Employers must offer fair retrenchment package, be more generous with low-wage workers amid Covid-19: MOM

The ministry said employers should consider implementing other cost-saving measures instead of layoffs.
The ministry said employers should consider implementing other cost-saving measures instead of layoffs.ST PHOTO: LIM YAOHUI

SINGAPORE - Employers who need to lay off staff during this Covid-19 pandemic should provide retrenchment benefits according to their financial position, and should treat their employees with "empathy and dignity", said the Ministry of Manpower (MOM) on Wednesday (May 20).

Companies that are in sound financial position should pay out the benefits agreed on in their employment contracts, collective agreements, memoranda of understanding, or the prevailing norms stated in the tripartite advisory on managing excess manpower and responsible retrenchment. The norms are between two weeks and one month of salary per year of service.

Those whose operations and business prospects have been adversely affected by the virus outbreak should work with their union or the employees to renegotiate a fair package linked to the worker's years of service with the firm, said MOM in a new tripartite advisory specifically for Covid-19 jointly issued with the Singapore National Employers Federation and the National Trades Union Congress (NTUC).

Companies in severe financial difficulties despite the government help available - such as rental waivers and training subsidies - should negotiate a retrenchment benefit package with their union, if they are unionised, or else they should support the affected staff by providing a lump sum benefit of between one and three months' salary.

The ministry urged employers to be more generous to lower-wage workers being laid off, such as those earning up to $2,300 a month who would be eligible for the Workfare Income Supplement. Employers can give them more weeks of retrenchment benefits per year of service, or additional training grants.

They should also consider the impact of retrenchment on the livelihoods of the affected lower-wage staff.

"Employers are reminded to ensure that their employees are treated with empathy and dignity," said the ministry.

Retrenchments in the first three months of the year rose to a preliminary figure of 3,000, up from 2,670 in the fourth quarter of last year, but the ministry as well as private sector economists expect this figure to worsen, as the circuit breaker restrictions where most workplaces had to close only began in April.

"The Covid-19 pandemic is an unprecedented crisis that has resulted in business difficulties for many employers as well as put jobs and employees' livelihoods at risk. Hence, helping businesses stay afloat and safeguarding employees' livelihoods are equally important," noted MOM in the latest advisory.

 
 
 

The ministry said employers should consider implementing other cost-saving measures instead of layoffs.

It added that employers should tap the Jobs Support Scheme, which provides employers with wage subsidies in April, May, July and October of up to 75 per cent on the first $4,600 of monthly wages, to pay workers baseline salaries even when they are not working. This baseline wage should be mutually agreed upon between employers and their workers or unions, taking into consideration government support and the company's financial position.

MOM added that employees being laid off must be selected fairly, unions must be consulted early where applicable, and affected employees must be told early, as stated in the tripartite advisory on managing excess manpower and responsible retrenchment.

Bosses should also support their retrenched employees in looking for new jobs, either through their business networks or by referring them to Workforce Singapore or the Employment and Employability Institute, it said.

Employers must notify the ministry of retrenchment exercises if they have at least 10 employees and lay off five or more staff within any six-month period.

 
 
 

Those planning to conduct a restructuring or retrenchment exercise can join the NTUC's Job Security Council, a programme that aims to match displaced workers with other employers within its network.

Retrenched Singaporean and permanent resident employees can also apply for the Covid-19 Support Grant which provides a monthly cash payout of up to $800 for three months to those eligible.

Employees who have been with their company for at least two years are eligible for retrenchment benefits. If they are not paid the retrenchment benefits stated in their employment contracts, they can lodge claims at the Tripartite Alliance for Dispute Management (TADM). Those who do not have retrenchment benefits specified in their employment contracts can still approach TADM for advice and mediation services.

Staff whose employments are terminated due to poor performance are not entitled to retrenchment benefits. However, the onus is on the employer to substantiate the poor performance when necessary or should a dispute arise, said MOM.

NTUC assistant secretary-general Patrick Tay said in a Facebook post on Wednesday that he is concerned about “disguised retrenchments”, where employees are contractually terminated with notice when in fact there were redundancies. 

Such workers can approach their unions or TADM for help, he said.

Correction note: An earlier version of the article said that if retrenched employees are not paid the benefits they are due, they can lodge claims at the Tripartite Alliance for Dispute Management (TADM). The Ministry of Manpower has clarified that only those with retrenchment benefits stated in their employment contracts can lodge claims at TADM. However, those who do not have retrenchment benefits specified in their employment contracts can still approach TADM for advice and mediation services.