Senior Minister of State for Manpower cites risks to existing employees, permanent employment
The Singapore government has underscored the need for a "balanced approach" when asked if it could consider legally mandating retrenchment benefits in the workplace, according to reports.
Koh Poh Koon, Senior Minister of State for Manpower, told Parliament that the tripartite partners have deliberated extensively on making retrenchment benefits mandatory.
"We concluded that a balanced approach to protect workers while at the same time providing business flexibility would achieve better outcomes for both workers and businesses," Koh said as quoted by Channel News Asia.
The official was responding to an inquiry in Parliament asking if the government could consider differentiated guidelines for organisations with more than 25 employees to give retrenchment benefits.
In Singapore, the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment introduces a norm of granting retrenched employees at least two weeks' salary per year of service.
Data from the Ministry of Manpower revealed that around nine in 10 eligible employees received retrenchment benefits between 2020 and 2025.
Around eight in 10 also received retrenchment benefits of at least two weeks' salary per year of service, in line with the tripartite advisory.
Reasons against mandatory retrenchment benefits
Koh noted that introducing mandatory retrenchment benefits could put other employees at risk of also getting laid off.
"Imposing strict restrictions such as legally mandating retrenchment benefits may affect the viability of companies who are already in financial difficulties and put existing employees - other employees who may still be in employment with the company - at risk of also being retrenched," the senior minister of state for manpower said.
"If the company then gets into further financial difficulties by the fact that we mandate a certain requirement for monetary compensation, that actually makes it difficult for them to actually even continue."
The official added that it could also negatively impact permanent employment.
"Mandatory retrenchment benefits may also result in employers becoming more hesitant to offer long-term or permanent contracts to employees," he said.
"So, the tripartite partners agreed on a balanced approach to issue guidelines instead, which stipulate the prevailing norms for retrenchment benefit quantum."
Need to protect workers' interests
Koh's remarks garnered criticism from the Progress Singapore Party (PSP), which said it "strongly" disagreed with the official's assertion.
"There is an urgent need to protect workers' interests by mandating retrenchment benefits of at least two weeks' salary per year of service," the PSP said in a statement.
The party pointed out that the adoption of artificial intelligence is shifting the balance of power away from workers to employers, noting that some organisations in Singapore and overseas have been retrenching staff to boost profits and not because of financial difficulties.
"The price of flexibility for businesses is often paid by workers. it is time for us to do more to safeguard workers' interests during uncertain economic times," the party stated.
