizations 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 marketleading 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

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

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 makers
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)

Legal Provisions

Decision Makers
Moral Principles

HRM Policies:
Dismissal Process

Diagram 1: Individual Rights protection during Dismissals.

10

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

11

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

12

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.

13

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.

14

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

15

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 largesized 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.

16

Previous Legal Frame

Existing Legal Frame

(1387/1983)

(3863/2010 3899/2010)

Unjustified Dismissals in Private Sector

(not applicable in short term contracts, as well

Unjustified Dismissals in Private Sector

as in

(not applicable in short term contracts, as

The Public and Banking Sectors)

well as in the Public and Banking Sectors)

Written Notification

Written Notification

Adequate Warning period (1-24 months,

Significantly Reduced Adequate

depending on years of employment) affects

Warning period (1-6 months) affects the

the redundancy reimbursement

redundancy reimbursement

Doubled reimbursement, after the first

Doubled reimbursement, in case of no

year of employment, in case of no

adequate warning period, paid by the date of

adequate warning period, paid in bi-

the dismissal

monthly installments

Dismissals Limit per month

Increased Dismissals Limit per month

(4 employees per month for Organizations that

(6 employees per month for Organizations

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

that employ 20-150 employees and 5%,

and up to 30 employees for Organizations that

and up to 30 employees for Organizations

employee more than 200 employees)

that employee more than 150 employees)

Table 1:

Major deregulations of the dismissal process according to the Law

3863/2010.

17

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 companys) 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.

18

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 doesnt 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 managers (or decision makers)
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

19

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 selfcontradictory 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

20

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

1. Kants 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 someones ends only". According to this
interpretation, failure to respect persons is to treat them as means in
accordance with ones 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 persons considered judgments, to ignore the persons
concerns and needs, or to deny the person the liberty to act on those
judgments.

2. The Organization should have those affected by the Organizations 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

21

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.

Kants 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 persons motive
for action must be recognition of the duty to act.

22

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 Kants
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.

23

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

24

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 shortterm 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. Ones satisfactions and
ones costs cannot be considered to be more important in some way than someone
elses satisfactions and someone elses 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

25

with the Stakeholders 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

26

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.

27

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

28

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
problems resolution should justify the dismissal. For instance, in real business
world, it is observed that when an Organization needs to improve its profitability, adhoc 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 Organizations financial condition in
order to be justified, not even with the utilitarian sense. Furthermore, according to
deontology, this motive (i.e. to improve Organizations 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.

29

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 employers 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

30

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

31

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 Organizations 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

32

Organizations 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

33

`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

34

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 employees
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.

35

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

36

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.

37

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 Organizations 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

38

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.

39

Reasons for Ad-Hoc Dismissals

Elements to assure Ethical

Decision Making

Conduct of Employee

Performance of Employee

Code of Conduct (HR)

Competency Based R&S Process (HR)

Warnings / Counseling (M)

Probation Period (HR)

Behavioral PMP 360 Evaluation (HR)

Performance Appraisal Process/MBO (HR-M)

Rotation Program (HR)

Employees 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

40

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.

41

Process Of Dismissal

Fair Process Elements

Ad Hoc Dismissals

 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

42

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.

43

For this reason, we would like to underline that, in case of an employees first
sufficiently serious misconduct, it may be appropriate to move directly to a final
written warning. This might occur where the employees 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 Organizations 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 employees 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.

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Direct Managers 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 aforepresented 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

45

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.

46

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

Decision Making and Ethical Conduct

The psychological contract refers to an individuals 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

47

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

Decision Making Elements

Strategic HR Planning (HR CoM)

Redundancies Avoidance
Actions

Efficient Workforce Allocation (HR M)

Internal Transfers instead of recruiting employees (HR)

Objective Criteria : Compulsory Redundancies

Standard of Work Performance or Aptitude for Work

Redundancies Selection Criteria
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

48

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 companys 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

49

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

organizational objectives.

The aforementioned analysis is in accordance with Kants 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 persons 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.

50

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

Organizations 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

51

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 companys 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.

52

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 employees 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.

53

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.

54

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

Fair Process Elements

Ad Hoc Dismissals

 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 displaced
employees, in order to assure that their individual rights are not violated during this process.

Diagram 5: Fair Ad-hoc Redundancies Process elements

NDANCY HANDLING

55

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 managers 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 Managers 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. ereafter, we applied
the proposed Termination of Employment Request form in the real business world,

56

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

57

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 makers 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.

58

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
employees 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 employees demonstrated skills and
competencies?

59

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 Professionals contribution is critical in order to
coordinate a potential internal transfer process in order to cover a position that suits
MKs skills.

In that time, there was a vacancy of an Account Manager position that fit
MKs 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.

60

7. Conclusion

The present study introduces the importance of applying ethical concepts in

fair dismissals conduct, while revealing labour legislations 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.

61

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