Singapore

Worrying trend of firms disguising layoffs: NTUC

Worrying trend of firms disguising layoffs: NTUC
TODAY file photo
Cases where workers whose contracts are terminated at one month’s notice on the rise
Published: 7:20 PM, October 23, 2016
Updated: 11:22 AM, October 24, 2016

SINGAPORE — Some had their contracts terminated without clear explanation — just before their firms moved overseas. Others were let go because they did not meet their performance targets. Or so they were told.

But investigations later show that they are actually disquieting examples of “disguised retrenchments”, a trend the National Trades Union Congress (NTUC) is concerned about, such that its assistant secretary-general Patrick Tay raised the matter in Parliament last month.

He had called on the Government to pay more attention to the issue for a better reflection of layoff numbers.

Speaking to TODAY last week, Mr Tay, who is also a Member of Parliament for West Coast GRC, said he was unhappy about such veiled layoffs because firms get away with not having to pay workers retrenchment benefits.

It also allows them to avoid bad press or business repercussions if the word gets out. Hence, they axe staff but “don’t say it’s (a) redundancy”, Mr Tay said.

Right now, firms do not have to notify the Government of any forthcoming retrenchment exercises, but are encouraged to do so.

Retrenchment benefits are not mandatory under the law, and the quantum hinges on agreements between employers and employees. Quantums are to be negotiated between the two parties if no provisions are made.

Mr Tay said that, lately, the labour movement’s U PME Centre, which helps professionals, managers and executives (PMEs), is seeing a rising number of one particular type of disguised retrenchment.

This would be workers whose contracts are terminated at one month’s notice — generally permissible under provisions in employment contracts — by firms shedding headcount. These workers did not get retrenchment benefits.

In the past year, the centre handled between 15 and 20 such cases, all in non-unionised firms, compared with fewer than 10 the year before, a trend that corresponds with the increasing number of layoffs, Mr Tay said.

The Ministry of Manpower’s (MOM) latest labour-market report last month showed that layoffs for the first half of this year vaulted to 9,510, the highest since 2009.

In other instances, workers are asked to resign voluntarily when firms wade into troubled times. The companies claim that terminating them “doesn’t look good on you”.

In cases where contracts are terminated with poor performance cited as a reason, a tell-tale sign of a disguised retrenchment is when the poor performance rating comes abruptly on the back of consistently good ratings.

Last month, the U PME Centre helped a senior professional in a large non-unionised firm claim retrenchment benefits after a tussle of nearly two months, Mr Tay disclosed.

Mary (not her real name), 45, had approached the NTUC in July after her firm discontinued the project she was working on. A shift in company strategy meant that her role ceased to exist.

Affected staff were given two options: Secure another internal role or accept a retrenchment package if they could not land one. She was also told to hunt for work externally owing to the difficult economic situation.

After landing two job offers, one of which was within the company, Mary chose the other job at another company, which offered bigger responsibilities.

She was later told, however, that she would not receive a retrenchment package since she was offered an internal role, and was to resign. The worker was not told about this policy and felt it was unfair, the NTUC said.

Workers at non-unionised firms tend to be more vulnerable. Mr Tay said unionised firms would consult their unions as provided for in the collective agreement between firms and unions.

The norm is to do this a month before employees are notified of a retrenchment exercise. Retrenchment benefits usually work out at one month’s wage for each year of service.

But workers in non-unionised firms risk being left to flounder, even though individuals who are union members could still seek help through the tripartite mediation framework.

Recourse aside from civil action is limited. Workers could turn to the unfair-dismissal provisions in the Employment Act, but this covers only those earning up to S$4,500 a month.

The new Employment Claims Tribunals, which will, from April, hear salary-related disputes for all workers, regardless of income, may close this gap, but even this avenue is “useless” if employment contracts are silent on retrenchment benefits, said Mr Tay.

Workers must therefore ensure that such benefits are spelt out in their contracts before signing on the dotted line, he urged.

The Tripartite Guidelines on Managing Excess Manpower and Responsible Retrenchment offer guidance on responsible retrenchment practices, such as retrenchment benefits.

For instance, employees who have worked in a firm for two years or longer should be eligible for retrenchment benefits, while those with less than two years’ service could be granted an ex-gratia payment.

The prevailing norm is to pay benefits of between two weeks’ and one month’s wage for every year worked, depending on the firm’s financial position and industry norms.

Mr Tay also said that notifying the ministry of retrenchment exercises should be made mandatory, so help can be offered to workers.

Reiterating that employers should be responsible when laying off staff, he added: “Be fair, responsible, follow the Tripartite Guidelines ... (and) do it in a responsible manner.”