You’ve arrived at the difficult decision of letting go of your workers due to various business challenges.
But wait, have you considered other options that can keep your costs down? Do you have to notify anyone about your plans? How can you conduct a fair, respectful and responsible retrenchment exercise without affecting the morale of existing staff and future hiring?
To address these concerns, LabourBeat has compiled information from tripartite guidelines and NTUC’s resources to guide you through the best practices to adopt if retrenchment is unavoidable.
1. Exhaust All Options Before Considering Retrenchment
Retrenchment should always be the last resort. Consider other alternatives to keep your businesses viable and prevent job losses.
One example is to train your workers under an NTUC Company Training Committee (CTC) during the downtime — equipping your workers with in-demand skills could help you prepare for an uptick in business. This way, you’ll have the workers to manage the influx of business and they’ll have the skills to offer value-added goods and services.
Companies can also explore redeploying workers to other jobs within your organisation, implementing a shorter work week or exploring various cost savings measures.
You can also find out about the various government assistance schemes to support your business transformation and seek help with employment facilitation at NTUC’s e2i (Employment and Employability) Institute.
What’s the best way to be prepared? We recommend observing the guidelines in the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment and NTUC’s Fair Retrenchment Framework.
For further employment facilitation assistance, reach out to e2i at followup@e2i.com.sg.
To form a CTC, reach out to NTUC Training and Transformation at www.ntuc.org.sg/tpe.
2. Consult Your Union if You Are a Unionised Company
Consult your union early to work out mutually agreeable arrangements.
In instances where retrenchment notification is stipulated within the collective agreement, the norm is to inform the union one month before notifying employees.
This will enable you to discuss issues like selection criteria, process flow, retrenchment benefits, and job placement planning, so you’re adequately prepared to handle your workers when the time comes.
Refer to the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment and NTUC’s Fair Retrenchment Framework for more details.
3. Notify Employees Affected by the Layoffs
If retrenchment is unavoidable, you must notify your employees according to the employment termination terms stipulated in their employment contracts.
You should also consider communicating your efforts to manage business challenges early before serving employees any notice or announcing the news publicly, so that they can be mentally prepared for retrenchment.
The session could involve sharing about your business challenges and current situation, outlining how the retrenchment exercise will be carried out, elaborating on the factors that will be considered, and specifying the assistance to affected workers.
4. Notify the Manpower Ministry
If you are a Singapore-registered business that employs at least 10 workers, you are required by law to notify the Manpower Ministry (MOM) about the retrenchment exercise.
You are also encouraged to notify MOM if your business has less than 10 workers. This enables NTUC and the tripartite partners to help workers find alternative employment or identify relevant training to enhance employability.
You must submit the notification within five working days after informing your employee. Failure to comply will result in administrative penalties of up to $2,000 per contravention.
Refer to the Tripartite Guidelines on Mandatory Retrenchment Notifications for more information.
5. Conduct a Fair, Responsible and Respectful Retrenchment Exercise
It’s a challenging time for you and your employees, so do the right thing and carry out fair, responsible and respectful proceedings to minimise the pain on both sides.
For companies retrenching for the first time, don’t discriminate against your employees or employee groups when deciding on who to cut. Make your selection based on factors like the ability, experience, and skills of the employee to contribute to the company’s sustainability, workforce transformation, and/or future business needs.
Other best practices include providing a longer notice period where possible, delivering the news in a sensitive manner, being on site to handle feedback and queries, giving employees time to adjust to the news, and offering counselling where necessary.
For unionised companies, union representatives will be on-site to assist with employee queries. The union will also rope in NTUC’s e2i (Employment and Employability) Institute to provide onsite job facilitation services and workshops to prepare affected workers for their job search.
More importantly, you should provide a fair retrenchment package with a benefit, salary, unused annual leave, notice pay, and so on to affected employees.
The prevailing norm is to give employees with two years’ service or more a payout of between two weeks to one month’s salary per year of service.
Unionised companies can refer to the tripartite guidelines, where the norm is one month’s salary for every year of service.
Refer to the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment and NTUC’s Fair Retrenchment Framework for more details.