Let’s Ask: What do you do in the face of retrenchment?


We see more companies restructuring in recent times and some are laying off workers, including MediaCorp which laid off 33 employees as part of a recent overhaul of its operations.

Companies have the freedom to hire and fire, to set their wages and to promote or demote their staff. Because it is a free market right, the Ministry of Manpower really has very little to do in these areas, except where laws are broken.

In the Employment Act, payment of retrenchment benefit is directed as:

45. No employee who has been in continuous service with an employer for less than 2 years shall be entitled to any retrenchment benefit on his dismissal on the ground of redundancy or by reason of any reorganisation of the employer’s profession, business, trade or work.

However, the law is silent on what happens if you have worked more than 4 years. Or what they could pay you if you’re entitled to retrenchment benefits.

This is where your union membership comes in handy.

The role of the union in negotiations with management partners are important. Without this, retrenched workers may be dealt with worse-off retrenchment benefit, and more workers could have been laid off.

Even before retrenchment starts, union officials are likely to be in negotiations with the management to come up with alternatives.

Alternatives to retrenchment for a company with excess manpower include:

Temporarily laying off employees for a short period of time; or
Implementing a shorter workweek.

The reduction in workweek should not:

  • Exceed two days in a week; and
  • Last more than two months.
  • Include temporary Layoffs

There exists tripartite guidelines agreed between the unions, employers and the Ministry of Manpower, that affected workers should receive no less than half of their gross salary during the days that they are laid off.

A company that is paying its employees half of their salaries during the days that they are laid off could also arrange for them to take half-day paid annual leave on those days.

In doing so, the employees will be able to continue receiving their full-day earnings, including the half-day salary the employer is paying. However, the employees should not be made to consume more than 50% of their earned annual leave for this purpose.







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