This article is written by Srijita Adak, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho.

Introduction

Ethics refers to a study of the ethical and moral principles as well as problems that might arise while conducting business. It is a study where issues of right and wrong are discussed. This study is relevant to the habits of individuals and the entire organization. Any business company comprises certain ethical principles like integrity, loyalty, honesty, respect and concern, fairness, and leadership. Ethics is important to every company as it plays a critical role in shaping the individual’s behaviour within a company. But one of the key things to bear in mind is that ethical issues are everywhere be it in shopping or election or a company. An ethical issue usually involves a conflict between values or principles that guide our perceptions of what is right and wrong. Ethical issues are continually evolving and companies need to give guidance to their staff about those particular issues. Though there are laws to avoid those issues, ethics are neglected very often. So, it is the sole action of a company to identify those ethical issues and rectify them to progress successfully. 

Ethical issues and ways to curb them

• Harassment and discrimination

Harassment is unlawful verbal or physical conduct that is based on one of the protected EEO basis that it alters the condition of the victim’s employment. This unwelcome harassment can change the conditions of employment by being so objectively offensive and intimidating, hostile, abusive that it effectively changes the terms and conditions of the workplace and by culminating in an employment action such as termination, demotion. Examples of workplace harassment can be a man touching a woman inappropriately, anti-Islamic cartoons sent to co-workers by email, racial slurs painted on a wall or victim’s car and derogatory comments made about an employee’s physical disability. Such unwelcome conduct that you did not initiate and find undesirable or offensive can be sexual, verbal, cyber, physical or retaliatory. On the other hand, discrimination is a negative action or attitude towards a group or a person at work based on sex, gender, race, religion, color, age (40 or older), national origin, genetic information, pregnancy, disability.

Any employee who will discriminate or harass another colleague should face serious consequences. To prevent these unethical issues every HR manager should start with taking a closer look at the existing policies in the workplace and social practices. There are laws enforced by the U.S. Equal Employment Opportunity Commission (EEOC) and laws like The Equality Act of 2010, Title VII of the Civil Rights Act of 1964, The Pregnancy Discrimination Act, The Equal Pay Act of 1963 (EPA), The Age Discrimination in Employment Act of 1967 (ADEA) which provide protection from certain types of discrimination, discrimination or victimisation. Though there are laws HR managers should adopt practices of encouraging and respecting each other and organizing events between the employees etc.

• Health and safety

Everyone is entitled to work in an environment where risks to their health and safety are properly controlled because health and safety are related to productivity. If you are healthier at work, you are more productive at work. Workplace health and safety refers to the actions taken by the employer to prevent harm to people at work. Though we all know about the importance of health and safety, precautions are usually ignored. Employers must take precautions to keep workers safe including keeping them informed, creating policies and procedures and ensuring workers use the right protective equipment. 

The Occupational Safety and Health Administration is the federal agency responsible for protecting the health and safety of workers. OSHA makes sure that employers follow occupational safety and health regulations and keep the workplace safe. The risks to health and safety in the workplace can be avoided by simple changes in the workplace. Some measures to eliminate hazards are substitution, isolation, administrative controls, personal protective equipment, assessment, plan and train. The employers should be integrating their health safety and well-being programmes and they should first be controlling hazards that contribute to work-related injuries in the first place. They should have return-to-work programmes to make sure that workers are successfully and safely returning to work. They should be considering incorporating workforce health promotion into their safety programming through healthy work designing. If this area is in focus then they can have a more productive workforce and they can see that their investment will be absorbed back.

• Whistleblowing

When a former or existing employee voices their concern against any wrongdoing happening in the workplace within an organisation is known as “whistleblowing” and the employee who shares the concern is known as “Whistleblower”. Whistleblowing can be against any kind of harassment or discrimination, sharing of confidential information, any breach of privacy, any kind of fraud or fraudulent misrepresentation of financial data, any kind of illegal activity, corruption, invalid promotion, illegal sales activity, conflict of interest, trading within the company, illegal competitive behaviour or improper use of company assets etc.

Whistleblowing is about encouraging disclosures that are made in the public interest and about protecting the people who blow the whistle in good faith but in order for someone to be protected under the legislation, the Public Interest Disclosure Act, the disclosure must meet certain conditions and criteria.

A worker is eligible for protection if their disclosure is in the public interest and they honestly think that what they are reporting is true and they make their disclosure to the right person. But if someone suffers detriment as a result of whistleblowing for example by being harassed, passed over for promotion or even dismissed, they can bring a claim for compensation through an employment or industrial tribunal. If the tribunal decides in their favour, it can order paid compensation or in the case of a dismissal, that the person gets their job back. So, if anyone faces unfair treatment for whistleblowing, he must keep a record of when and how he was unfairly treated in case he needs it as evidence. If appropriate he should contact the HR department and also get advice from an external employment lawyer.

• Cash and incentive plans

Cash and incentives places include issues like employees’ salaries, annual bonus or incentive after a specific job is done, executive perquisites and long-term incentive plans.

Basic Main Salary

Human Resource managers are liable to justify a higher level of main salary or high level of percentage increment than the other competitor to retain some employees. In several situations it is observed that where the increase is very larger than normal, they have to elevate some positions to upper grades. These situations are particularly true in the case of top-level management executives and managers. With the fear of losing some high performance and extra-ordinary personnel, the HR managers are forced to give very high incentives to them than what the individuals really deserve.

Executive Perquisites

In the name of executive perk, sometimes excess demands are often committed, the ethical burden of which falls on the HR. Sometimes the expenses of these extraordinary perks are out of proportion to the value-added. For example, the CEO or CFO of a loss-making company buys a Lamborghini for his personal use or wants a full-fledged GYM built at his personal residence.

Long term incentive Plans

Long term incentive plans are to be drawn by the HR officials in consultation with the CEO and an external consultant. Ethical issues arise when the HR manager is put under pressure to favour top interests discarding the interests of the other common employees and the investors.

So, the discrimination based on high salary or incentives, favouritism is very common in the organisation which is very unethical. For these practices, well-deserved employees are neglected and as a result of this the business is getting down day by day. Strict action needs to be adopted against this. All employees should be treated equally because loyal employees will be loyal and if an employee has a bad motive, in spite of giving more incentives or facilities they will be disloyal to the organisation.

• Restructuring and layoffs

Restructuring of the organisations is done very often which results in layoffs and retrenchment of employees. This is not an unethical practice, if that is conducted in an atmosphere of fairness and equity and with keeping in mind the interests of the fellow affected employees. If the restructuring company needs to close the plant or an office to complete or fulfill the goal or achieve restructuring, how that news is to be conveyed and the time frame for completing the layoffs is very important from the ethical perspective. In many cases, it was observed that they didn’t get their last pay or even worked without pay for a long time. 

To resolve this issue company HR should focus more on the hiring process of the company. Any extra hiring or job offers should be avoided at the very early stage otherwise, judging them by their performance during the economic crisis period will be very hard for the HR. As per human psychology, it’s very obvious that the employees will not perform efficiently when they are in the fire of losing their jobs. If any random decision is made during that period the company may suffer by losing some jewel employees. Giving payment at the early of a calendar month is considered as a good practice. If the company suffering from finance related issues and layoffs is the only way to resolve the problem then only that should take and must give their pending salary and if any other benefits can give that should also avail.

Conclusion

Ethics are important to each and every company for many reasons such as corresponds to basic human needs, credibility in the public, credibility with the employees, better decision-making, profitability and protection of society. The presence of ethics in the workplace creates a positive culture for managers and employees as well as a successful business. Businesses with strong ethics add value to the organisation and support an environment where employees feel safe and valued. So, many companies are using several techniques that are designed to encourage ethical behaviours. Ethics provide the ways in which ethical violations may be dealt with by managers, regulators and others interested in improving ethical issues. Business leaders of today are well aware of the ethical issues and hence they want to improve the ethical standards of the business. This can be accepted through the personal code of ethics, ethical code of the company, ethical climate of the company, legislation, social pressure etc. By offering ethical training, a protective mechanism, ethical climate ethical issues can be managed more efficiently. Thus, by following the ethics the loss of money, as well as business reputation, can be regained for the unethical practices before it becomes a case of remediation.

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