The Challenge of Wealth

By Dr. Meir Tamari

RESPONSA-MATTOT

Severance Pay and Pension.

All of the questions regarding morality in ethics in business and economics involve limitations on efficiency and profitability flowing from the non-economic considerations of justice, mercy, and social responsibility. It is obvious that the knowledge that a certain type of advertising is immoral means that the advertiser may lose market share or profits. Nevertheless, the immorality should be sufficient to make that advertising forbidden, regardless of these losses. Obligating the employer to bear some of the costs of health and sickness of the employees will similarly mean adding costs to the firm and so diminishing its profits, nevertheless, our value structure as shown in the previous responsa demands that. The insistence that the community or the State have an obligation of social responsibility does not free the Jewish individual from his or her own social responsibilities, even at the cost of economic success and profitability. When Aharon Feuerstein of Malden Mills paid his employees their salaries despite the idleness enforced by the fire that destroyed his factory, and despite any contractual obligation to do so, he claimed that this was the way he had been taught that Jews did business. It should be remembered that ethics comes into the picture when the law stops and that all ethical decisions cost money. If there were no costs involved everybody would be moral and ethical all the time.

In the absence of contractual obligations to the contrary, an employer is not obligated to retain employees when there is no economic justification for retaining them. Just as they did not obligate themselves to working for the same employer, the employer is not obligated to provide them with lifelong employment. However, the human and moral problem is that long-term employees may then find themselves impoverished at the end of their tenure.

The following decision of the Bet Din regarding the principal of the school in Haifa is based on Jewish practice and law covering many hundreds of years. "The school is not part of the state school system, but are the a private institution financed primarily by donations and tuition. It's principal has been dismissed after many years of service and he claims severance pay.

"We uphold his claim on the basis of the biblical injunction to grant a terminal payment to the Hebrew bondsman (indentured servant- eved ivri) on the conclusion of his services. "You shall surely grant him from your flocks, your granary jury and your wine press, of that which the Lord your G-d has blessed to you with" (Deuteronomy, 15:14).

The Sefer HaChinuch [which explained the educational, moral and ethical implications of the laws of the Bible some 6 centuries ago] comments on this verse as follows: "Even though the laws of the Hebrew Bondsman apply only to the Land of Israel when the Yovel [Jubilee year] applies-that is, when the Land of Israel is divided and amongst the 12 tribes-nevertheless, even in our own day the wise man will observe this. He who has employed a fellow Jew for a long period or even for a short term, will upon termination of the work, grant him some of the wealth which the Lord has blessed him with".

Therefore, we have to reiterate that the Chinuch has obligated every employer to make such a grant on the basis of ethical and moral principles, so that the employees should not go way empty handed. Long term employees, just as the Hebrew bondsman, may otherwise find themselves impoverished at the end of their tenure" (Piskei Batei Din Harabanim, Haifa, 1963).

"Justice would demand that an employee should not be simply discarded as used up articles or a useless piece of equipment" (Rabbi B. Rabinowitz, Ziknei Hadayanim, Torah Ve Hamedinah, vols.9-10).

It seems that the codifiers regarded severance pay to the Hebrew bondsman -and therefore, to the modern worker- primarily as an act of loving kindness [chesed] and righteousness [tzedakah], rather than an obligation of the wage mechanism but nevertheless that obligate the employer. So Maimonides placed the obligation of the severance grant in his chapter dealing with charity. This would make it something beyond the letter of the law, although it is good Jewish law that one is obligated to do charity.

There are authorities that maintained that is a function of the Jewish courts to enforce such righteous acts on the part of the employer. So we find Rabbi Mordechai been Hillel[13th century Germany] writing that it is the function of the bet din in every community in Jewry to force the rich to do all those acts that are worthy and just even if these are not their legal obligations (Bava Metziah, 24b).

The basis for the responsa and the communal enactments in this area is found in the biblical injunction, "and you shall do that which is righteous and good" (Deuteronomy, 5: 18); it is to an obligation, a positive mitzvah to enact a kindness rather than being a contractual obligation that flows from the employer-employee relationship.

Copyright © 2002 by Rabbi Meir Tamari and Project Genesis, Inc.

Dr. Tamari is a renowned economist, Jewish scholar, and founder of the Center For Business Ethics (www.besr.org) in Jerusalem.