NTUC Proposes a Fair Retrenchment Framework Amid Rising Retrenchments

Companies need to ensure openness, transparency and consultation with unions and workers as retrenchments become increasingly inevitable.

To help with ensuring the right of workers are protected during this period, NTUC proposed on 24 July 2020 a Fair Retrenchment Framework (FRF) to guide companies on responsible retrenchment practices.

According to NTUC in a statement, the FRF complements the existing tripartite advisory and guidelines on managing excess manpower and responsible retrenchment.

The FRF sets out three guiding principles for companies – protecting the Singaporean Core, preserving jobs and providing job support.

Protecting Singaporean Core

NTUC said that it understood that companies in Singapore, which is an open economy, create job opportunities for both Singaporean and foreigners to meet business objectives.

“As foreigners are intended to augment Singaporeans in the workforce, companies may consider keeping foreigners in their workforce if they have special/critical skills for the continuity of the business. Companies should also ensure that these skills are transferred to Singaporeans in the longer term,” added NTUC.

As part of the framework, NTUC also called on companies to implement fair selection criteria to ensure that the Singaporean Core is safeguarded when retrenchments are inevitable.

This should be done with Singaporeans keeping their jobs in terms of job protection and redeployment, while due considerations are given to foreign workers.

The selection criteria for managing excess manpower should also be based on business needs and reasonableness. This may include reviewing the ability, experience, skills and occupational qualification of employees required to meet future business needs.  

NTUC also called on companies to evaluate older employees on an equal basis to their younger employees. These mature workers may possess skills, experience, knowledge, maturity and reliability.

Preserving Jobs

Companies should work with unions and workers to find ways to preserve as many jobs as possible before considering retrenchments, urged NTUC.

It reiterated that retrenchments should be the last resort, adding that working with the unions and workers to preserve as many jobs as possible will ensure companies have enough manpower to thrive when the economy recovers.

According to NTUC, some of the measures companies can implement include:

• Implementing collective pay reductions
• Providing secondment opportunities for workers
• Placing workers on no-pay leave or furlough
• Allowing workers to switch to part-time contracts
• Considering job-share arrangements for workers
• Tapping on Government assistance schemes to mitigate manpower costs.

Providing Job Support

NTUC also urged companies to provide fair retrenchment packages and processes if retrenchments are inevitable.

Doing so will ensure workers who have contributed to the companies’ growth and performance are treated fairly and with dignity, even as they are asked to leave the companies, said NTUC.

Companies can also provide support to workers affected by retrenchments by joining the NTUC Job Security Council (JSC). Being part of the JSC will facilitate workers in seeking new employment and training to prepare them for new jobs.

NTUC also reiterated its call for companies and unions to work together to support NTUC’s Job strategy to help companies through this crisis and to help preserve jobs for workers.

In a Facebook post, NTUC Secretary-General Ng Chee Meng said: “It is most stressful when one loses his or her job. I understand how tough this can be. With the economic headwinds, I expect more retrenchments in the coming months.

“In NTUC, we will do our best to help you save your job, and match you to a job if you have lost yours – you don’t give up, we won’t give up … Today, I am making this call to companies to act responsibly and treat their workers fairly and with dignity. There must be consultation, openness and transparency.”

Response from Tripartite Partners

Both the Ministry of Manpower (MOM) and the Singapore National Employers Federation (SNEF) have agreed on key areas in the FRF.

These include retrenchments being the last resort, fairly compensating retrenched workers and maintaining a Singaporean Core.

In a Facebook post following the announcement, Manpower Minister Josephine Teo said: “Retrenchment is painful. Given a choice, most companies will avoid it. Their workers dread the pink slip. Even co-workers who remain employed worry they may be next.

“This is why, when COVID-19 hit the world like a curve ball, the tripartite partners updated the advisory to guide companies on managing excess manpower and responsible retrenchment in March 2020. We made clear retrenchment should be a last resort, after all possible measures have been tried and proven inadequate for business survival,” said Mrs Teo.

Echoing the FRF, Mrs Teo urged employers to be fair to all workers, especially when it comes to selecting who to retrench, compensating affected workers, and giving advance notice and help to transition.

She added: “It is important that employees are treated with dignity and respect, especially during a retrenchment. If the company is unionised, the relevant union should be consulted as early as possible. Workers and unions, too, need to be fair to employers – hearing them out and understanding the situation, accepting redeployments, negotiating for a package in good faith.”

Mrs Teo also said that the tripartite partners are aligned when it comes to preserving a strong Singaporean core in the workforce.

Addressing employers, Mrs Teo said: “I hope you keep in mind another key consideration, that it is in your own interest to preserve your Singaporean Core, even as you retrench. While being fair to all affected workers, keep in mind how the local workers have contributed to your presence and past successes in Singapore.

“As much as Singapore welcomes you to make this the best home for your business, we need you to make your company the best home for our people.”

Note to Employers

In a media release, SNEF reminded employers that retrenchments should be the last resort.

“Where retrenchment is inevitable, the tripartite partners have released the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment to guide employers to conduct retrenchment responsibly and sensitively, especially to affected employees.

“As more retrenchments are likely in the coming months, SNEF urge employers to refer to the Tripartite Advisory. SNEF also stand ready to assist employers to tap on the various schemes available to help them to manage costs and transform to emerge stronger from COVID-19,” said SNEF.

SNEF also encouraged employers to continue to leverage Government schemes, including the SGUnited Jobs and Skills Package, to help their business transform, upskill their workers and maintain a Singaporean core.

“However, with the challenging economic environment and as businesses transform, it may be difficult to preserve jobs and alternatives should be sought, such as redeploying workers or to support affected workers to regain employment through training, job matching and other assistance,” it added.