Ethical leadership has come to be an important leadership method in contemporary organisations as a consequence of its positive impact on employees' behaviour, organisational ethics and effectiveness of the workplace. Businesses need leaders who can support fairness, integrity, accountability, transparency and employee wellness in today's business landscape. At the same time, workers' involvement has become a major factor in the productivity, innovation, commitment, and sustainability of the organisation. Employees with high engagement are more committed, emotionally connected, motivated and actively involved in the organisation. This theoretical paper explores the correlation between ethical leadership and employee engagement through a literature review from the health care, hospitality, construction, education and corporate industries. The review suggests that the positive effect of ethical leadership on employee engagement is manifested through the development of ethical climates, trust-based relationships, psychological safety and supportive work environments. Ethical leaders demonstrate integrity, honesty, and ethical communication with employees, fostering their engagement and commitment to the organisation. This paper also highlights some of the key mediating factors, like workplace spirituality, organisational commitment, self-efficacy, ethical climate, and organisational trust. In addition, it discusses variables that need to be moderated, such as supportive supervision and organisational culture. Theories that support the study are Social Learning Theory, Social Exchange Theory and Self-Determination Theory. Conclusively, the study reveals that ethical leadership has a great impact on employee engagement and long term organizational effectiveness.
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