Employers should retrench based on merit, but also retain more locals under updated advisory

The advisory continues to state that retrenchments should be a last resort.
The advisory continues to state that retrenchments should be a last resort.ST PHOTO: KUA CHEE SIONG

SINGAPORE - A day after the National Wage Council issued fresh guidelines on pay, tripartite partners followed up with an updated framework for retrenchments, signalling that the job situation ahead remains grim.

Employers must ensure objective criteria such as ability and experience are used should they need to retrench. They should also lean towards retaining Singaporeans, while recognising the importance of permanent residents in their workforce.

“The tripartite advisory on managing excess manpower and responsible retrenchment calls on employers to lean in favour of Singapore citizens,” said a Ministry of Manpower (MOM) spokesman.

“It also recognises the importance of allowing employers to retain capable PRs as part of their local workforce. The primary considerations are the merit and skills of the individuals and how they help to keep the business viable.”

The advisory was previously updated in March to lay out other options employers have besides retrenchment, such as staff training or “time banking” unused working hours to be repaid when business picks up.Objective reasons such as merit should be the basis for retrenchments, but employers should also lean in favour of retaining Singaporeans in their workforce.

The updates, released on Saturday (Oct 17), were made jointly by MOM, the National Trades Union Congress (NTUC) and the Singapore National Employers Federation (SNEF).

The advisory continues to state that retrenchments should be a last resort, after exhausting all other cost-cutting measures based on latest guidelines from the National Wages Council.

In the event that retrenchments are inevitable, employers should select employees to let go based on objective criteria such as merit and preserving those with skills to ensure business sustainability.

At the same time, they should also take a long-term view of their manpower needs, including the need to maintain a "strong Singaporean core".

"Retrenchments should generally not result in a reduced proportion of local employees. This can be achieved by retaining proportionately more locals during a retrenchment exercise," the guidelines state.

When business activities pick up later, employers should make a "deliberate effort" to strengthen their local workforce by hiring locals when they are able to do so.

Singapore will remain open and welcoming to foreigners who can help grow the country's economy and create good jobs for locals, the guidelines add.

Local employees are also encouraged to acquire new capabilities from foreign employees with specialised skills, while companies should put in effort so that these skills can be transferred to local employees in the long term.

The updated guidelines also spell out how employers can conduct a retrenchment exercise in a responsible and sensitive manner.

These include notifying affected employees earlier than what is contractually or legally required of employers, and informing them of the retrenchment in person as far as possible.

Responsible employers should also ensure that human resources personnel and union representatives for unionised companies are on site to take feedback and answer questions from retrenched employees.

Affected employees should also be given the time and space to adjust to the news of retrenchment, before they are asked to vacate the workplace.

If necessary, counselling support should also be offered to retrenched employees to support their emotional needs.

In response to media queries, a spokesman for MOM said the ministry expects employers to follow the advisory when conducting retrenchments.

"If companies act irresponsibly in cost-saving measures or retrenchments, the Government will consider denying them future government support or suspending their work pass privileges. So far, the authorities have not had to do so," the spokesman added.