When companies retrench, they are advised to inform MOM and the union as early as possible.
Retrenchment benefits may be paid out, especially if the union’s collective agreement, employment contract or staff handbook has provided for it.
But if not, don’t expect any retrenchment benefits.
But not all companies, which want to get rid of staff quickly, will call their layoffs a retrenchment.
After all, if there are other ways to axe staff, save on retrenchment benefits and make staff think it’s their own idea to leave (“It’s not me, it’s you”), why not?
There are a few ways to disguise retrenchments.
Check out one other case study here and decide if ALL the axed staff in the next 2 years should be classified under “Retrenchment”.
How one company cheated a PME of retrenchment benefits
In a Today article, a 45 year old PME ‘Mary’, found her job role redundant as her non-unionised company discontinued the project she was working on.
She was given 2 options:
1. Secure another internal role
2. Accept a retrenchment package if she could not land one.
Also, she was told to hunt for work outside the company due to the “difficult economic situation”.
Mary got two job offers, one within the company, and one outside the company. She chose the latter which offered bigger responsibilities.
But then her company chut pattern and said, since she was offered an internal role but rejected it, her case is actually considered a resignation, so she wouldn’t receive the retrenchment package.
Mary wasn’t told about this policy, so she went to inform NTUC’s U PME Centre about it this July, which subsequently was highlighted by PME advocate Patrick Tay to Today newspaper.
The U PME centre tussled with the company for 2 months before Mary finally got her retrenchment benefits.
Retrenchments or forced resignations?
Some time ago, during the last financial crisis, I knew a company which was proudly declared to all its staff that there wouldn’t be any retrenchments (probably to save face and uphold team morale).
In the next couple of months, 3 staff were quietly asked to resign, due to poor performance, poor fit and some other reasons.
The management told the 3 staff that it is better they voluntarily resign, than have their employment contract terminated.
One lady cried at work, because she was so shocked at the news and she had not heard any prior feedback about poor performance.
This rankled a few other staff which felt management was cunning, calculative and untrustworthy.
But the 3 staff voluntarily resigned, because what else could they do right?
What does the law say?
According to Patrick Tay, who is also Director of NTUC’s Legal Services Department, says that civil recourse for disguised retrenchments is limited.
If you earn up to $4,500 a month, you can appeal under the Employment Act that you were unfairly dismissed.
If you earn above that, you may try approaching the new Employment Claims Tribunals (from April 2017 onwards), which will hear salary-related disputes for all workers, regardless of income.
But this avenue may be “useless” if employment contracts are silent on retrenchment benefits.
What protection do union members get against disguised retrenchments?
If your company is unionised, you can approach the union for advice.
If not, the union can help you in tripartite mediation where the company has to attend to sort out issues with you in the presence of MOM (but only if you are covered by the Employment Act).
What if I’m not a union member?
You can contact NTUC’s U PME centre, which will advise you on your options, and how to prepare a case to submit to the authorities.