Rav Eliezer Cohen
Answer: If the secretary is under contract for the entire year, the school definitely is not allowed to fire her in the middle of the year. While the secretary has the status of a po'el, and is allowed to leave in the middle of a contract (as we explained in previous shiurim), the employer does not have the right to terminate her without cause mid-contract. Hiring a cheaper replacement is not considered a justified cause to fire her, and the school would, therefore, still be obligated to pay her if they lay her off.
There is a discussion among the Poskim as to how much an employer must pay a worker who is laid off in the middle of a contract. The Gemara says that a worker who loses his job and now has to sit at home with nothing to do, is paid like a "po'el batul". This means that you calculate how much of a pay cut the employee would be willing to take to be able to sit idly, rather than do his work. That amount is deducted from his salary, and the employer must pay him the difference.
On a practical level, there are different formulas suggested by the Poskim to calculate this amount. The Taz rules that the worker should be paid half of his salary. Rav Mendel Shafran shlita, one of the biggest Choshen Mishpat experts in Eretz Yisroel, says that the Taz is only speaking about a manual laborer, whose job involves a lot of physical work. For such a worker, there is a big difference between doing his job and sitting idly at home; therefore, he would be willing to take a 50% pay cut to not have to do his labor.
A secretary, however, does not have to perform strenuous, physical labor. Of course, she has to do work, but there is not as much of a difference for her between working in an office and sitting at home as there would be for a blue-collar laborer. Rav Shafran rules that she would need to be paid almost her full salary if she is fired in the middle of the year. Therefore, the school may lose the financial gain they were hoping for by laying off the original employee, as they would be required to pay the secretary's salary regardless.
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