Singapore updates its retrenchment advisories to support local workers

Written by Thomas Choo and Heather Lim

As a result of COVID-19, businesses in Singapore have implemented cost-saving measures such as reduction of employees’ salaries and retrenchment. In March, the Ministry of Manpower (“MOM“), the National Trades Union Congress (“NTUC“) and the Singapore National Employers Federation (“SNEF“) (together, the “Tripartite Partners“) had jointly updated the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (“Advisory“).

The Tripartite Partners have yet again updated the Advisory on 17 October 2020 (“Updated Advisory“) to emphasise key desired outcomes in any retrenchment exercise, in light of retrenchments being inevitable for some employers despite available government grants and support.

A summary of the updates is as follows:

  1. Maintaining a Singaporean core

The Updated Advisory urges employers to use objective criteria in the selection of employees to be retrenched and strongly encourages them to take a long-term view of their manpower needs, including the need to maintain a strong Singaporean core and preserve jobs as far as possible.

Employers are encouraged to plan ahead and provide employees with reskilling, training and redeployment opportunities, especially for their Singaporean core. Employers can also tap on Government training support schemes and redeployment programmes to aid them in their plans.

  1. Retrenching responsibly, sensitively and providing support
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The Updated Advisory provides further guidance on how affected employees are to be notified and the type of support to be given to them.

Employers must comply with the Mandatory Retrenchment Notifications requirement under the Employment Act (Cap. 91) of Singapore, which states that employers must notify the MOM of retrenchments within 5 working days after they notify their affected employees.

Retrenchment benefits would depend on the affected employee’s year(s) of service and employment contract or if not specified in the employment contract, the prevailing norm of the industry and financial position of the company.

Further information on retrenchment notifications and benefits can be found in Annex C of the Updated Advisory.

Additionally, a responsible retrenchment practices checklist for employers to follow can be found in Annex B of the Updated Advisory.

  1. Suggested good practices

Employers are encouraged to:

  1. provide longer notice periods beyond contractual or statutory requirements where possible;
  2. prepare managers for notifying employees of retrenchment in a sensitive manner;
  3. have HR personnel and union representatives onsite to address queries from retrenched employees, and maintain an open communication channel with affected employees;
  4. give affected employees time and space to adjust to the news, before requesting them to vacate their workplaces; and
  5. be sensitive to emotional needs of affected employees, including offering counselling and support.

Employers may also wish to help affected local employees maintain or build up relevant skills by providing training assistance to them post-retrenchment.

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Employers are encouraged to adopt the recommendations and guidance in the Updated Advisory, which, alongside  its Annexures, can be found here.


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