StarHub begins retrenchment exercise, package offered above market practice

Starhub's retrenchment exercise started in earnest on Monday and is expected to last till the end of the week, with laid-off workers said to receive a package that is slightly more generous than the standard market practice.

Singapore's second-largest telco had earlier announced in October that it will be axing 300 of its full-time and contract staff - a move deemed necessary by its recently-appointed chief executive Peter Kaliaropoulos as part of a strategic transformation amid "current industry pressures".

Prior to the retrenchment, StarHub had some 2,500 full-time workers.

The Business Times understands that they will receive a month's pay for each year of service, pro-rated annual wage supplement, and a variable bonus based on the company's financial performance which will be paid out in March next year.

They will also receive six months of medical and insurance benefits from the termination of their employment contract.

A statement by StarHub said that the workforce reduction exercise has impacted "predominantly support functions".

According to sources, the majority of the affected employees were believed to come from the information systems, engineering, marketing and commercial, and consumer departments. Most of them were senior managers who had worked in the company for more than 15 years.

However, StarHub declined to confirm details of the retrenchment package on the grounds of staff privacy.

The firm said that its "overall package is more generous versus market practice", adding that it is closely following the guidelines laid down by the Ministry of Manpower (MOM).

It added: "We intend to treat our employees fairly in recognising their past contributions, with sensitivity and respect."

According to MOM guidelines, companies are encouraged to pay retrenchment benefits of between two weeks and a month's salary per year of service, depending on the company's financial position and the industry. The norm is one month's salary for each year of service for unionised companies.

The lay-offs will come with a one-off restructuring cost of some S$25 million, but StarHub had said that this will not affect the guidance for FY2018. It added it should yield savings of S$210 million over three years, starting next year.

This article was first published in The Business Times. Permission required for reproduction.