askST: I heard a retrenchment exercise is coming up in my company. What should I do?

People at Raffles Place MRT station on Sept 28, 2020.
People at Raffles Place MRT station on Sept 28, 2020.ST PHOTO: KUA CHEE SIONG

If there's a rumour going around about a possible retrenchment exercise in your company, do not jump to conclusions, says a spokesman for the Institute for Human Resource Professionals (IHRP).

Find out more by speaking to your manager or union representative and check if a retrenchment exercise has already been confirmed by company management.

If there really are retrenchments coming, National Trades Union Congress assistant secretary-general Patrick Tay says, one of the key things to consider is whether you are eligible to receive any retrenchment benefits, based on your employment contract or collective agreement.

"Retrenchment benefits are meant to help you tide through the job search period, before you embark on your next job. If retrenchment benefits are payable, you will not receive them - assuming the company can pay - if you resign instead of being retrenched," he says.

Companies are not legally required to pay retrenchment benefits - the law states only that employees who have worked for an employer for less than two years are not entitled to the payouts - but most do.

Manpower Minister Josephine Teo told Parliament last month that about nine in 10 eligible employees received a payout when they lost their jobs, based on ministry data for April to September.

The IHRP spokesman suggests three possible scenarios when considering your next move.

Scenario 1: If you know there will be retrenchment benefits, and you do not yet have a confirmed job, it might be better to receive such benefits than to resign.

Scenario 2: If you know that there will be no retrenchment benefits, it may be prudent to resign only after you have secured your next job, or even pay in lieu of notice or mutually agree with your current company to exit earlier, so that you can start earlier at your next job and secure longer-term financial stability.

Scenario 3: If you do not know whether there are retrenchment benefits, and you already have a next job offered to you, it may be better to resign and secure your next job - even if means forgoing the possibility of retrenchment benefits.

"This is a difficult situation to be in, so please take care of your health and well-being, and stay positive. Seek professional help if you are feeling stressed, or speak to someone you trust and who cares for you," says the spokesman.

Mr Tay encourages anyone who is retrenched to take advantage of the lull period to pick up relevant and/or new skills in order to increase your employability and land your next job.

When applying for jobs, the question of why you left your previous job may come up. IHRP's spokesman recommends being clear and honest about your reasons for leaving your last job, while emphasising the value you can bring to the new role.

Q: What is a disguised retrenchment?

A: Tripartite guidelines state that a dismissed employee is presumed to have been retrenched if the employer cannot show a plan to fill the vacancy any time soon.

A disguised retrenchment is where a company takes cost-cutting measures and retrenches employees with no intention of filling the vacancies, but calls it contractual termination - which means exercising the employer's contractual right to end the employment relationship with notice, or payment in lieu of notice, according to the contract, says Mr Tay.

The company could be trying to avoid paying the affected employees a fair retrenchment package.

A Ministry of Manpower (MOM) spokesman says that where there are complaints about employers misclassifying a retrenchment, MOM will investigate and mediate.

The spokesman adds that employers found to have misclassified their retrenchments will have government support - such as the Jobs Support Scheme - withdrawn or their work pass privileges suspended.

Q: Is there any recourse if I believe I am owed retrenchment benefits?

A: Mr Tay advises union members to approach their unions, which will try to work amicably with the employer to secure the payment. If the company is uncooperative, the union may apply for arbitration with the Industrial Arbitration Court. Mr Tay has represented unions and union members in such cases before.

Employees can also approach MOM for help.

If your employment contract or collective agreement provides for retrenchment benefits, you can file a claim with the Tripartite Alliance for Dispute Management.

But Mr Tay notes that if your employer can show documentary evidence that he is in severe financial difficulties, you may not receive the full retrenchment package that you are eligible to receive.