MOM warns HR against disguising layoffs

Employers stand to lose subsidies and work pass privileges if found guilty, says minister Josephine Teo

MOM warns HR against disguising layoffs

Employers who disguise layoffs to escape from paying retrenchment benefits will be punished, said Singapore’s manpower minister Josephine Teo.

“Even during the COVID-19 period, whatever the termination of employment is called, an employee is presumed to have been retrenched if the employer cannot show a plan to fill the vacancy any time soon,” Teo said in parliament.

If found guilty, firms may lose wage subsidies from the Job Support Scheme and work pass privileges.

The minister reminded employers that workers are entitled to retrenchment benefits as part of employment contracts or collective agreements. Regardless, Teo reaffirmed that employers should only conduct retrenchments as a last resort, reported Channel NewsAsia.

READ MORE: MOM updates retrenchment guidelines amid COVID-19

Recently, the Ministry of Manpower (MOM) shared guidelines on how firms should manage retrenchment benefits, considering the company’s current financial health.

Employers doing okay financially should continue to pay the retrenchment benefit as per contract or normal – between two weeks and one-month salary per year of service.

If the business is adversely affected, employers should work with the union or employees to renegotiate for a fair retrenchment benefit linked to the employee’s years of service.

Those struggling with severe financial difficulties should negotiate with trade unions for a mutually acceptable retrenchment benefit package.

READ MORE: Singapore govt urges 'responsible retrenchment'

“The tripartite partners have therefore agreed that in instances of genuine financial difficulty for the employer, retrenchment benefit may be renegotiated or moderated,” said Teo.

“The norms may have to be set aside in these abnormal times. Nevertheless, businesses should still give some support to retrenched employees to the extent that they can afford.”

As we face a difficult, long-drawn crisis, one industry leader advised employers on the benefits of supporting workers financially, emotionally, and mentally.

“Listening to employee concerns and providing support during these challenging times is a good way to build loyalty and goodwill,” Peta Latimer, CEO at Mercer Singapore told HRD. “Seeing and taking advantages of such opportunities will pay dividends when business demand returns.”

Is your organisation conducting retrenchments or temporary layoffs to cope with the crisis? Click here to share your insights and help other leaders navigate the uncertain landscape.

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