Is it right to fire an employee who insults his superior or colleagues, or both, on a social networking site like Facebook?

This should be a no-brainer. It is not only right – it is essential.

Apart from anything else, in some jurisdictions the insulted colleague or superior, unless he is the business owner, could end up suing the business.

On a more rational level, even the most liberal and easy-going management cultures need to preserve some degree of discipline and subordination. The alternative is chaos – as well as litigation.

So it is vital, even in a very informal hierarchy – perhaps most of all in a very informal hierarchy – that everyone in the workplace understands the concept of respect. It might sound bureaucratic, but, even in a small business, a formal Code of Conduct can be useful. Everyone knows where they stand and, if there is a dispute, it helps to be able to point to a clear declaration of everyone’s rights and responsibilities.

Adding belt to braces, all contracts of employment should refer to the Code of Conduct, and should also include a clause making it a condition of employment that no employee should say or do anything that is likely to bring the business into disrepute. It should be made clear that this applies outside working hours and even – if the laws of the particular jurisdiction permit – after the period of employment has ended.

This is not restricting free speech. No one is physically preventing anyone saying anything. It is simply confirming that, as we have said before, true freedom of choice means accepting the consequences of your choices. If someone bad mouths someone else, the consequence that the first someone should expect is that the second someone is not going to want to carry on giving him money.

Freedom of speech must be balanced against the basic economic freedom to give your money to whom you please.

The US federal government has problems with this concept. The Obama Administration has intervened on behalf of a Connecticut woman who was – quite rightly – fired for accusing her supervisor of mental illness in the most offensive fashion. This is the same Administration which fired General Stanley McChrystal and Colonel Lawrence Sellin – again, quite rightly – for criticising their superiors in far less insulting terms. The irony is obviously lost on them.