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I work for a relatively small company (about 15 or so employees). The owner has informed us the company will close for good at the end of the year. I suspect this was done in an attempt to try and offset the expenses of all the severance packages by tempting the employees to resign beforehand for a new job.

However all staff were told to continue as normal. Given that many of our products are not compatible with competing products and many projects can take a few months to complete, and if supply of our products (not available anywhere else) were to dry up, it would require the whole projects to be redone, is it ethical of staff to withhold the fact that the company will be closing down?

Note that many of our clients are privateers doing the projects out of their own pockets (which can easily cost $20-30k).

Personally, I would prefer informing clients upfront so they can complete their projects before we close, but the staff have been told not to say anything, in fact we have been told to deny any knowledge of such plans if asked.

closed as off-topic by Dukeling, scaaahu, Jenny D, gnat, mxyzplk Jul 12 at 12:55

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  • What industry are you in? Is your small company an engineering firm or a manufacturing facility or something else? – Thomas Owens Jul 11 at 17:22
  • We in building material manufacturing - of sorts – JustSaying Jul 11 at 17:23
  • Just to make sure I understand - architects or engineers would design buildings that call for your products or construction firms constructing engineering designs would purchase your products, and those engineers or construction firms are your clients? – Thomas Owens Jul 11 at 17:24
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    Have you asked your manager already about when/if to disclose this with clients? – DarkCygnus Jul 11 at 18:42
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    IANAL, but I suspect there may be legal implications if an employee shares confidential informaion with someone outside the company. – Salmononius2 Jul 11 at 19:57
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Your first responsibility is to your company not the customers.

Imagine if you told all the customers now, they would obviously start jumping ship. This would as you would expect drain money from the company. This could cause the company to close up shop faster thus putting you all out on the street before you had a chance to secure new jobs.

My advice is to toe the company line, and do as they say, work as if nothing is changing.

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    Your first responsibility is to your company not the customers. Please find and reference any professional code of ethics that backs this statement up. – Thomas Owens Jul 11 at 17:21
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    This is correct. The employee should not spill the beans, and I have seen many times where the closing of such a place is delayed by years. – Mister Positive Jul 11 at 17:42
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    @ThomasOwens, an employee should act in the interest of the employer. This is a key concept of agent-principal law across geographies. The duties of care and loyalty are relevant. Google provided: en.wikipedia.org/wiki/Law_of_agency – Jay Jul 11 at 18:05
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    The OP has no legal, moral, or ethical obligation to the customers. His employer might, but the OP certainly doesn't. As such, my opinion is that the OP should take no action to inform the customers. – joeqwerty Jul 11 at 18:37
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    The more I think about this, the more I don't like this answer. I'm a programmer. If my company tells me, "Implement a system that stores customer credit cards and passwords in plain-text," it's my responsibility to tell them no, and to refuse to do it. It's certainly not, "my first responsibility" to obey the company regardless of how it would affect customers. There's a bit of a difference between "waste the customer's money/time" and "put their credit card numbers at risk", but it's a good demo of why "company first" isn't a good hard-line policy. – Kevin Jul 11 at 21:01
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This isn't something we can answer for you, since it's really just about two competing concepts:

  • The logistical, bottom-line financial perspective. This would tell you to tell the customers nothing. Because doing so would cause the company problems, and likely cause employees problems as well.
  • Your guilt/responsibility about possibly costing the customers lots of money.

We could write paragraphs about the first; we could write paragraphs about the second. But in the end, it's going to come down to a decision on your part.

For what it's worth, I'd treat each case on its own. If someone's doing a small job that will be finished quickly? Go ahead and sell my own product. If someone's doing a large job that will require a lot of time or they may be affected a lot greater? Then I might recommend they shop around for some other solutions. I wouldn't outright tell them we were going out of business... but I'd hint that other solutions might be a better fit for their project.

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    I think this sounds like a practical solution - treat each case on it's own. – JustSaying Jul 11 at 18:05
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Don't inform the clients, you gain nothing by doing so.

Your company has asked you not to say anything so by saying something to the clients you risk your own job ( while you still have one ) at this company. This means you may lose out on salary, benefits, and possibly a severance ( if you stay until the end ) when the company closes down. This is not solely due to you disobeying your boss ( thus risking getting terminated early ) but also your actions can cause clients to leave and force the company to close earlier than planned.

Another thing you stand to lose is possible references. By directly disobeying what has been asked of you, you are less likely to receive a good reference when applying for any new companies. Most managers will gladly write a reference when a company is closing, but if you do anything to sabotage the plans for closing the company ( i.e. telling the clients when you were asked not to ), you risk losing out on receiving a reference since you could be deemed insubordinate and untrustworthy.

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However all staff were told to continue as normal.

I would suggest that, when in doubt, consult with your manager what to do. If you are not clear how to handle this information with clients, approach your manager and ask.

However, seems clear to me that they asked all of you to "continue as normal". That implies that you should make as if the closing will not happen, and thus, you should not tell anybody (clients included) that you will close down soon.

Again, if you are not sure, or if they weren't explicit on how do deal with this and clients, approach your manager and ask them how to handle this.

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From my own experience, this is your employer doing something unethical and dishonest. There are laws in the USA that protect "whistle blowers" from backlash, but you'll have to research that in your own location. Also, this only protects a person if they go to the authorities, rather than the public.

https://en.wikipedia.org/wiki/Whistleblower_protection_in_the_United_States

If you company really is closing and going to be leaving your customers "high and dry" without products they paid for and with no way to get a refund for the products and services paid for but not delivered, this is not legal in most places and highly unethical.

Since you mention this might be a ploy to get rid of people near retirement, there's plenty of doubt on the closure of the company, too. However, trying to push out people near retirement before paying for the retirement earned is also highly unethical and a shady business practice, in general.

I'd start looking for a new job, regardless, and try to have one lined up before you quit and/or are laid off due to closure.

Since there's doubt about the company closing, I'd keep quiet for now, or you're guaranteeing trouble and possibly the closure of the business. If it gets down to less than a month and the business is showing obvious signs of shutting down without telling customers, you might want to go to the authorities to let them know what's going on.

Years ago, I worked for a company that sold computer components to businesses, not only individual parts but also some bulk sales. At one point, headquarters told the manager that our store was staying open for 2 more weeks, then closing the doors and we weren't supposed to tell our customers. We were supposed to take orders and make sales as usual, which the HQ wouldn't actually honor since they couldn't get the parts anyway. My boss told me to keep quiet and that he would tell the customers the situation, which he did. He did that so I wouldn't get in trouble, but also so that the customers had correct expectations.

It's entirely up to you if you tell the customers, but I'd definitely research the protections as well as the consequences in your jurisdiction before you do anything. Fortunately, it sounds like you have time. Well, as long as no one else leaks the info. Good luck!

Edit:
I've removed sections that talk about tell the customers and either replaced those sections or added other wording to suggest going to the authorities instead. Of course, this all depends on the laws of the local and higher governments a person has to deal with. Always do your own research before acting on the law or against a business. Businesses can have rights and protections similar to people.

  • I was once told that US Federal "whistle blower" laws only protect an employee who reports illegal activity to the government. I'm not a lawyer, but she was. She was presenting to a bunch of programmers and I was in the crowd. She explicitly said that no whistle blower law protects you from disclosure to the public... and that appears dissimilar to what you are saying. – J. Chris Compton Jul 12 at 15:23
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    @J.ChrisCompton, doing research, it appears you are correct about reporting it to the authorities, rather than the public. I'll update my answer. – computercarguy Jul 12 at 16:03
  • It nowhere says they will run away with customer money. To my understanding customers are having bigger projects with some temporary vendor lock-in, like buying the same product in smaller quantities over a stretch of time or consumables (e.g. the same type of tiles to redo their abbatoir one room at a time, or a specific make of table saws that requires sawblades from the same vendor). In that case we don't know what the plan for the future is. Maybe they intend to send a mailing to their customers in October saying "last orders please" and get that processed by Christmas. – Alexander Jul 12 at 17:32
  • @Alexander, and that's why I said "if" at the start of that paragraph. We don't know what they plan on doing. It's also why I said to not do anything until the end of the year and only if the company hasn't already done something themselves. There's a lot of unknown, so I mentioned things that could happen, not just what little we think we know. – computercarguy Jul 12 at 17:48

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