What happens if you are retrenched?

Know your rights, what you are owed, who to turn to for help, and where to look for a job

The Ministry of Manpower says that although retrenchment benefits are not mandated by law, it strongly encourages employers to adhere to the ministry's advisories to provide retrenchment benefits, depending on their financial position. ST PHOTO: KUA
The Ministry of Manpower says that although retrenchment benefits are not mandated by law, it strongly encourages employers to adhere to the ministry's advisories to provide retrenchment benefits, depending on their financial position. ST PHOTO: KUA CHEE SIONG

Retrenchments more than doubled in the second quarter of this year, with 6,700 workers laid off, up from 3,220 in the first quarter.

More workers are expected to lose their jobs for the rest of this year as the recession deepens.

Here is what you should know if you are retrenched:

Q What are the rights of a retrenched worker?

A There are three questions on rights that all retrenched workers should ask.

One: Is it really a retrenchment?

The Employment Act defines retrenchment as "dismissal on the ground of redundancy or by reason of any reorganisation of the employer's profession, business, trade or work".

This means that an employer can retrench workers only under certain conditions, such as if the company is restructuring or the jobs are no longer there after business has dwindled.

Employers are generally cutting costs during the current recession, but not all cost-cutting exercises are necessarily retrenchments.

For example, if an employer proposes to workers that they voluntarily take a pay cut to keep their jobs and a worker is reluctant to do so, the employer cannot retrench the worker who refuses a voluntary pay cut. To let the worker go, the employer has to abide by the conditions of the contract or the Employment Act, or both.

At the same time, there may also be employers that disguise retrenchments as something else, such as dismissals, to avoid paying retrenchment benefits.

 
 
 

On this practice, Manpower Minister Josephine Teo said in Parliament in June that an employee is presumed to have been retrenched if the employer cannot show a plan to fill the vacancy any time soon.

She added that an employer cannot sidestep the obligation to pay retrenchment benefits by calling the retrenchment something else.

She also warned: "If a company is found to have disguised their retrenchments, the MOM (Ministry of Manpower) can and will consider withdrawing government support like the Jobs Support Scheme and suspending their work pass privileges."

Two: Has the employer given enough notice?

The Employment Act stipulates minimum notice periods that employers are required to give when they terminate the employment of their workers.

These notice periods apply to retrenchments too, although an employer can pay the retrenched worker a quantum, such as an amount equivalent to the worker's pay for the notice period, in lieu of the notice.

Three: Am I entitled to retrenchment payments?

Yes, but only for workers who have worked with the employer for two years or more, and if it is stipulated in the union's collective agreement with the company or the workers' individual contracts. Those who have worked for the employer for less than two years are not entitled and this is spelt out in the Employment Act.

For those who have worked for the employer for less than two years, it is up to the company to make a goodwill payment.

Retrenched workers who are pregnant are also entitled to maternity benefits if they have worked for the employer for at least three months and were certified by a doctor to be pregnant before receiving the pink slip.

Q How much does my employer owe me in retrenchment payouts?

A In some cases, it may be nothing.

While the law says that a worker who has worked with an employer for at least two years is eligible for retrenchment payouts, it does not state that the employer must pay such benefits to the retrenched worker.

In other words, Singapore does not have a legislated mandatory retrenchment benefits scheme.

If the payment or amount of retrenchment benefits is not spelt out in the union's collective agreement with the company or the workers' individual contracts, then it is up to the company to decide how much to pay, if at all.

MOM says that although retrenchment benefits are not mandated by law, it strongly encourages employers to adhere to the ministry's advisories to provide retrenchment benefits, depending on their financial position.

For unionised workers, the amount of retrenchment benefits depends on what is in the collective agreement.

The prevailing norm is to pay a retrenchment benefit of between two weeks' and one month's salary for each year of service, depending on the financial position of the company.

An MOM survey published in September 2018 found that 90 per cent of employers who retrenched workers in 2017 paid retrenchment benefits and 94 per cent of retrenched local workers who were eligible for retrenchment benefits received them.

The same survey found two common reasons why some employers did not pay such benefits: There were no such provisions in the workers' employment contracts, and financial constraints.

 
 
 

The second reason is worth noting now. The coronavirus pandemic and recession would have weakened the financial positions of many employers in Singapore and affected their ability to pay retrenchment benefits.

Q If I think I have been shortchanged, who can I turn to?

A Retrenched workers in unionised companies can turn to their unions for help, although the chances of such companies shortchanging their retrenched workers are significantly lower.

Last month, three unions threatened to go on strike to prevent aircraft maintenance, repair and overhaul firm Eagle Services Asia from going ahead with planned retrenchments unilaterally.

The strikes were averted after the company backed down, corrected its retrenchment process and reached an amicable agreement with the unions.

Union members in non-unionised companies can approach the National Trades Union Congress, or NTUC (call 6213-8008).

Other workers can approach MOM (call 6438-5122, e-mail: mom_lrwd@mom.gov.sg).

The ministry may in turn direct the workers to make their claims for retrenchment benefits through the Tripartite Alliance for Dispute Management, which conducts mediation for such claims.

Q How do I look for a new job?

A A good place to start is the network of SGUnited Jobs and Skills Centre run by Workforce Singapore.

There are now over 20 such centres (www.wsg.gov.sg/sgujscentre.html) found mostly in community clubs, and they are open daily except on public holidays.

The staff in these centres are trained to help retrenched workers find jobs and training opportunities.

NTUC also runs the Employment and Employability Institute (e2i), with two centres in Jurong East and Toa Payoh that help retrenched workers find jobs.

Some 92,000 jobs, traineeship and attachment opportunities were available as of the end of last month. Seven in 10 of these positions are professional, managerial, executive and technician roles, MOM has said.

About half of these jobs are government-funded, heavily subsidised traineeship and attachment opportunities, or hiring that was brought forward by public sector agencies, while some 42,000 positions are offered by private-sector employers, with the bulk of those being long-term roles.

 
 

MOM has also started publishing weekly job situation reports to provide information on the growing sectors that are hiring.

• If you have a question, e-mail us at askst@sph.com.sg

Correction: This article has been edited for clarity.

A version of this article appeared in the print edition of The Straits Times on August 24, 2020, with the headline 'What happens if you are retrenched?'. Subscribe