SINGAPORE — Between 2019 and 2023, the Ministry of Manpower (MOM) received around 16,300 mandatory retrenchment notifications from companies that are required to alert the authorities when letting go their staff members.

Of these, around one in three (30 per cent) notices were submitted later than MOM’s requirement, which is five days after affected employees were notified, an MOM spokesperson said in response to TODAY’s queries.

Nevertheless, the spokesperson said that things had improved in 2023, with around 25 per cent of submissions being late.

Manpower Minister Tan See Leng on Tuesday (Feb 6) revealed the 16,300 figure in Parliament in response to a supplementary question posed by Dr Tan Wu Meng, Member of Parliament (MP) for Jurong Group Representation Constituency (GRC).

The minister said that the compliance rate for these submissions has also “continued to improve” over the years and MOM has also not received any cases of unionised companies that have not submitted these notices after carrying out a retrenchment exercise.

MOM requires employers in Singapore that employ at least 10 people to notify the ministry of an employee’s retrenchment within five working days of the employee being notified.

Citing this requirement, the MP had asked if the ministry would consider mandating earlier notification to MOM in cases where the retrenchment is “very substantial” and involves a large number of employees.

The early notification could allow for help to be provided to employees early on, the Jurong MP added in a supplementary question.

The parliamentary question comes after recent news of layoffs at Lazada in Singapore. The company did not notify the union representing its workers before retrenching staff members. CNA reported that departments across the company saw drastic cuts in manpower.

On Feb 4, Lazada and the workers’ union reached a deal for retrenched workers to receive enhanced support packages, among other benefits.

Responding to the question on Tuesday, the minister said it is important to note that the compliance rate for companies to notify MOM over the years has continued to improve.

“This five days mandatory retrenchment notice period strikes a balance between allowing employers sufficient time to finalise their decisions and collate the required information for submission, while still allowing for the prompt provision of career facilitation services and programmes to assist the affected workers,” he added.

MOM and its tripartite partners had also formulated “clear guidance” for employers when undertaking cost-cutting measures, contained in the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment.

The advisory urges unionised companies to notify their unions early about an upcoming retrenchment exercise. Where it is provided for in the collective agreement, employers should ideally alert their union one month before notifying their employees of their retrenchment.

If an employer does not follow the advisory, the Tripartite Alliance for Fair and Progressive Employment Practices (Tafep) would engage the employer to adhere to the advisory, said Dr Tan See Leng, adding that most employers were cooperative when approached by Tafep or MOM.

“This shows that our tripartite advisories are working well without the need for additional penalties, which may negatively affect the wider business environment in Singapore,” he said, noting that unionised companies have an interest to maintain a good working relationship with their unions as it is a long-term partnership.

“Let me reassure members of the House: The majority of unionised companies have a good relationship with their unions to secure win-win outcomes,” said Dr Tan See Leng.

NON-COMPETE CLAUSES

Dr Tan See Leng also responded to a parliamentary question filed by MP for Sengkang GRC Jamus Lim on non-compete clauses in employment contracts.

Associate Professor Lim had asked about the prevalence of such non-compete clauses in contracts for mid-level employees, whether the ministry condones the enforcement of such clauses in the event of retrenchment, and what efforts MOM has taken to better protect employees against “exploitative” employment contracts.

A non-compete clause refers to a restriction in an employment contract that generally prevents employees from working for a competitor in the same industry after they leave their job.

It came under public scrutiny recently, after it was found that employees from Shopee and Lazada were bound by these contractual terms.

Dr Tan See Leng said MOM and its tripartite partners are developing a set of tripartite guidelines to provide guidance on the “reasonable use” of such clauses, educate employers and shape norms.

“These guidelines are currently being finalised and we target to release them in the second half of this year,” he said.

Responding to Assoc Prof Lim, the minister said MOM does not intend to introduce more regulations outside of these new guidelines.

Dr Tan See Leng said: “To be clear, MOM will not, will never and does not condone any exploitative employment contracts.

“On non-compete or restraint of trade clauses in employment contracts, the civil courts have clear established principles on when such clauses are acceptable and can be upheld in court, and when such clauses are unreasonable, unjustified and thus declared void.”

He added that the civil courts would assess if there was a “genuine business need” for the clause, and whether the company had scoped the clause “reasonably based on sector, geographical areas and duration”.

The courts would also balance employers’ needs to safeguard their businesses and employees’ ability to earn a living. Courts will also consider whether the clause is used to help businesses gain unfair advantages.

Nevertheless, the minister acknowledged that “overly restrictive” restraint of trade clauses could disadvantage retrenched employees and create difficulties for them in finding employment.

Employees who believe that they are affected by unreasonable or unjustified restraint of trade clauses can seek assistance from their unions, MOM or Tafep, he added.