Disguised retrenchment is 'not progressive'

More cases of disguised retrenchments - workers getting laid off without their employers treating it as a retrenchment to avoid paying a fair package - are surfacing.

There has been an increase in disguised retrenchment cases, said NTUC assistant secretary-general Patrick Tay, who is also the director of NTUC Legal Services and its PME (professionals, managers, executives) unit.

About 15 to 20 people have approached the NTUC's U PME Centre for help, compared to fewer than 10 in 2015.

In disguised retrenchment, a company avoids treating the layoff as a retrenchment so as not to pay fair benefits.

Mr Tay told The New Paper on Wednesday that cases of irresponsible retrenchments are not rampant. But they remain a concern because companies are carrying out such practices without breaking the law. 

For example, some workers are terminated with a month's notice - allowed under provisions in employment contracts - and do not get retrenchment benefits.

He said: "The employee might be working for them for 15, 20 years, then they are told, 'You don't have to come back any more.' "Legally, the employer may have the right to do that because the employment contract doesn't have any severance package but this is not progressive."

Nine in 10 companies paid retrenchment benefits, according to the last survey in 2013 on retrenchment carried out in the previous year.

It showed that the prevailing norm was to pay a retrenchment benefit of between two weeks' and one month's salary per year of service, Manpower Minister Lim Swee Say told Parliament in September.

In May, tripartite guidelines on managing excess manpower and responsible retrenchment were issued by the Ministry of Manpower (MOM), the Singapore National Employers Federation and NTUC. They highlighted the measures that companies are supposed to take during a retrenchment exercise, such as giving ample notice to affected employees and paying them benefits.

Mr Tay thinks irresponsible retrenchments could happen to employees across all industries and age groups.

He said: "It affects firms that are facing challenges and need to fire people. If (disguised retrenchments) are legal, it doesn't matter if you are old or young."

4 signs you may be retrenched

  • It's not only older workers who get retrenched these days. Singaporean 20-somethings now have to come to terms with the fact that despite having the lowest salaries on the team, they're still in danger of being let go.
  • Often people get retrenched simply because they're costing the company more money than they bring in. It may not even be their fault. It could just be that the market isn't doing well.
  • If you're a salesperson, it's a good idea to monitor your sales figures to ensure the amount of cash you bring the company justifies your salary.
  • While robots aren't exactly taking over all our jobs (yet), technology is rendering quite a few obsolete. If that's what's happening to your job, you're in trouble and had better try to learn some new tricks fast so you can transition into a different role.
  • For instance, many rookie real estate agents are dropping out of the game not only because of the sluggish property market, but also because the internet allows many potential buyers or renters to bypass using an agent altogether.
  • Barclays recently announced they would be cutting 100 IT jobs in Singapore.
  • Apparently, many of these jobs are going to be moved to India, where employees are much cheaper to hire.
  • As much as you might like to believe that your lame jokes are something your colleagues can't live without, you're a lot more dispensable than you think. When companies need to cut corners, the guys who are most easily replaced are the first ones to go.

There are tell-tale signs when a company is trying to get rid of employees to reduce costs, Mr Tay added.

For instance, workers who have been doing the same job are suddenly given poor performance ratings when they had previously received consistently good ratings. Another sign is when a company's order books are empty.

Mr Tay urged companies to inform MOM and the Tripartite Alliance for Fair and Progressive Employment Practice of any impending retrenchment exercise so that affected employees can get help finding another job.

According to the tripartite guidelines on retrenchment, the relevant union is supposed to be consulted as early as possible if the company is unionised.

Where it is provided in the collective agreement, the norm is one month before notifying the employee.

Mr Tay said: "We want to know early so that we can help workers who are affected as best as we can. We want to help them with a seamless transition to another employer.

"We can also negotiate the retrenchment payout which might not be prescribed in the collective agreement."

In September, Labour NMP K. Thanaletchimi asked in Parliament whether it could be made compulsory for companies to notify MOM about any retrenchment exercise.

Mr Tay said the matter is currently being discussed with MOM and there will be an announcement in the coming months.

Asked if compulsory notifications could lead to more disguised retrenchments, he thinks that would be unlikely but he called on companies to conduct retrenchment exercises in a "fair, responsible and progressive" manner.

"There is more to lose for the employer if word goes around and employees still with the company will give them a dirty look. It affects morale and productivity."

He added that the employer's reputation could suffer, especially if the "retrenched" employees go to the media or use social media to reveal how the employer had treated them.

5 things Singaporeans should do in the economic slowdown

  • The gloomy outlook in 2016 is expected to result in higher retrenchment figures, a slowdown in employment and horrible news for a whole bunch of industries.
  • NTUC has spoken: They predict that in the first quarter of 2016, 234 workers in unionised companies could be retrenched, a 31 per cent increase from the first quarter of 2015.
  • No matter how useful you think you are to your company, there's a chance your boss thinks of you, yes you, as an unnecessary cost-especially if he can just dump all your work on the guy in the next cubicle.
  • Job hopping is nothing new in Singapore, and while the employment market is still pretty robust, don't quit without another job lined up unless you're okay with the fact that it's probably going to be harder to find a new one than it was last year.
  • Employers are going to find it harder to justify hiring a new guy, so you definitely don't want to be job hunting desperately at that time.
  • If you're a business owner and haven't bothered correcting certain inefficiencies, this is the time to do it, as you could be in for some tough times.
  • While businesses across the board are likely to feel the pinch, if you're in particularly vulnerable industries like tourism and manufacturing, now is the time to see if there are more efficient, more streamlined and cheaper ways to do what you do.
  • Even if you don't find yourself unceremoniously retrenched, if your company is badly affected you can expect a smaller (or even no) bonus, as many people did during the 2008 recession, or even a pay cut.
  • This is not exactly the best time to start a designer bag collection or plan a lavish shopping trip to the factory outlets in California.
  • Everyone's investment mix is different, but if you're a stock investor who buys and holds for the long-term, this may be a good year to monitor stock prices more closely.
  • At this point, many stocks are quite heavily undervalued, and property prices are still on the decline. It's anyone guess when they'll rebound, but for now, investors should pay attention.

Firms carry out disguised retrenchment to avoid payout

Disguised retrenchments happen when companies seek to avoid paying retrenchment benefits or have reputational concerns, said lawyer Ian Lim.

Mr Lim, who heads TSMP Law's employment and labour team, said employees in industries more affected by the economic slowdown, such as oil and gas, could be more prone to disguised retrenchments.

"Employees could also be more susceptible to disguised retrenchments when they have individual contractual entitlements to retrenchment benefits, but are not from a unionised company and are not union members," he said.

Nonetheless, employers would seek to comply with the tripartite guidelines when it comes to retrenchments, said lawyer Jenny Tsin, joint head of employment practice at Wong Partnership.

"On the whole, companies do their best to be good corporate citizens," she said.

"As long as the termination is done in accordance with the provisions of the contract, it would on balance be difficult for any employee to successfully bring a claim in respect of the termination unless there are other factors in play, for instance a breach of some implied term of mutual trust and confidence."

Singapore Human Resources Institute president Erman Tan thinks disguised retrenchments are rare because of tripartite agreements.

But if it happens, there are options for employees to seek recourse, such as the Employment Claims Tribunal, which will start hearing salary-related disputes next April, he said.

It will cover all workers including those who do not come under the Employment Act - professionals, managers and executives earning more than $4,500 a month, who would otherwise have to file claims with the civil courts.

How Singaporeans can lower their cost of living

  • Nobody ever said Singapore was a cheap place to live in. But some things here are more expensive than others, and getting a cheap meal isn't impossible so long as you don't expect to be sitting in air conditioned comfort and waited on hand and foot.
  • Renting out unused rooms on your property to defray the cost of living can generate some passive income for yourself.
  • If you live in private property, rent out your place on a short-term basis on Airbnb whenever you go on holiday, so you earn some spare cash while you travel.
  • Go to polyclinics for basic medical and dental help (unless you employer pays for this). The $10.70 you pay for a consultation at a polyclinic is 1/3 the price you'd pay at a private clinic. The medicines also tend to be cheaper.
  • Use your $500 SkillsFuture and your $100 ActiveSG credit.
  • If you have kids of school-going age, check if they qualify for Edusave Bursaries and Awards and the Good Progress Award. The household income cap for the Edusave Merit Bursary is $6,000 as of 2015.
  • Anybody planning to buy HDB property needs to understand the different CPF Housing Grants.
  • Meals at mid-range to high-end restaurants have escalated in price over the past decades. While $10 could get you a decent restaurant meal in the 90s, these days you'll need to budget about $25 to $30.
  • On the other hand, while hawker food prices have not risen as quickly, and picking hawker centres instead of restaurants when you eat out means greater savings than before.
  • Public transport is way cheaper than driving, even if you rely mostly on taxis.
  • Alcohol is ridiculously expensive, but drinking in the streets is actually allowed before 10:30pm. Buying a beer from 7-11 instead of imbibing it at an overpriced Clarke Quay bar will save you almost $20.


Mr Tan also called for retrenchments to be carried out with empathy and respect.

"I have heard of employees being escorted out by a security guard or workers who were logged out of their e-mail accounts," he said.

Mr Tan added that given the current economic situation, retrenchments may be unavoidable, but should be used as a last resort.

"It is important to prioritise the welfare of the staff. This means making them feel appreciated and giving them a fair compensation."

Retrenchment notice and benefits

Under the Employment Act, employers are supposed to inform their workers before they are retrenched.

There is minimum requirement, ranging from one day's notice for employees who have worked less than 26 weeks to four weeks' notice for those who have worked for at least five years.

Employees who have worked for at least two years are also eligible for retrenchment benefits.

It depends on the collective agreement or contract of service, but the prevailing norm is a payout of between two weeks' to one month's salary per year of service.

In unionised companies, where the quantum of retrenchment benefit is in the collective agreement, the norm is one month's salary for each year of service.

Disguised retrenchments mean companies terminate employees without taking the necessary responsibilities.

NTUC assistant secretary-general Patrick Tay outlined more scenarios:

Workers axed by firms and given a one-off or ex-gratia payment, some of which are below industry norms.

Contract workers terminated due to loss of business contracts.

Contract workers have their contracts discontinued after their firms fail to retain business deals or have to shed staff on account of a slowdown. While legally permissible, this could be considered a layoff.

Workers asked to resign voluntarily. The companies tell them that being terminated "doesn't look good " on their resumes.

6 items S'poreans who want to save money shouldn't buy in S'pore

  • Many people think it's too "leceh" to drive across the Causeway to buy groceries. But it's probably because they don't know exactly how much money you can save by buying your food and toiletries in Johor Bahru.
  • A few years ago, you could save about 30 per cent on your groceries by buying in JB.
  • Now that the Malaysian Ringgit is lower than ever vis a vis the Singapore dollar, you can save much more, in many cases up to 50 per cent.
  • Unless you're talking about those awful assessment books for kids at Popular Bookstore, most books in Singapore have to be imported.
  • And they're not cheap-you can usually expect to pay about $15 to $20 for a paperback novel.
  • If you are ordering a fairly large shipment and don't mind second hand items, consider buying your books from Amazon's second hand section and then shipping them back using a service like Borderlinx or vPost.
  • For some reason, vitamins and dietary supplements are super expensive in Singapore. If you've ever walked into GNC, the prices are enough to give you a stroke.
  • If you're happy go buy all your furniture from Ikea, more power to you. But if you're the house-proud type who's willing to spend thousands of dollars on a sofa, consider buying your furniture and homeware in Bali or Thailand.
  • It's not just owning a car that's expensive in Singapore. It's also darned difficult to get your car serviced without being ripped off-many mechanics here are more concerned about getting you to replace parts than actually fixing your vehicle's problems.
  • If you know where to go, car and bike servicing in Malaysia can cost almost half the price. Although there are hundreds of popular recommendations, it's best to go with a friend who's familiar with a workshop in JB to be safe.
  • If you work in the sort of place where you actually have to show up looking decent, adding a few crisp tailored shirts or a slick suit to your wardrobe can make you look a bit more presentable.
  • But tailors in Singapore are expensive-you can usually expect to pay at least $1,000 for decent tailored suit.
  • Some people prefer Hoi An in Vietnam or even Shanghai, but Bangkok is the cheapest and easiest place to fly to and the destination Singaporeans are the most familiar with.


4,100: The number of workers who lost their jobs in the third quarter of this year.

13,610: Redundancies (consisting of retrenchments and workers under contracts) so far this year.

15,580: Redundancies last year.


For assistance on employment facilitation, companies can contact:

Singapore Workforce Development Agency

URL: www.wda.gov.sg Tel: 6883 5885 Feedback: portal.wda.gov.sg/feedback

Employment and Employability Institute

URL: www.e2i.com.sg Tel: 6474 0606 E-mail: followup@e2i.com.sg

Employees who encounter irresponsible retrenchment practices not in compliance with the Employment Act can approach the Ministry Of Manpower for help.

Those not covered by the Act can approach their unions.

Non-union members whose contract stipulates a notice period or the retrenchment benefits quantum can seek recourse through the Civil Courts.


This article was first published on November 04, 2016. Get The New Paper for more stories.