Desmond Chng, Director at Drew & Napier, shares legal guidance for responsible workforce reductions in Singapore
A recent retrenchment exercise by home-grown electronics firm, Creative Technology, has drawn renewed attention to how companies handle job cuts in Singapore.
The company confirmed the layoffs in April, citing restructuring efforts to respond to changing market conditions.
While the number of affected employees was not officially confirmed, the announcement reflects broader trends affecting businesses in the current economy.
Across various industries, companies are rethinking headcount and reorganising teams as they adjust to slower growth, new technologies, and shifting demand.
These workforce changes often lead to difficult decisions involving role eliminations, and while sometimes unavoidable, they come with legal obligations that must not be overlooked.
To understand how HR professionals can manage retrenchment in a legally sound and responsible way, HRD Asia spoke with Desmond Chng, Director at Drew & Napier LLC.
Redundancy is a business condition of having excess manpower, such as due to internal restructuring or declining demand. Retrenchment is the termination of employment based on that excess manpower.
Desmond explains that using the correct terminology matters. "If you are going to use terms like redundancy or retrenchment in your communication, make sure that is, in fact, the situation," he says.
Mislabeling a termination as redundancy can expose employers to obligations, such as severance payments and formal reporting.
Singapore-registered businesses with at least 10 employees must notify authorities even if only one staff member is affected by retrenchment. Desmond cautions that casual use of these terms can lead to legal exposure, which could otherwise be avoided.
When role redundancy is cited in termination letters, Desmond warns that the explanation must reflect an actual business condition or decision. "If you have reassigned tasks because of improvements in technology or a legitimate reorganisation, any termination on that basis can be considered redundancy," he says.
However, if companies use this as a blanket explanation without first exploring redeployment or training options, they may fall short of legal requirements. Employers should be able to justify why no other options were available before letting someone go based on redundancy.
"You need to be prepared to show that retrenchment was the final step after evaluating all other measures," Desmond adds. That includes assessing long-term manpower needs and, in unionised settings, engaging the union before taking action.
With the Workplace Fairness Legislation set to take effect in the coming years, how companies select employees for retrenchment will face greater scrutiny. Desmond says that even now, discrimination claims are taken seriously and can lead to regulatory consequences.
"The most important thing is to rely on objective criteria like skills, performance, and experience, and apply those standards consistently," he says.
If an affected employee belongs to a protected group, such as older workers or those with caregiving responsibilities, HR should ensure that the process is not biased and cannot be perceived as biased.
Desmond emphasises the importance of training. "Even if the decision was fair, how you communicate it affects how it is perceived, and the wrong perception can trigger disputes just as easily even if there was no actual misconduct."
To mitigate this risk, Desmond recommends implementing bias training and conversation workshops for HR personnel.
"What HR teams can do is ensure your HR staff receive bias training, workshops on anti-discrimination, and guidance on how to have these difficult conversations, especially with people who have protected characteristics."
One of the most common issues Desmond sees is a lack of proper records. Employers may act quickly during restructuring, but fail to document their decision-making processes.
"You need contemporaneous records that show what you considered before deciding on retrenchment," he says.
This includes records of cost-saving alternatives, reskilling efforts, and how selection criteria were applied.
A brief internal memo or email can become vital evidence later. "If the reason for termination changes or cannot be supported with records, that creates inconsistencies that can undermine your case."
When retrenchment affects employees who are on medical leave or recently filed grievances, these should be handled sensitively. Desmond explains that while such employees are not immune to layoffs, their situations must be handled with extra care.
"There should never be any form of retaliation. That is clearly prohibited," he says. Still, if the business situation requires job cuts, companies should document the objective reasons for selection and show flexibility in timelines.
"Give affected employees the time and space to process the news," Desmond advises. For those on leave, this may include allowing flexibility in setting up meetings or longer decision windows.
"Let people know early enough so they have time to adjust," he adds. "Engage them throughout the process so they do not feel like things are being imposed on them. That helps people understand the process is fair and that retrenchment really was a last resort."
In Singapore, employers are not legally required to provide a reason when terminating with notice. However, Desmond says it may sometimes be worth a consideration.
"If the employee has a protected characteristic or has filed a complaint, giving a reason that is based on objective criteria can help reduce the risk of discrimination or retaliation claims," he says. But this must be done carefully and be supported by evidence, as the reason may be challenged later.
He adds that the delivery is just as important as the content. "If the message comes from someone the employee trusts, and it is handled with professionalism, it is more likely to be accepted."
When performance is used as a basis for retrenchment, the company should be able to show meaningful differences between employees. Desmond says vague or overly positive reviews can make this difficult.
"If everyone gets the same score, and then someone is let go for poor performance, it does not align," he says. Managers should be trained to give honest feedback and keep accurate records.
"Doing this helps the organisation operate better during normal times, and it also protects you when tough decisions have to be made."
Retrenching unionised employees comes with added obligations. Most collective agreements require that the union be informed in advance, sometimes before the employee is notified.
"In many cases, the union must be notified one month before notifying the employees," says Desmond. He adds that retrenchment benefits for union members can be higher than for employees who do not belong to a recognised union.
Regardless of company size, early communication can make the process smoother. "If people are told early and given time to make alternative plans, they are more likely to respond calmly."
For Desmond, effective retrenchment planning is not just about legal protection. It’s about leadership.
"You can follow every rule and still create mistrust if the process feels cold or rushed," he says.
"Done right, retrenchment is still difficult, but it should be fair."
Planning, preparation, and clear documentation are the foundation. But at the heart of it is respect.
"People remember how you treat them when things are hard. HR has the responsibility and the opportunity to make that experience more humane," Desmond says.
"In volatile times, that kind of leadership builds the foundation for long-term resilience and reputation."
