New labour guidelines call for 'responsible retrenchment'

Singapore - The Ministry of Manpower (MOM), which has been reiterating in recent months that it's watching closely the economic and labour market situation, on Tuesday warned it will cut the work pass privileges of employers who unfairly retrench Singaporeans.

The warning came with the issue of beefed-up tripartite guidelines for managing excess manpower and responsible retrenchment that stress the need for employers to maintain a strong Singaporean core, and avenues to help workers displaced.

Introduced in 2008, the guidelines drawn up by MOM, the Singapore National Employers Federation (SNEF) and NTUC (National Trades Union Congress) lay out ways for employers to manage their local staff when facing structural changes. The guidelines were last revised in 2009 during the last recession.

Both MOM's warning and the latest tripartite guidelines came in the wake of a pick-up in layoff numbers. Redundancies jumped from 12,930 in 2014 to 14,400 in 2015 - the highest since the 2009 economic downturn.

The number eased from 5,370 in October-December 2015 to 4,600 in January-March this year, but the latter was still higher than the 3,500 redundancies posted a year ago.

Meanwhile, the Monetary Authority of Singapore issued its twice-yearly macroeconomic review, which raised concerns about the weakening labour market. The global economy remains shaky and local companies are still restructuring their business to stay competitive. The tripartite guidelines suggest that as businesses adjust, they should consider alternative ways to manage their excess manpower - such as upskilling and redesigning jobs. "However, if retrenchment is inevitable, companies should do so in a responsible manner," say the guidelines.

In a joint press statement, SNEF urged employers to take a longer-term view of their manpower needs and boost competencies and maintain a strong Singaporean core.

NTUC called on employers to better manage their excess workers and, if they have to retrench them, do so in "a fair and sensitive manner".

The MOM said that employers should notify the ministry and the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) of an impending layoff early, so that they can work with employers to help the retrenched workers find alternative jobs.

"MOM will also investigate complaints of discriminatory employment practices, including retrenchments that unfairly target Singaporeans, or which result in Singaporeans being replaced with foreigners," it added. "If the complaints are substantiated, companies may have their work pass privileges curtailed."

Patrick Tay, NTUC assistant secretary-general, said in a Facebook post that his "worry would be for the many in non-unionised companies and especially those who are not union members". These workers are not represented and thus unprotected, he suggested.

The latest guidelines shorten the length of service for workers to be eligible for retrenchment benefits from three to two years. For those with less than two years' service, employers could grant them an ex-gratia payment.

The guidelines noted that the prevailing norm is to pay a retrenchment benefit varying between two weeks and one month salary per year of service. Employers should pay all salaries due and retrenchment benefits to the affected workers by the last day of work.

Under the revised guidelines, employers who implement a reduction in work week should cap the reduced work week to three days in a week - and the reduction in work week should not last more than three months. The 2009 guidelines recommended two days in a week for up to two months.

The new guidelines also say employers should "go beyond advisory assistance and make practicable efforts to place affected employees in their next jobs, possibly with the help of intermediaries such as "employment/placement agencies".

This article was first published on May 25, 2016.
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