5 things you need to know about retrenchments


The Tripartite partners have released the revised Tripartite Guidelines on Managing Excess Manpower and Responsible Retrenchment to strengthen its support for affected companies and workers in light of the economic restructuring that Singapore is facing.

It urges to consider alternative ways of managing their excess manpower such as upskilling employees and redesigning jobs.

But it also said that if retrenchment is inevitable, companies should do so in a responsible manner.

The guidelines emphasise the need for companies to maintain a strong Singapore Core and avenues to help workers who have been displaced.

Here are 5 things you need to know about the revised guidelines:

1. Upskill workers in difficult times


Throughout the entire guidelines, the word upskill was emphasised many times to show the call for companies to use their lull periods to upskills workers so that they remain relevant and adaptable.

2. Responsible Retrenchment


If retrenchment is inevitable, the tripartite partners have urged companies to exercise responsibility and sensitivity.

“Retrenchment is a difficult time for all, especially the employees affected and their families. It is important that employees are treated with dignity and respect during a retrenchment exercise.”

The guidelines also stated that companies should not discriminate against any particular group on any ground. For instance, older, re-employed as well as pregnant employees should not be unfairly targeted.

3. Retrenchment Notice Period

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The guidelines also highlight what the Employment Act prescribes as a minimum requirement for the notice period schedule for termination of employment under normal circumstances.

Length of Service Notice Period
Less than 26 weeks 1 day
26 weeks to less than 2 years 1 week
2 years to less than 5 years 2 weeks
5 years and above 4 weeks

4. Retrenchment Benefits and Employment facilitation

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According to the guidelines, employees with 2 years’ service or more are eligible for retrenchment benefits while those with less than 2 years’ service could be granted an ex-gratia payment.

The prevailing norm as prescribed by the guidelines, is to pay a retrenchment benefit varying between 2 weeks to 1 month salary per year of service.

The guidelines also urged employers to help affected employees look for alternative jobs in associate companies, in other companies, or through outplacement assistance programmes.

5. Cost-Saving Measures to Manage Excess Manpower


Some of the possible cost-saving measures include redeploying workers to alternative areas of work within the organisation with the relevant training, or providing a shorter work week or other work arrangements and implementing a temporary layoff period. These should be done in consultation with the workers and trade unions, taking into consideration the performance and financial position of the company.

One other way is to put a Flexible Wage System in place to avoid retrenchment, which includes Variable Bonus Payment, Annual Wage Increment, Monthly Variable Component and Annual Wage Supplement.

Responding to the release of the revised guidelines, NTUC’s Assistant Secretary General Patrick Tay said he is glad that the tripartite partners acknowledged the need for fairness and profesionalism in the carrying out of retrenchments.



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