The approach taken in this case is relatively common, with
supervisors who have employees they cannot fire trying to force the individual to resign by some form of harassment. Such tactics are ethically wrong. Individuals should be terminated for cause and not be forced to resign because of ill-treatment. The fact is that this is ill-treatment, and therefore it cannot be justified in ethical terms.
Rex Crane is an employee who has served his company for 26 years and who is still working up to company standards. He has gained a number of skills and abilities and uses them well for the company. The reason why the supervisor and other senior managers want him to leave seems to be largely because they consider him eccentric and do not like him, though they also admit they have no reason for terminating him. Meeting the standards of the company should be enough, yet instead of taking better advantage of Crane's work experience, these managers are trying to force him out. The dilemma can be defined as employee rights vs. management whims.
The fact that there is no employee problem solving process is itself a questionable fact, for any company interested in ethical treatment should have some mechanism for making such determinations. Such a system should be instituted and followed in order to assure that untoward actions by disgruntled managers will be controlled.
Sam is being placed in an untenable position, and in truth, J.B. is foisting his own ethical dilemma off onto his employee to solve. Sam is being asked to make the company more competitive buy whatever means necessary. J.B. knows that deciding to pay the gratuities opens the company to legal sanctions in the future, and by turning to Sam in this way, he is taking the onus off his own shoulders and placing it on Sam's so that whatever happens, Sam will be responsible. Sam is being asked to decide the issue over legal requirements vs. benefits to the company...