Azmul Haque, managing director, and Syma Zainab, counsel, at Collyer Law LLC, share how HR leaders can manage retrenchments responsibly
The recent Jetstar Asia case has put retrenchment back into the public eye. Although no litigation followed, the closure of part of its operations triggered strong reactions across Singapore, especially after employees learned about the decision only at the same time as the public announcement.
While the airline offered benefits and support, questions arose over communication and transparency.
Cases like this show how quickly workforce reductions can become a reputational flashpoint. Even if employers meet the legal requirements, poor handling of retrenchments can erode trust, invite union scrutiny, and damage brand credibility.
The Ministry of Manpower (MOM), together with unions and employer groups, has issued clear guidelines under the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment.
These standards go beyond the minimum legal framework, setting expectations for fairness, objectivity, and compassion.
Companies that ignore them risk both regulatory intervention and public backlash.
To help employers understand how to manage these challenges, HRD Asia spoke with Azmul Haque, managing director, and Syma Zainab, counsel, at Collyer Law LLC. Both lawyers advise companies on retrenchment exercises, compliance with the Employment Act, and stakeholder engagement.
Legal obligations and common gaps
Haque and Zainab explain that Singapore law sets out clear duties when retrenchment is on the table.
Employers must comply with notice periods, pay out all salaries and benefits, and avoid wrongful dismissal.
“Employers must follow the notice period, pay out all salaries (including retrenchment benefits if applicable), and ensure there is no wrongful dismissal,” they note.
They add that too many companies underestimate the broader expectations. “Treating retrenchment as a simple termination under the contract, without recognising the additional responsibilities, can risk wrongful dismissal claims,” they explain.
Communication failures, such as leaving employees unprepared or uninformed, are another common pitfall.
In addition, MOM requires employers with at least 10 employees to notify the ministry of all retrenchments within five working days of informing affected staff.
This rule has been applied since 2021, ensuring transparency and accountability in how companies reduce headcount.
Misconceptions about 'fair' retrenchment
According to Haque and Zainab, many employers assume that retrenchment is purely a business decision.
“One of the biggest misconceptions among employers is that retrenchment is simply a business decision — close a unit, cut costs, or restructure — and nothing more,” they say.
In reality, both regulators and employees expect a much higher standard of care.
“The misconception is that ‘fair’ retrenchment equals only legal compliance,” they emphasise.
“In reality, both regulators and employees expect retrenchments to be handled with care, transparency, and responsibility, not just paperwork”.
Applying proper selection criteria
When layoffs become unavoidable, employee selection often becomes the most sensitive aspect. Haque and Zainab stress that employers must adopt clear, objective, and documented criteria.
“Selection must be seen as fair, transparent, and business-driven, not based on personal preference,” they explain.
They highlight three cornerstones of proper criteria: relevance to business needs, non-discrimination, and strong documentation.
“Decisions should be based on business needs, skills, performance, and the ability to adapt to future roles,” they say.
“Employers cannot use factors like age, race, gender, religion, marital status, pregnancy, or disability”.
Documentation, they add, is critical for defensibility. “Proper records protect employers from claims of wrongful dismissal and demonstrate compliance if MOM or unions ask questions. Without documentation, employers may struggle to prove decisions were fair and objective”.
Unionised workplaces and collective agreements
The lawyers note that unionised environments come with additional requirements.
“Where a union is involved, employers must consult early and meaningfully with the union,” they say.
“Collective agreements may set out additional requirements for benefits and processes”.
This means HR leaders cannot treat unionised and non-unionised workplaces in the same way.
Early engagement and respect for collective agreements reduce the risk of disputes and build credibility with employees.
Why communication makes or breaks retrenchments
Even if legal duties are met, how retrenchments are communicated often defines whether employees feel respected, or aggrieved.
“Communication is often the make-or-break factor in how retrenchments are perceived,” Haque and Zainab explain.
“Even if a company complies with the law, how the message is delivered can determine whether employees feel respected, or whether the employer faces backlash, union disputes, and reputational damage”.
They recommend early consultation with unions, advance notice beyond statutory minimums, and clarity about the rationale.
“Explain the business reasons for retrenchment in simple, straightforward language,” they advise.
“Share how selection criteria were applied, and provide full details of compensation, retrenchment benefits, and career transition support”.
Regulatory timelines and compliance details
Haque and Zainab caution that even seemingly small administrative gaps can create risks.
“Final salaries and Central Provident Fund (CPF) contributions must be paid promptly, usually within 7 days,” they explain.
“Employers must issue itemised pay slips”.
These details, while procedural, are often overlooked. Failing to meet these obligations can quickly escalate into disputes or MOM intervention.
Going beyond the minimum
From a regulatory perspective, MOM only steps in when laws are broken.
But Haque and Zainab caution that compliance alone may not protect employers from reputational fallout.
“If contractual obligations and statutory requirements are met, organisations are likely to be able to manage any legal risks and repercussions,” they explain.
“At the same time, going beyond statutory minimums is not only encouraged by MOM but is increasingly seen as a commercial imperative in Singapore’s reputationally sensitive business environment”.
Redeployment before retrenchment
The lawyers emphasise that retrenchment should always be the last resort. “Redeployment as an alternative to retrenchment is strongly advocated by the Tripartite Advisory,” they say.
“Employers are expected to explore all reasonable alternatives, such as redeployment to other roles or reducing work hours, before proceeding with layoffs”.
Half-hearted measures, however, create risks of their own. “If such measures are offered superficially or not genuinely explored, both legal and reputational risks arise,” they warn.
MOM may intervene if retrenchment appears to be used as the first rather than the last resort, especially in socially sensitive industries.
Learning from case studies
The lawyers point to past examples where poor handling drew scrutiny, specifically at a certain hospital.
“During the early COVID-19 period, some contract workers alleged they were retrenched without clear communication or fair selection,” they recall.
“Following complaints, MOM and unions intervened... The hospital had to reinstate some employees and tighten its processes”.
Such cases underscore the need for foresight.
HR leaders must anticipate how employees, regulators, and the public may perceive their actions, not just whether they meet the letter of the law.
Managing reputational risks in the social media age
In today’s connected world, retrenchment decisions can spark instant reactions online. Haque and Zainab caution that this amplifies the importance of transparency.
“In today’s climate, where retrenchment decisions can rapidly become viral on social media, employers must be prepared to manage [the] impact on reputation,” they explain.
“Negative public perception can often be fuelled by [a] lack of transparency, or perceptions of unfairness, and can have immediate effects on customer trust, talent attraction, and business relationships”.
Supporting employees through transition
Beyond compliance, the lawyers highlight the need for human support. “Offer emotional support, counselling, and outplacement services,” they advise.
“Partner with Workforce Singapore (WSG) or unions to provide job-matching or training programmes”.
Such initiatives not only cushion the impact on employees but also reinforce the company’s reputation as a responsible employer.
Best practices for future retrenchment playbooks
Looking ahead, Haque and Zainab advise companies to prepare proactively rather than wait for crises.
“Retrenchment will always be difficult, but employers who prepare thoughtfully can handle it in a way that is both legally defensible and trust-preserving,” they say.
They outline several best practices:
- Have a clear policy in place: “A well-drafted retrenchment policy sets expectations for managers, employees, and unions, and ensures consistency.”
- Consult early: “Engage unions and employee representatives before decisions are finalised. This helps to build trust and reduce resistance.”
- Be transparent about criteria and process: “Clearly explain how decisions were made, what criteria were applied, and what benefits employees will receive.”
- Go beyond the minimum: “Provide not just statutory benefits, but also emotional support, counselling, outplacement services, and job search assistance.”
- Keep strong documentation: “Record the business reasons, criteria applied, and communications made. This protects the company if challenged by regulators, unions, or even public opinion.”
- Coordinate across teams: “HR should work closely with legal, senior management, and communications/PR teams. Consistent messaging prevents misunderstandings and protects the company’s reputation.”
- Align with the Tripartite Advisory: “Following its recommendations will keep you aligned with both legal requirements and public expectations”.
Leading with responsibility
Retrenchment is never easy, but as Haque and Zainab make clear, the way employers handle it can determine whether they emerge with credibility intact.
Meeting statutory requirements is only the starting point. Transparent communication, early consultation, fair criteria, and genuine support are what distinguish a responsible employer from one that risks reputational harm.
For HR leaders, the message is clear: thoughtful preparation and principled execution are not optional extras but essential safeguards in Singapore’s employment landscape.
By embedding fairness and empathy into retrenchment playbooks, companies can weather restructuring with resilience, and maintain the trust of employees, unions, and the wider public.
