MOM updates retrenchment guidelines amid COVID-19

'Companies should explore all other cost-cutting measures before considering retrenchment'

MOM updates retrenchment guidelines amid COVID-19

Singapore updated the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment in view of the evolving COVID-19 situation.

The tripartite partners, including the Ministry of Manpower (MOM), acknowledged that some employers have started to implement cost-saving measures to tide over the uncertain economy.

While the advisory is meant to provide guidance to affected employers, the government urged employers to only retrench workers as a ‘last resort’.

During her speech at Budget 2020 Debate (26 February), Manpower Minister Josephine Teo recounted the “apparent short-sightedness” of an employer in a previous downturn.

The employer had rushed to trim its workforce by rolling out a mutually agreed departure scheme with a generous payout for employees, she said.

Unexpectedly, less than a year later, business picked up again. Some of his former employees who had received payouts under the scheme were rehired at their previous salaries and went on to work many more years.

“We may laugh at…the apparent short-sightedness of the employer,” Teo said. “But when business is down and the bottom nowhere in sight, it must cross the minds of bosses to cut jobs and save costs.

“Today, with the COVID-19 outbreak casting a pall, concerns have heightened.”

READ MORE: Can HR fire staff who breach a COVID-19 quarantine order?

MOM, NTUC, and the Singapore National Employers Federation (SNEF) have thus jointly rolled out the advisory to ensure ‘responsible retrenchment’.

  • Flexible work schedule

As businesses slow during this period, employers can consider reducing weekly working hours, creating a timebank” of unused working hours. These can then be used to offset the increase in working hours in subsequent periods.

In offsetting future overtime pay, the employee or union and employer may agree on the rate of hourly pay. Employers who wish to implement the flexible work schedule need to seek the support of the employees and their union, and apply to the Commissioner for Labour.

  • Mandatory reporting to MOM on cost-saving measures

With effect from March 12, 2020, employers are required to notify MOM if they implement any cost-saving measures that affects the employees’ monthly salaries, and indicate that they have done so fairly.

The new requirement applies to employers with 10 or more employees and is intended to be a temporary measure, until the economy recovers.

This would encourage responsible implementation of such measures, prevent salary disputes, and allow MOM to monitor the scope and scale of such measures. This would also enable tripartite partners to step in to provide the appropriate support to both employers and employees when needed.

READ MORE: Singapore Airlines cuts pay for senior leaders amid coronavirus

  • Training and upskilling

The updated advisory also highlights that during a business downturn, focusing on training and upskilling greatly benefits both employers and employees.

Employers will be able to retain skilled employees to enable the company to meet business demand when demand rebounds.

Employees can also take the opportunity to update themselves with better skills and knowledge to improve their productivity.

During this downtime, we urge companies to work closely with our unions on cost-cutting measures to manage excess manpower,” said Cham Hui Fong, Assistant Secretary-General at NTUC.

“Companies should explore all other cost-cutting measures before considering retrenchment. If retrenchment is inevitable, companies should conduct the retrenchment exercise in a fair and sensitive manner.

“They should inform their unions and the Ministry of Manpower in advance, and work with unions to ensure that affected workers are compensated fairly and are assisted with proper outplacement services.”

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