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The ethics of redundancy in times of crises... What would you do?

Tuesday 11 August, 2020
by Anonymous

A small boutique wealth management company has been hammered by a slowing economy in the current climate. Revenue is down, cash flow is dwindling and lines of credit are nearly exhausted. The company is bleeding money, despite some government support. The founder and CEO is trying to ride out the storm, but the situation has deteriorated enough that they must do something to stop the financial haemorrhaging.

The option that would reap the greatest savings for the struggling company is to lay off some of his longest-tenured employees (each of whom contributed to the company’s prosperity in better times) because they cost the most in salary and benefits. But given his company’s precarious finances, he would be in no position to offer these workers any meaningful severance beyond two weeks salary.

What would you do?

  • What ethical considerations would you give to your decision-making?

We encourage you to post your answers in the comments so we can create a healthy discussion, with the aim of learning from our peers, becoming aware of differing perspectives and challenging our own biases.

If you would like to submit an ethical dilemma to feature in an upcoming weekly challenge please email:

Photo by Joshua Davis on Unsplash

This article has been updated to reflect the impact of Covid-19 on financial services. It first appeared on The BFSO website on 7 June 2019 and featured a boutique insurance company as facing this the dilemma. 


There are 4 comments for The ethics of redundancy in times of crises... What would you do? .

What would you do? Your weekly ethical dilemma challenge

Friday 7 June, 2019
by Kirsty
Here is one perspective to consider. This need not be an all or nothing situation. Unless there are reasons that prevent disclosing the situation to employees (eg regulatory reasons), this could be an opportunity to discuss with his team and work through options together. I have worked in a business where this happened calmly and successfully. For example, they might determine that they can work differently or a while and ride out the situation together eg working fewer days each week on the absolute essentials, for a period of time. Not everybody will be able to afford or want that option but enough might. I consider that having no information or advance warning -- though they are likely to have some sense of the situation -- and no control where they might have been some self-determination is the situation in which employees feel most challenged and disappointed by an employer's choices.

Re: The ethics of redundancy in times of crises... What would you do?

Thursday 13 August, 2020
by Adrian
The choice essentially becomes a small amount of redundancy or no redundancy at all if the business ultimately fails with no assets/cash reserves to meet any redundancy. Options could include offering two weeks redundancy but to book the amount that would normally be expected as a loan that gets repaid pending the survival of the business prior to any dividends being paid out. That may be a compromise with morally trying to do the right thing and achieving a win win with an option for first to be rehired if the business picks up as well

Re: The ethics of redundancy in times of crises... What would you do?

Thursday 13 August, 2020
by Darren
Whilst the financial situation of the company is noted and their reasoning for wishing to make longest service employees redundant, has their HR policy in relation to severances been fully considered? Are they legally & ethically allowed to offer such a small severance as opposed to a package based on time-served?
Furthermore, should the redundancies be based on the individual's performance measures as opposed to purely cost saving measures?
As per Kristy's comment above, alternative ways of working could be considered. Based on the individual's performance & skill sets, do they have the competencies to transfer to other roles & maybe with a reduced income based on the new responsibilities?
How about training also? If the company is within their rights to only offer 2 weeks severance & there is no other option, can they include a meaningful training/accreditation package to increase ex-employees well-being & help them secure future employment? Do they have partners they can leverage to provide/sponsor such a service or offer at a low cost.
Finally, age is a factor that needs to be considered. The employee will already be disadvantaged in securing future employment due to COVID-19 impacts on economy alone & mental health of the employee needs to be considered but the fact that they are a long-serving employee indicates that they may be a more mature worker & even approaching retirement within next few years. Could they also be at risk of age discrimination whether conscious or unconscious?

Re: The ethics of redundancy in times of crises... What would you do?

Wednesday 19 August, 2020
by Anonymous
It's a tough decision - managing the balance sheet of a company during tough times with the consideration of having to let some of your most loyal and long serving employees go. Before this happens, the business should definitely consider the impact and the outcomes that they've created for the company and its customers, and if the decision is indeed made to let them go, then the HR team should definitely get in touch with other contacts at financial institutions to see if there are any vacant roles that these employees could potentially interview for.

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