Stealth firing or ethical dismissal? Why employers terminate staff for minor offences

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Mark Zuckerberg, chief executive officer of Meta Platforms Inc., which sacked about two dozen staff for allegedly abusing meal credit vouchers. Photo / Bloomberg via Getty Images
Amazon chief executive Andy Jassy recently told employees a new plan requiring them to be in the office five days a week did not amount to a “backdoor lay-off”.

Yet his reported comments at a company-wide meeting last week did not rebut a previous suggestion from a senior manager
that staff who fail to comply could look for work elsewhere.

As companies try to rein-in costs and restrict workplace initiatives that do not help profits, workers are wary of falling victim to a fresh horror: the stealth sacking.
Alongside a string of recent publicly announced mass lay-offs — by companies including Nissan, Boeing, and Citigroup — there have been a series of employers quietly justifying smaller scale dismissals because of seemingly minor violations of company policy.
Here the focus is not on the size and scope of redundancy programmes, how humanely managers handled them or whether support or severance pay was offered to affected staff, but on the specific rationale behind the decisions.
Facebook owner Meta, for example, sacked about two dozen staff for abusing meal credit vouchers, while EY terminated the employment of a group of workers for watching multiple training videos at once, the Financial Times has reported.
Infractions that workers have probably interpreted as minor misdemeanours in the past can now be sackable offences, and may prompt questions about whether cost savings are being disguised.
“As with most stories, there are two sides,” says Leo Martin, managing director of GoodCorporation, a business ethics consultancy that helps organisations design, build and improve their ethics and compliance programmes.
“From the employee perspective they may have been given unrealistic deadlines, excessive work pressures or have received unclear guidance as to what is expected, while the employer will feel that abusing a perk or taking short-cuts undermines their systems, [and that] cheating in an exam or lying about training … is a fundamental breach of trust.”
Part of the motivation to take a tough line on employees could be to make an example of anyone deemed to be a rule-breaker.
This level of corporate discipline has been more common among heavily regulated industries, such as banking and financial services, that have huge compliance functions and the risk of hefty penalties for any conduct breaches.
Amanda Rajkumar, who has held senior HR leadership roles at JPMorgan Chase and BNP Paribas, says: “Banks and financial services have always come down hard … given the robust regulatory environment and strong requirement to demonstrate exemplary, ethical behaviour related to the fiduciary nature of the industry.”
Another incentive for a tough stance is that small infractions, such as taking advantage of company perks or bending minor rules, can foreshadow more serious ethical lapses.
This has fuelled a “zero-tolerance” approach to policy enforcement in some sectors, as companies seek to preserve what they see as a culture of integrity. One example from the financial crisis was when Fidelity Investments fired employees for being part of a Fantasy Football league that went against the company’s gambling rule.
Early this year, several employees at United States retailer Target were sacked after they used their status as staff to buy highly coveted Stanley cups ahead of customers.
“The spotlight should be on the employees’ reason or motivation for breaking the rules,” adds Rajkumar. “A deliberate misuse of company resources usually indicates low engagement or a specific gripe against the firm.”
A recent trend of staff turning to online platforms to vent their frustrations about perceived mistreatment by employers or indiscriminate lay-offs has also pushed some companies to recalibrate their approach.
Websites such as LinkedIn and anonymous review site, Glassdoor, give workers an outlet for grievances about their bosses, which can then spread quickly and damage the reputation of employers.
In one example that went viral this year, Brittany Pietsch, an employee at internet company Cloudflare, recorded her nine-minute virtual meeting with HR representatives in which she was fired, and posted it to TikTok, spawning a new “Quit-Tok” trend. In the video, Pietsch confronted her seniors about the reasons for her termination, but they had “no specific” answers or “clarity”.
Aware employee complaints about terminations are no longer confined to private HR files, some companies are aiming to reduce backlash and curb reputational risk by emphasising policy-driven grounds for firing.
Recruiters, HR heads and workplace experts say whether an employer has made a clear case for dismissal is becoming as important as the manner in which a termination is conducted.
“Companies have had to be more mindful when they are firing staff because people are more vocal. We are in an era where snap decisions can have big blowbacks,” says Habiba Khatoon, a director at headhunter Robert Walters.
She says in her experience, managers are so wary of dismissing workers out of turn they are delaying action until a record has been built of repeated performance issues or behaviour that violates company policy.
Khatoon says more companies are talking about so-called “ethical firing”. This refers to a transparent, rule-based approach to dismissals, where managers can point to concrete breaches in policy rather than subjective issues, such as workers being a “poor fit”.
Targeting terminations in this way has some advantages for employers. Basing decisions on documented infractions can help reduce staff numbers — and cut costs — without the optics of a struggling business that come with mass lay-offs.
And unlike big rounds of job cuts, which often require severance packages, firings for conduct issues are typically exempt from such obligations.
Lucas Shaw, an expert in hiring and retention strategies, says he has been part of a conversation in which senior staff at a company — not one of his clients — instructed their IT team to look for misconduct on an individual’s record to avoid paying a costly redundancy settlement. “It’s incredibly underhand.”
Employment experts say such practices underscore the need for staff to closely read and understand company policies and codes of conduct, which are at times being followed more rigidly than in the past.
The advice for employers is to provide stronger and simpler guidelines about what is acceptable and what is not. Rules and disciplinary processes must be unambiguous and fairly applied, no matter how senior an employee is.
“Companies need to ensure they carry out fair and thorough investigations regarding any allegation of misconduct,” says Martin.
“Not only does this ensure a proper process is followed, it can also protect an organisation from accusations that what they are doing may have an ulterior motive.”
In an era when workers prioritise transparency, selective enforcement of codes of conduct can erode trust as employees might see it as an excuse to target some staff.
This, in the long run, may “be more damaging to the company than the actual employee misconduct”, warns Martin.
Written by: Anjli Raval
© Financial Times
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