Mr Patrick Tay

The National Trades Union Congress (NTUC) expressed its concern over ‘disguised retrenchments’, a trend to  disguise the intent of job termination by the company to circumvent existing labour laws.

Mr Patrick Tay, NTUC assistant secretary-general, who is also a Member of Parliament for West Coast GRC, said last week that he was unhappy about such disguised layoffs because firms get away with not having to pay workers retrenchment benefits. It also allows them to avoid bad press or business repercussions if the word gets out.

He said that there was a need to pay attention to cases of retrenchment disguised as voluntary resignations and ‘golden handshakes’.

He had urged the Government to pay more attention to the issue to get a better information on layoff numbers.

Disguised layoffs increase

At the present, firms do not have to inform the government of any upcoming retrenchment, although they are encouraged to do so.

Retrenchment benefits are not obligatory under the law, and the quantum depends on the agreements between employers and employees. It is to be negotiated between the two parties if there was no clause on it.

According to Mr Tay, the labour movement’s U PME center – a one stop advisory center for Professionals, Managers and Executives (PMEs) – is seeing an increasing number of one particular type of disguised retrenchment.

In the past year, the center handled between 15 and 20 such cases, all in non-unionised firms, while the year before it was fewer than 10 cases.

“This is a trend that corresponds with the increasing number of layoffs,” Mr Tay said.

The Ministry of Manpower’s (MOM) latest labour market report showed that layoffs for the first half of 2016 bounced-up to 9,510, the highest since 2009.

Modus of disguise

  • Retrenchment: it involves workers whose contracts are terminated at one month’s notice — generally permissible under stipulations in employment contracts — by firms terminating employee. And these workers did not get retrenchment benefits.
  • Workers are asked to resign voluntarily when firms wade into troubled times. The firms claim that terminating them ‘will not look good on you’.
  • And where contracts are terminated with poor performance cited as a reason, a curious sign of a disguised retrenchment is when the poor performance rating comes abruptly following a consistently good ratings.

Unionised vs non-unionised

Mr Tay said, in planning retrenchment, unionised firms have to consult their unions as conditioned in the collective agreement between firms and unions. The norm is to do this a month before employees are notified of a retrenchment exercise.

Also individuals who are union members could seek help through the tripartite mediation framework.

But workers at non-unionised firms are more vulnerable. Option except civil action is limited.

Workers could turn to the unfair-dismissal provisions in the Employment Act, but this covers only those earning up to S$4,500 a month.

The new Employment Claims Tribunals, which will, from April, hear salary-related disputes for all workers, regardless of income, may close this gap, but even this means is useless, if employment contracts are silent on retrenchment benefits, said Mr Tay.

Worker must ensure

Workers must therefore ensure that such benefits are stipulated in their contracts before signing it, Mr Tay said.

The Tripartite Guidelines on Managing Excess Manpower and Responsible Retrenchment offer guidance on responsible retrenchment practices, such as retrenchment benefits.

For instance, employees who have worked in a firm for two years or longer should be eligible for retrenchment benefits, while those with less than two years’ service could be granted an ex-Gratia payment.

Depending on the firm’s financial position and industry norms, the general practice is to pay benefits of between two weeks’ and one month’s wage for every year worked.

Mr Tay also said that notifying the ministry of retrenchment exercises should be made mandatory, so help can be offered to workers.

The Straits Times reported on 17 October, the Government will bring forward a planned retrenchment survey to this year, in view of the expected economic slump.


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