The Big Read in Short: Protecting workers amid the spectre of retrenchments
Each week, TODAY’s long-running Big Read series delves into the trends and issues that matter. This week, we look at the topic of retrenchment and what help workers can get. This is a shortened version of the full feature.
Each week, TODAY’s long-running Big Read series delves into the trends and issues that matter. This week, we look at the topic of retrenchment and what help workers can get. This is a shortened version of the full feature, which can be found here.
SINGAPORE — Each year, thousands of workers here are laid off. The number of workers retrenched in Singapore peaked at 23,430 in 2009, when the global financial crisis hit. The figure dipped under 10,000 for each of the two succeeding years (2010 and 2011).
Between 2013 and last year, the figure ranged from a low of 10,730 last year to a high of 19,170 in 2016. Latest statistics from the Ministry of Manpower (MOM) showed a total of 5,550 workers laid off in the first half of this year.
While the retrenchment numbers in recent years remain relatively low, there have been several high-profile retrenchment exercises which made the headlines.
Just earlier this week, media company Singapore Press Holdings announced it will lay off 5 per cent of its staff in the media group by end-November, as part of restructuring efforts.
Last month, travel retailer DFS Group also laid off about 60 workers, following an announcement by the Hong Kong-based company that it was scaling back its operations in Singapore. According to media reports, the workers at the DFS outlets in Scotts Road, Changi Airport, as well as its shared services centre in Chai Chee were not given any warning, and were told to leave with immediate effect.
In the age of disruption where industries could be turned on their heads overnight, it could be said that workers need to be better prepared for and protected against retrenchments. It also raises the question of whether Singapore’s existing framework — which seeks to strike a balance between the interests of businesses and workers — is adequate.
VARIED PRACTICES
The manner in which DFS went about its retrenchment exercise was roundly criticised. It is currently being looked into by the authorities.
While horror stories abound of high handed employers, there have also been cases where companies were lauded for handling the unpleasant task of shedding jobs well.
In October last year, telco StarHub announced that it was laying off about 300 of its 2,500 employees as part of a restructuring exercise. TODAY previously reported that the majority of those affected were senior managers who had worked in the company for more than 15 years.
Though many were initially shocked, a StarHub staff member told TODAY then that some of those retrenched were happy with their retrenchment packages.
Mr David Ang, director of corporate services at Human Capital Singapore, stressed the need for employers to have empathy when carrying out a retrenchment exercise.
“A good employer (who is) responsible enough will know that retrenchment is a very painful process and is very personal to the employee,” he said.
Employers should take into account the “psychological and emotional aspect”. Some companies, for example, would arrange for counsellors to provide support to retrenched employees, said Mr Ang.
Speaking from his own experience, a manager with an aviation company, who declined to be named, said that his firm’s HR department would break the news to a retrenched employee face-to-face in the presence of his supervisor.
“Even at later stages, after the employee has left, and he foresees some issues (in finding employment) and wants to engage professional help, he can still reach out to the company,” he said.
EXISTING LAWS & GUIDELINES
- Under the Employment Act, companies are required to notify MOM within five working days of notifying the retrenched employees.
- This requirement applies to companies that retrench at least five employees within a six-month period and employ at least 10 employees, said an MOM spokesperson in response to TODAY’s queries.
- Separately, MOM's Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment guides companies in managing the retrenchment of all employees, regardless of nationality. Companies that refuse to follow the advisory’s guidelines risk having their work pass privileges curtailed, the MOM spokesperson said.
- Among other things, the advisory states that only employees who have worked for more than two years are eligible for retrenchment benefits. Those who do not meet the requirement could be granted an ex-gratia payment.
- If the company undergoing retrenchment is unionised, it will have to consult the union “as early as possible, with the prevailing norm being one month prior to notifying the employee”.
- In general, MOM can step in to conciliate between the parties if negotiations between the unions and companies reach a deadlock. Should that fail to resolve issues, the case may be referred to the Industrial Arbitration Court (IAC).
ARE TOUGHER LAWS NEEDED TO PROTECT WORKERS?
To accord better protection for Singapore workers, some felt that there could be room for tougher legislation, on top of the existing guidelines.
Singapore Management University law lecturer Eugene Tan said: “It would be better to have a (legal) framework so that workers will not be at the mercy of the employers who are more concerned about the bottom line at the expense of the well-being and welfare of the workers.”
While he acknowledged the limitations of legislation, having a legal framework is “certainly better than leaving it to chance” in an age of economic disruption, he said.
Others, however, disagreed. They said the following issues may arise should the non-binding guidelines be made into laws:
- Workers could be worse off if a minimum requirement for compensation is legislated, for example, said National Trades Union Congress (NTUC) assistant secretary-general Cham Hui Fong. In certain industries, such as oil refineries and banks, companies pay more than a month’s worth of salary for each year of service rendered by a worker being retrenched.“If the law stipulates that the minimum (retrenchment benefit) is one or two weeks instead, why should I (as an employer) pay extra?” she said.
- Singapore National Employers Federation (SNEF) said laws would not be able to address the different business and financial circumstances that companies are in when they conduct retrenchments.
- An employer who is in a bad financial shape may not be able to meet the minimum compensation requirements for those who are retrenched, and yet keep the rest of its business viable. The cost of retrenchment may be too prohibitive for some employers and this will impede economic restructuring for the “long-term good of the economy and the workforce”, said SNEF.
- DBS Bank senior economist Irvin Seah said it would create “a lot of inflexibility into our business regulatory frameworks”. This could deter foreign companies from choosing to operate in the Republic, he said.
- In the long term, the productivity of the workforce could also be affected, he said. Laws to protect workers could end up encouraging “unproductive behaviour” if it prevents an underperforming worker from being retrenched, he added.
HOW UNIONS CAN HELP AFFECTED WORKERS
If a unionised company is about to retrench people, or if a dispute arises over compensation terms, unions are able to:
- Negotiate on behalf of its members for better terms.
- Find alternative job placements within the company, or elsewhere, while offering training to get the affected staff ready.
- Typically ensure at least a months’ salary per year worked.
- Offer other forms of support like training grants, assistance for hardship or medical cases, and job referrals.
- Escalate matters to MOM or IAC if the situation requires.
For members of a registered trade union working in non-unionised companies, a tripartite mediation framework exists to assist them.
The mediation covers a wide range of issues: Salary arrears, employment statutory benefits, payment of retrenchment benefits, breach of individual employment contract by an employer, re-employment issues, and wrongful dismissal claims.
WHAT ABOUT WORKERS WHO ARE NOT PART OF A UNION?
Non-union members can seek help from the Tripartite Alliance for Dispute Management (TADM), though the assistance offered will be limited compared to what a union member could expect.
For instance, non-union members will only be able to receive 30 minutes of advisory for free for all workplace issues.
For salary-related claims, TADM will only help advise on the Employment Claims Tribunal process for a claim of up to S$20,000, while unionised members will be able to seek help for claims of up to S$30,000.
Union leaders whom TODAY spoke to urged workers to join unions, which can help them fight for better terms should they be given the pink slip.
They noted that not many Singaporeans are aware of the work that unions do — until they are laid off, which may be too late.
As in the case of DFS’ retrenchment exercise, the unions carry out much of its work behind closed doors. This, together with the harmonious industrial relations that Singapore has enjoyed over the decades, has inadvertently resulted in the general population being unaware and unconvinced about the benefits of joining unions.
To date, NTUC has about 950,000 members in all, making up merely about 30 per cent of the workforce.
Joining a union is like buying insurance, said Ms Cham. “You don’t wait until your company is hit by retrenchments then you join,” she added.