Employment Practices – Legal and Ethical Dimensions

The Executive Committee of a listed company was in the midst of its annual review meeting. While presenting his analysis, the CFO informed the team about a sharp increase in the hiring of contract labour over the past couple of years. He noted that many of these contract hires were effectively performing regular, permanent roles, raising concerns about potential legal implications. The CEO turned to the HR and Legal Heads and asked if they foresaw any issues and could manage the fallout should problems arise. Both replied confidently that they did not foresee any significant issues and would handle any complications that may come up. The CFO then reminded them that the auditors had previously flagged this as a potential compliance risk. Dismissing the concern, the CEO said, “Based on HR and Legal’s assurance, convince the auditor. I do not want any mention of this subject in the report to the Board.” While not purporting to be a record of an actual Board Meeting, such a scenario does play out in the corporate world.
Over the years, the HR function has...