When is a company justified in laying off its employees? Does a Catholic institution, such as a hospital, have more of a responsibility to ensure the job security of its employees and to avoid layoffs?
There are no hard-and-fast numbers that would justify laying off employees or reducing a work force. Situations could range from a business owned and administered by one person to a huge company with hundreds of employees and many investors or stockholders.
But surely the threat of going bankrupt would justify reducing a work force to the point where a business can survive and be profitable. To continue running a business at a loss means eventual collapse and ruin for everyone in the enterprise with damage to creditors.
Good and just management looks at the welfare of investors, employees and customers in its decisionmaking. The interests of all need to be balanced.
A Catholic institution, above all, should be aware of how the social encyclicals lay out its obligations to the institution's employees as well as to those it serves. Part of its concern should be managing its affairs to avoid large and sudden layoffs that disrupt the lives and welfare of workers.
If forced to reduce the institution's staff, management might do so by attrition. It should also provide severance pay and assist the employee in finding a new job.