Carrying out redundancies – a comparison of Asian jurisdictions

Employers in Singapore, Thailand, China, and Indonesia must follow certain rules

Carrying out redundancies – a comparison of Asian jurisdictions

In our continuing Asia comparative series, we focus on several key issues when carrying out redundancies across Singapore, Thailand, Mainland China, and Indonesia. 

The decision to carry out redundancies involves a myriad of considerations.

Below, we compare issues across the region, from selection criteria, protected classes of employees and providing alternatives to redundancies.

Are there statutory selection criteria requirements?

Singapore: No. However, there are government advisories such as the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment which provides that employers should adopt objective and consistent selection criteria.

The Advisory also emphasises the need to maintain a strong "Singaporean Core" and to ensure that redundancies should not result in a reduced proportion of local employees.

While the Advisory is non-binding, employers are expected to comply with it.

Mainland China: No, but employees should generally be selected based on fair and objective criteria.

Thailand: No, but employees should generally be selected based on fair and objective criteria.

Indonesia: No, but employees should generally be selected based on fair and objective criteria.

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Are there classes of employees who are protected from redundancies?

Singapore: Yes. There is a blanket prohibition on an employer giving notice of termination during a female employee's absence on statutory maternity leave or on such a day that the notice will expire during the absence on statutory maternity leave.

Additionally, an employer who gives notice of termination, without sufficient cause or on the ground of redundancy or reorganization, to a pregnant employee (as medically certified), is liable to pay her the maternity benefits that she would have been entitled to, so long as the employee has at least three months' service.

A female employee who considers that the notice of termination given to her was not given for sufficient cause may also lodge a claim for reinstatement or compensation before the Employment Claims Tribunal.

China: Yes. There is a prohibition on an employer terminating the employment of

  • a female employee during her pregnancy, maternity leave or nursing period
  • an employee during the medical treatment period for illness or injury not related to work
  • an employee who has lost or partially lost the ability to work due to occupational disease or work-related injury
  • an employee who has worked for the employer for 15 consecutive years and will reach the retirement age in less than five years
  • an employee engaged in work exposed to occupational disease hazards who has not taken a pre-exit occupational health check
  • an employee suspected of an occupational disease who is in the period of diagnosis or medical observation.

If the employment contract of an employee expires during the period set out above, the contract must be extended until the end of the specified circumstance, unless otherwise specified by law.

Thailand: Yes, Thai law prohibits dismissal (including due to redundancy) of employees involved in labour or industrial relations/trade union activities, such as employees who are members of employee committees or the trade union, subject to certain limited exemptions.

Indonesia: There are no classes of employees protected from redundancies in Indonesia.

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Does offering an alternative role avoid redundancy payment?

Singapore: This depends on whether the employee accepts the role.

If the employee accepts the alternative role, then no, as the employee is not made redundant (note however that there are no statutory severance payment obligations in Singapore, though the Advisory recommends, and most employers will pay, retrenchment payments).

However, if the employee is offered but does not accept the alternative role and they are made redundant, then the recommended retrenchment payment as set out in the Advisory (and any contractual redundancy payment) is payable.

Mainland China: This depends on whether the employee accepts the role.

If the employee accepts the alternative role, then no, as the employee is not made redundant.

However, if the employee is offered, but does not accept the alternative role and they are made redundant, then severance payment is payable.

Thailand: This depends on whether the employee accepts the role.

If the employee accepts the alternative role, then no, as the employee is not made redundant.

However, if the employee is offered, but does not accept the alternative role and they are made redundant, then statutory severance payment is payable.

Indonesia: This depends on whether the employee accepts the role.

If the employee accepts the alternative role, then no, as the employee's employment is not terminated.

However, if the employee is offered, but does not accept the alternative role and their employment is terminated, then termination payments are payable depending on the applicable statutory ground of termination and type of employment.

Is there an obligation to look for alternative roles outside the organization?

There is no obligation on employers to look for roles outside of their organisations in any of Singapore, Mainland China, Thailand, or Indonesia.

Fatim Jumabhoy is the Asia Head of Employment, Pensions, and Incentives and Managing Partner of Herbert Smith Freehills in Singapore. Nurul Ayu Fajarani is an associate in the Employment, Pensions, and Incentives practice at Herbert Smith Freehills in Singapore. Herbert Smith Freehills LLP provides access to Singapore law advice through its Formal Law Alliance with Prolegis LLC.

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