Employers should provide retrenchment benefit based on their financial position to their retrenched workers while ensuring that their workers are treated with “empathy and dignity” if retrenchment is “inevitable” even after tapping the Government support measures, said the Ministry of Manpower (MOM) on Wednesday (20 May).
According to its advisory to guide employers and employees on retrenchment benefit payable, the MOM stated that retrenchment of workers should always be a “last resort” for employers to manage manpower costs.
However, if there is a case of retrenchment that is “inevitable”, the MOM noted that employers are reminded to treat their employees with “empathy and dignity”, adding that the retrenchment exercise is to be conducted in adherence to the Tripartite Advisory.
It stated that employers who are in sound financial position – who have returned or donated Jobs Support Scheme (JSS) payments – should continue to pay benefits to the affected staff according to their existing employments contracts, collective agreements, memoranda of understanding, or the prevailing norms for retrenchment benefit.
Based on the prevailing norms stated in the Tripartite Advisory released on March, the payment rate is between two weeks and one-month salary per year of service.
The guideline in the Tripartite Advisory also included fair selection of employees for retrenchment, early consultation with unions, early communication to affected employees, and employment facilitation for affected employees.
Meanwhile, employers whose businesses prospects and operations are “adversely affected” are recommended to work with the union or their employees to “renegotiate for a fair retrenchment benefit” related to the employees’ year of employment in the companies.
To keep the business afloat and to preserve some jobs, the MOM stated that retrenchments may be necessary for employers who still encounter “severe financial difficulties” and are on the “brink of ceasing business”, though the Government support measures are available.
Hence, the Ministry suggested that the unionised employers should negotiate with their unions for a mutually acceptable retrenchment benefit package.
However, for those non-unionised employers, they should provide a lump-sum retrenchment benefit to support their retrenched workers.
“Instead of linking retrenchment benefit to employees’ years of service, a lump sum of between one and three months of salary could be provided, taking into consideration the JSS pay-outs that employers have received and their financial position,” it added.
The MOM also urged the employers to be “more generous” to the lower wage workers, such as those who are eligible for the Workfare Income Supplement, by providing them with more weeks of retrenchment benefit pay-out per year of service or additional training grants.
“In addition, employers should consider and assess all relevant factors carefully, including the impact of retrenchment on the livelihoods of the affected employees,” said the Ministry.
In terms of support giving to the affected workers, the MOM highlighted that employers should support their retrenched workers in seeking new jobs.
The Ministry noted that job facilitation can be carried out either through the employers’ business networks or by referring the workers to Workforce Singapore (WSG) or Employment and Employability Institute.
It also mentioned that eligible retrenched Singaporean and permanent resident employees can apply for the COVID-19 Support Grant and others training support grants.
For employers who plan on conducting a restructuring or retrenchment exercise, the MOM recommended that they join NTUC’s Job Security Council (JSC), which is a council that offers outplacement services to match displaced workers to other employers within its network.
“An employer must also notify MOM of the retrenchment exercise, if the employer has at least 10 employees and retrenches 5 or more employees within any 6-month period,” the Ministry said in its advisory.
Netizens find the advisory is just another “guidelines for reference”, suggesting to make it compulsory for all employers
Penning their thoughts on the Facebook page of MOM and The Straits Times, many netizens pointed out that this advisory is only a “recommendation from MOM” whereby the employers will only treat it as “guidelines for reference”.
They asserted that the MOM should implement a full-on mandatory enforcement, otherwise the retrenchment benefit will not be taken seriously as it is still subjected to the company.
Some netizens suggested that the Ministry make the retrenchment benefit compulsory for all companies by implementing a law to protect the workers.
“Suggest is not law…An employer can use company consolidation as a word instead of retrenchment and they get away with it. No doubt the lower salaried staff will bear the unfair practice,” one netizen wrote.
On the other hand, several netizens commented that the MOM has made it more difficult for the employers. Feeling the irony of the situation, they claimed that employers already need to retrench workers due to financial constraints, yet MOM still issue the advisory to ask the employers to pay the retrenchment benefits.