COVID-19 Series: Retrenchment

25 May 2020, Singapore: A must read for all SGP HR professional, a lot of changes has been roll-out on Singapore employment legislation on retrenchment, employers need to observe the following: -

• Latest (20 May 2020) MOM announcement on Tripartite Advisory on “Retrenchment” (https://www.mom.gov.sg/covid-19/advisory-on-retrenchment-benefit-to-retrenched-employees)
• Mandatory Retrenchment Notification: Employers must notify MOM of retrenchments within 5 working days after they notify their employees. (source: https://www.mom.gov.sg/eservices/services/notify-for-retrenchment-exercise)
• Give proper termination notice to affected employees
• If the employment contract is silence on termination clause, the company will have adopt MOM notice period which is based on the employee length of service.

(source: https://www.mom.gov.sg/employment-practices/termination-of-employment/termination-with-notice)

Retrenchment benefits: -

• Retrenchment benefit can range between 2 weeks to 1 month salary per year of service, depending on the company’s policy and financial situation.
• Unionized company usually have retrenchment benefit clause stated in their collective agreement, it is usually 1 month’s salary for each year of service.

Selection criteria for retrenchment: Singapore do not have any regulations that required employers to have a selection criteria for retrenchment but advocate “responsible retrenchment”. Listed below are the extraction from MOM website (source: https://www.mom.gov.sg/employment-practices/retrenchment/responsible-retrenchment)

Retrenchment considerations

• As an employer, if you plan to retrench workers, you should do the following before you retrench:
• Take a long term view of your manpower needs, including the need to maintain a strong Singaporean core.
• Inform MOM before carrying out any retrenchment exercise.
• Consult with the union if your company is unionized.
• Not discriminate against employees or groups of employees and make your selection based on factors such as the ability to contribute to your company’s future business needs.
• Treat your affected employees with dignity and respect
• Consider having a longer retrenchment notice period for all your affected employees.
• During the retrenchment exercise, you should:
• Pay all salaries, including unused annual leave, notice pay, etc., to your employees on their last day of work.
• Help your affected employees look for alternative jobs in associate companies, other companies or through outplacement assistance programmes, e.g. job fairs, career fairs, career advice.

Understand the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment. (source: https://www.mom.gov.sg/-/media/mom/documents/employment-practices/guidelines/tripartite-advisory-on-managing-excess-manpower-and-responsible-retrenchment.pdf?la=en&hash=FED5FC78385A29DE079C113C4DBB0871)