MOM: Pay retrenchment benefits according to firms' financial state

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

Ministry also urges employers to be more generous to lower-wage staff being laid off

Employers who need to lay off staff during the coronavirus pandemic should provide them retrenchment benefits according to their financial position and should treat their employees with "empathy and dignity", the Ministry of Manpower (MOM) said yesterday.

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

Those whose operations and business prospects have been adversely affected by the pandemic should work with their union or employees to renegotiate a fair package linked to the worker's years of service with the firm, MOM said 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 should negotiate a retrenchment benefit package with their union, if they are unionised, or they should support the affected staff by providing a lump-sum benefit of between one and three months' salary.

MOM 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.

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

Retrenchment in the first three months of this year rose to a preliminary figure of 3,000, up from 2,670 in the previous quarter, and is expected to rise further.

MOM said in the latest advisory that employers should consider implementing other cost-saving measures instead of layoffs.

It added that employers should tap wage subsides in the Jobs Support Scheme to pay workers' baseline salaries, even when they are not working.

MOM said employees being laid off must be selected fairly, unions must be consulted early where applicable and affected employees must be told early.

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.

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.

  • 3,000

  • Preliminary number of retrenchments in the first three months of this year, up from 2,670 in the previous quarter. The number is expected to rise further.

Companies can also join NTUC's Job Security Council, which helps match their displaced workers to other employers.

Retrenched Singaporeans and permanent residents can 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. 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 yesterday 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 added.

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.

 
A version of this article appeared in the print edition of The Straits Times on May 21, 2020, with the headline 'MOM: Pay retrenchment benefits according to firms' financial state'. Print Edition | Subscribe