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Tripartite advisory: What employers in Singapore should know about retrenchment linked to COVID-19

Tripartite advisory: What employers in Singapore should know about retrenchment linked to COVID-19

Whether your business is in sound financial condition, or if you're currently facing financial difficulties, you'll definitely need to stay updated on the just-launched advisory to guide employers in Singapore through retrenchment benefits owing to COVID-19, through three unique scenarios.

Click here to jump straight to each part of the update:

Employers to note: Retrenchment should always be the last resort

Employers are encouraged to tap on the wide range of support measures in place by the Government - training grants, financial support and more, in helping employers manage their manpower costs. 

For instance, under the Jobs Support Scheme (JSS), employers would receive four payouts in April, May, July and October 2020, with enhanced payouts in April and May at 75% of monthly wages.

As stated in the advisory, employers should make use of the JSS to retain employees and provide them with baseline wages even when they are not working.

It noted: "This baseline wage, which may vary from company to company, should be mutually agreed upon between employers and their employees or unions, taking into consideration the level of Government support available and the financial position of the company."

Employers are also urged to refer to the earlier-released Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment for other cost-saving measures they can take to manage manpower costs. 

That said, retrenchment may be inevitable in some instances, and in these scenarios, employers should be aware of the following points stated in the advisory:

Scenario 1: The employer is in sound financial position

In the event an employer is still in sound financial position (e.g. those who have returned the JSS payments and declined future pay-out, or donated these payments to worthy causes), they should continue to pay the retrenchment benefit according to their existing employment contracts, collective agreements, memoranda of understanding, or the prevailing norms for retrenchment benefit detailed in the earlier Tripartite Advisory.

Scenario 2: The employer's business is adversely affected

Notwithstanding Scenario 1, employers whose operations and business prospects are adversely affected should work with the union or their employees to renegotiate for a fair retrenchment benefit linked to the employee’s years of service.

Scenario 3: The employer is facing severe financial difficulties

Despite the various Government support measures available, some employers may still face severe financial difficulties. Some may even be on the brink of ceasing business.

Retrenchments may thus be necessary in such cases to keep the business afloat and to preserve some jobs. In these cases, the following should be noted:

  • Unionised employers should negotiate with their unions for a mutually-acceptable retrenchment benefit package.
  • At the same time, non-unionised employers should support their retrenched employees by providing a lump sum retrenchment benefit. Instead of linking retrenchment benefit to employees’ years of service, a lump sum of between one and three months of salary could be provided, taking into consideration the JSS payouts that employers have received and their financial position.

Consideration for lower-wage employees, and support for retrenched workers

In all cases of retrenchment, employers are urged to be more generous towards their lower-wage employees (e.g. employees eligible for the Workfare Income Supplement). Employers can do so by providing them with more weeks of retrenchment benefit payout per year of service, or additional training grants.

Further, employers should also consider and assess all relevant factors carefully, including the impact of retrenchment on the livelihoods of the affected employees.

As for employees who have been retrenched, employers should support them in seeking new employment, either through their business networks, or by referring them to Workforce Singapore or the Employment and Employability Institute (e2i) for employment facilitation.

Additionally, employers planning to undergo a restructuring and/or retrenchment exercise should also join NTUC’s Job Security Council, which offers support to both employers and displaced employees, such as outplacement services that match displaced employees to other employers within the JSC network.

On the employee's end, retrenched Singaporean and Permanent Resident employees who meet the eligibility criteria can also apply for the COVID-19 Support Grant as well as tap on the various training support grants.

Last by not least, the advisory reminds employers to ensure that their employees are treated with empathy and dignity and the retrenchment exercise is conducted in adherence to the Tripartite Advisory. The employer should also notify the Ministry of Manpower of the retrenchment exercise if the employer has at least 10 employees and retrenches five or more employees within any 6-month period.

Sharing his take on the advisory, in a Facebook post today, NTUC Assistant Secretary-General Patrick Tay urged all employers that should job losses and retrenchments be inevitable, they should "communicate openly and be transparent about the companies’ outlook and financial situation with their employees and extend fair retrenchment packages for retrenched workers, guided by this advisory.

"I am sure other employees within the company who are not affected and industry peers are also observing how the company treats its employees during this downturn and difficult period of time."


 Photo / iStock

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