Covid-19 Update Singapore

published on 20 November 2020 | reading time approx. 1 minute

Updated Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment

On 17 October 2020, the Ministry of Manpower together with the National Trade Union Congress and the Singapore National Employer Federation published an updated version of the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (the “Advisory”).

     
As emphasized in previous advisories, retrenchment should be considered as last resort of any business, and all business are encouraged to take a long-term view on their manpower requirements. Under Annex A, the Advisory suggests that entrepreneurs shall first implement other cost-saving measures before considering retrenchment, such as adjustments to work arrangements with or without salary cuts, direct adjustments of salaries and no-pay leave. Furthermore, the Advisory highlights the provided governmental support with regard to training and redeployment. The updated Advisory intends to provide clarity on the selection criteria during a retrenchment exercise:
 

Fair and objective criteria of retrenchment

When required to conduct a retrenchment exercise, employers should apply objective and fair selection criteria concerning the retrenched employees. Retrenchment should be conducted without discrimination with respect to age, race, gender, religion, marital status and family responsibility or disability. As an example, the Advisory names an unfair treatment of older, re-employed or pregnant employees.
  

Maintain strong Singapore core

Employers should apply a long-term view when considering any retrenchment exercise, and should in this regards maintain a strong Singaporean core within their workforce. The Advisory stipulates that retrenchment should not result in a reduced proportion of local employees. However, in the following paragraph the Advisory also mentioned the openness of Singapore to foreigners and encourages businesses to allow knowledge transfer from foreign to local workforce.
 
Furthermore, the Advisory addresses the need to early communicate a retrenchment with the employees, to comply with the notification requirements as well as to consider payment of any retrenchment benefits to the retrenched employees.
 

What does that mean for business

Whenever a business considers termination or retrenchment of staff, the named objectives should be carefully evaluated. The Advisory is a recommendation, however, it might be taken into consideration by a court in case of related disputes. Hence, proper documentation to show compliance with the applicable legal obligations (contractual and statutory requirements) and the Advisory is very important. Employers might use the guidelines issued under Annex B of the Advisory as guidance. Obtaining legal advice before retrenchment or termination of staff is important. Even more so as the vagueness of the new criteria in an economic environment of potential higher unemployment rates might give rise to more employment disputes. 
  
You can find the Advisory here »