Ethical Concerns in Workplace Practices (UPSC Ethics Paper 4)

Ethical Concerns in Workplace Practices: Lessons from the EY Case in Pune

Introduction

The tragic death of 26-year-old Anna Sebastian Perayil, an audit executive at Ernst & Young (EY) in Pune, has brought to light critical ethical questions related to corporate responsibility, employee well-being, and compliance with labor laws. This case offers significant insights for UPSC aspirants preparing for the Ethics paper (GS-IV), as it highlights the ethical dimensions of workplace practices and the responsibilities of organizations towards their employees.

The Issue: Ethical Lapses and Legal Non-compliance

The primary issue at the heart of this case is the failure of EY to comply with the Maharashtra Shops and Establishments Act, which regulates working hours and ensures the well-being of employees. According to Maharashtra’s additional labor commissioner, Shailendra Pol, EY’s Pune office applied for registration under the Act only in February 2024, despite operating since 2007 without the necessary permit. This late compliance application was rejected, as the company had not sought registration in the preceding 17 years, reflecting a serious lapse in legal and ethical responsibility.

Ethical Dimensions of the Case

1. Employee Welfare vs. Profit Maximization:
   The death of Anna Perayil due to what her mother described as “backbreaking” work conditions brings into question the ethical balance between an organization’s drive for profitability and the well-being of its employees. Ethical organizations prioritize the health, safety, and well-being of their workforce, ensuring that workload and stress levels are manageable. The case illustrates a potential disregard for this ethical obligation, with reports suggesting that Perayil faced excessive work demands, including long hours and weekend work.
2. Corporate Accountability and Transparency:
   EY’s failure to comply with the Shops and Establishments Act until 2024, despite having operated in Pune since 2007, raises questions about corporate accountability and transparency. Ethical governance requires adherence to laws and regulations, not merely as a legal obligation but as a reflection of respect for societal norms and employee rights. By neglecting to register for over 17 years, EY may have compromised on transparency and accountability, which are foundational principles of good governance.
3. Ethics of Compliance:
   The Shops and Establishments Act mandates a maximum of nine working hours per day and 48 hours per week, ensuring that workers are not exploited and have sufficient time for rest and recovery. The case of EY not adhering to this regulation indicates an ethical lapse in compliance, especially when the lack of such adherence might contribute to adverse outcomes like Perayil’s death. An ethical approach to compliance requires not only fulfilling legal requirements but also aligning organizational practices with the spirit of the law to protect employee welfare.

Ethical Responsibilities of Organizations

1. Ensuring Employee Well-being:
   Organizations have a duty of care towards their employees, which involves creating a work environment that is safe, healthy, and conducive to their physical and mental well-being. This duty extends beyond adhering to minimum legal standards and includes proactive measures to ensure that work conditions do not harm employees. Ethical organizations foster a culture where employee welfare is paramount, and employees feel supported in managing their workload and stress.
2. Fostering an Ethical Work Culture:
   A work culture that respects work-life balance and discourages overwork is essential for the long-term sustainability of organizations. Ethical work cultures involve clear communication of expectations, support for mental health, and mechanisms for employees to report undue pressures. In Anna Perayil’s case, the reported lack of opportunity to “catch her breath” suggests a failure to foster such a supportive environment.
3. Accountability in Addressing Employee Concerns:
   Following Perayil’s death, EY India emphasized its commitment to employee well-being and promised to take the matter seriously. However, true accountability involves not just responsive actions but proactive engagement with employees to understand their challenges and improve working conditions. Ethical accountability means that organizations take responsibility for their actions and the consequences that arise from them, ensuring that such incidents do not recur.

Consequences of Ethical Failures

The lack of compliance with labor laws and ethical obligations can have serious consequences for organizations, including legal penalties, reputational damage, and the loss of trust from both employees and clients. In this case, the Maharashtra labor department has initiated an investigation into EY’s practices, with potential penalties including imprisonment or fines. Beyond legal implications, the loss of a young employee’s life has sparked public scrutiny and calls for improved work conditions, reflecting the broader societal expectation for ethical conduct by corporations.

Lessons for UPSC Aspirants: Ethical Reflections for Paper 4

1. Importance of Legal and Ethical Compliance:
   Compliance with laws like the Shops and Establishments Act is not just a legal requirement but also an ethical duty. It reflects respect for the rule of law and the protection of vulnerable sections, such as employees in demanding work environments. For aspirants, this case is a reminder of the importance of aligning legal frameworks with ethical principles in public administration.
2. Balancing Efficiency with Human Dignity:
   The case highlights the need to balance organizational efficiency with respect for human dignity. Aspirants can reflect on how public officials can ensure that businesses prioritize human values over productivity metrics and uphold the dignity of individuals in their care.
3. Ethical Leadership and Corporate Responsibility:
   The role of leadership in shaping ethical organizational cultures is critical. EY’s response to this incident, including how it addresses the findings of the investigation, will serve as a case study in ethical leadership and corporate responsibility. Aspirants should consider how leaders can demonstrate ethical behavior and guide organizations through challenges while maintaining integrity.

Conclusion

The tragic incident involving Anna Sebastian Perayil and the subsequent scrutiny of EY’s workplace practices offer important lessons on the ethical responsibilities of organizations and the role of regulatory compliance in protecting employee well-being. For UPSC aspirants, the case serves as a practical example of the complex interplay between law, ethics, and organizational conduct, emphasizing the importance of an ethical approach in public administration and corporate governance. Through these reflections, aspirants can better appreciate the principles that guide ethical decision-making and the impact of such decisions on individuals and society.