What is your Retrenchment benefit ??

Responsible of Retrenchment

Employers who are retrenching employees must do so responsibly and fairly. Find out the considerations and requirements for retrenchments.

Retrenchment considerations

As an employer, if you plan to retrench workers, you should do the following before you retrench:

Take a long term view of your manpower needs, including the need to maintain a strong Singaporean core.

Inform MON or TAFEP before carrying out any retrenchment exercise.

Consult with the union if your company is unionised.

Not discriminate against employees or groups of employees and make your selection based on factors such as the ability to contribute to your company’s future business needs.

Treat your affected employees with dignity and respect.

Consider having a longer retrenchment notice period for all your affected employees.

During the retrenchment exercise, you should:

• Pay all salaries, including unused annual leave, notice pay, etc., to your employees on their last day of work.
• Help your affected employees look for alternative jobs in associate companies, other companies or through outplacement assistance programmes e.g. job fairs, career fairs, career advice.
• Retrenchment is not the only way to reduce excess manpower, there are alternatives you can consider.

Get help early before deciding to retrench

• If you need any of the following, you can submit an early alert to us:
• Get information on government assistance schemes to support your restructuring exercise.
• Understand how to apply the Tripartite Guidelines on Managing Excess Manpower and Responsible Retrenchment.
• Get employment facilitation for your employees.

Notice of retrenchment

If you have decided and will be going through a retrenchment exercise, you are strongly encouraged to submit a notice of retrenchment online.

You should give a longer notice period if possible as your employees will need time to prepare and look for new jobs.

The notice period depends on what is stipulated in the contract of service. If the notice period is not stated, as a minimum requirement, the following applies:

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

Retrenchment benefits

Retrenchment benefits are payments given to employees to compensate them for the loss of employment.

Who is eligible ?

Employees who have served the company for at least 2 years are eligible for retrenchment benefits. Those with less than 2 years’ service could be granted an ex-gratia payment out of goodwill.

Amount of compensation

The amount of compensation depends on the contract of service or what is agreed collectively. If there is no contract or agreement, it will have to be negotiated between the employee and employer.

If the retrenchment comes shortly after a salary cut, the salary before the cut should be used to determine the amount of compensation.

Both employee and employer don't have to pay CPF contributions for retrenchment benefits.

Help employees find new employment

You can work with unions, SNEF and agencies such as WDA, NTUC’s U PME Centre and e2i to help affected employees find alternative employment.

Agency Phone:

1. Singapore National Employers Federation (SNEF) 6290 7633

2. SIngapore Workforce Development Agency (WDA) 6883 5885

3. U PME Centre 6213 8008

4. Employment and Employability Institute (e2i) 6474 0606

Alternatives to retrenchment

As an employer, you should consider alternatives to retrenchment such as redeployment and temporary layoffs as recommended by the Tripartite Guidelines on Managing Excess Manpower and Responsible Retrenchment (Updated May 2016) 

Managing Excess Manpower The Singapore economy is highly exposed to structural changes in global trends and volatility in external demand and would constantly need to restructure towards higher productivity as we deal with slower manpower growth and keener global competition. As businesses seek to adjust, there may be some impact on workers whose jobs may be affected in the process.

2. The tripartite partners – the Ministry of Manpower (MOM), the National Trades Union Congress (NTUC) and the Singapore National Employers Federation (SNEF) - strongly encourage companies to take a long term view of their manpower needs, including the need to maintain a strong Singaporean core, when managing these challenges.

3. Companies facing structural changes should consider alternative ways of managing their local manpower where possible. These could include upskilling employees and redesigning jobs. Companies wishing to develop capabilities in these areas can tap on government grants like WorkPro and the Capability Development Grant. Employers are encouraged to consult the unions, business associations and employees about these changes. In some instances, companies may find it more appropriate to implement established cost–saving measures for their excess manpower as outlined in Annex A. Responsible Retrenchment 

4. In the event that retrenchment is inevitable, the tripartite partners have developed the following guidelines to help companies implement their retrenchment exercise in a responsible and sensitive manner, bearing in mind the impact on the affected employees. 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. Considerations

5. When conducting a retrenchment exercise, the selection of employees for retrenchment should be based on objective criteria such as the ability of the employee to contribute to the company’s future business needs and conducted fairly. Companies should not discriminate against any particular group on grounds of age, race, gender, religion, marital status and family responsibility, or disability. For instance, older, re-employed as well as pregnant employees should not be unfairly targeted. 2

6. Companies are encouraged to follow prevailing guidelines on fair and progressive employment practices. MOM acts on complaints of discriminatory employment practices. If the complaints are substantiated, companies will have their work pass privileges curtailed. Pre-Retrenchment Preparations

7. If the company is unionised, the relevant union(s) should be consulted as early as possible. Where it is provided in the collective agreement, the norm is 1 month before notifying the employee.

8. Companies should also notify the Ministry of Manpower (Labour Relations & Workplaces Division) and/or the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) of their impending retrenchment exercise as soon as possible. This can be done through the following ways: A. Fill the notification via the website http://www.mom.gov.sg/eservices/services/notify-forretrenchment-exercise; or B. Call MOM’s Hotline (6438 5122) or email MOM (mom_lrwd@mom.gov.sg) for further assistance; or C. Email TAFEP (contactus@tafep.sg) All notifications will be kept confidential.

9. These steps will enable the tripartite partners and the relevant agencies to work with companies facing retrenchment to help their affected local employees find alternative employment and/or identify relevant training for enhanced employability.

10. In the event where labour issues do arise from the retrenchment exercise, the Ministry or tripartite partners can also advise company on such issues. Communication to Employees.

11. Companies should communicate the intentions for retrenchment to their employees early and before the public notice of retrenchment is given. This may include: A. Explaining the business situation faced by the company resulting in the need for a retrenchment exercise; B. Outlining how the retrenchment exercise will be carried out; C. Elaborating on the factors that will be considered; and 3 D. Specifying the assistance being offered to those affected.

12. When issuing the retrenchment notice, companies should be sensitive to the emotional needs of affected employees. Where necessary, counselling support should be considered and offered. Retrenchment Notice Period to Affected Employees. 

13. Employees being retrenched need time to prepare for and look for alternative arrangements. A longer notice period, to the extent practicable, will be helpful.

14. As a minimum requirement, the Employment Act already provides for the following notice period schedule for termination of employment under normal circumstance: 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.

15. However, responsible employers are encouraged to adopt a longer retrenchment notice period when compared to the normal termination of employment contract, or to pay in lieu of such notice. This should be worked out with union(s) in the collective agreement concerned; or with employees in their contracts of service; or codified in their company HR handbooks.

16. Companies should also pay all salaries due and retrenchment benefits to the affected employees by the last day of work. Retrenchment Benefits Eligibility.

17. Employees with 2 years’ service or more are eligible for retrenchment benefits. Those with less than 2 years’ service could be granted an ex-gratia payment. 4 Quantum.

18. The quantum of retrenchment benefit depends on what is provided for in the collective agreement or contract of service. If there is no provision, the quantum is to be negotiated between the employees (via their union in the case of a unionised company) and the employer concerned.

19. The prevailing norm is to pay a retrenchment benefit varying between 2 weeks to 1 month salary per year of service, depending on the financial position of the company and taking into consideration the industry norm. However, in unionised companies where the quantum of retrenchment benefit is stipulated in the collective agreement, the norm is one month’s salary for each year of service1 . Adjustments.

20. If the retrenchment exercise follows shortly after a wage cut, the salary prior to the wage cut should be used to compute the retrenchment benefit, so that cuts are not implemented just to reduce retrenchment payments. Employment Facilitation2.

21. As responsible employers, companies should help affected employees look for alternative jobs in associate companies, in other companies or through outplacement assistance programmes. We urge companies to go beyond advisory assistance, and make practicable efforts to place affected employees in their next jobs, possibly with the help of intermediaries such as employment/placement agencies. Supporting documentation (such as referral letters, service records and past training certificates) should also be provided where relevant to facilitate the job search of affected employees.

22. Companies can work with unions, SNEF and agencies such as WDA, NTUC’s U PME Centre and the Employment and Employability Institute (e2i) to provide employment facilitation services to assist the affected employees. Early notification to the Ministry of Manpower can allow the agencies to better assist companies. Conclusion

23. The revised ‘Tripartite Guidelines on Managing Excess Manpower and Responsible Retrenchment’ aims to assist companies in managing their excess manpower and conduct the 1 For executives, companies can also refer to the Tripartite Guidelines on Extending the Scope of Union Representation for Executives and Tripartite Guidelines on Expanding the Scope of Limited Representation for Executives. 2 Employment facilitation refers to activities that improve jobseekers’ employability, and help jobseekers secure employment. 5 retrenchment exercise, where it is inevitable, responsibly. This can help result in better outcomes for the company, its employees, and the wider community. For assistance on employment facilitation services, companies can contact

You can redeploy or rotate employees within your company when the job scope is expanded or restructured.

Employees who are redeployed should also be provided with the relevant training.

Temporary layoffs

You can ask employees to stop coming to work for a short period.

However, you still have obligations towards your employees:

You must pay at least half of their gross salary during the days that they are temporarily laid off.

If they take annual leave on their laid off days, then you must pay them half-day pay for each day of annual leave taken. In such an arrangement:

Employees will get a full day's pay (half-day laid off pay + half-day annual leave pay).

Employees should not be asked to take more than 50% of their earned annual leave.

Implementing a shorter work week

You can ask employees to work only a few days a week for a short time. This reduced duration should not:

• Exceed 3 days in a week.
• Last more than 3 months.

Sources: 

http://www.mom.gov.sg/employment-practices/retrenchment/responsible-retrenchment

http://www.mom.gov.sg/~/media/mom/documents/employment-practices/guidelines/tripartite-guidelines-on-managing-excess-manpower-and-responsible-retrenchment.pdf?la=en