The Ministry of Manpower, in a press release on 24 May 2016, outlined the Tripartite Guidelines on Managing Excess Manpower and Responsible Retrenchment that sets out ways for employers to manage their local staff in the face of structural changes needed to maintain a competitive edge. The revision of the guidelines by the tripartite partners (the Ministry of Manpower (MOM), the Singapore National Employers Federation (SNEF) and the National Trades Union Congress (NTUC)) follow heightened concerns about the weakening labour market, highlighted by a rapid growth in the number of employees being made redundant.
Managing Excess Manpower
The tripartite partners encourage companies to adopt a long term view of their manpower needs, including the need to maintain a strong Singaporean Core, when dealing with restructuring challenges. There is a focus on alternatives to retrenchment, including upskilling employees, redesigning jobs, tapping on government grants like WorkPro and the Capability Development Grant, consulting unions, business associations and employees about changes and implementing established cost-saving measures for excess manpower.
Further, the new guidelines provide that employers must act responsibly and sensitively whilst conducting retrenchment, acknowledging the impact on the employees. Retrenchment should be conducted objectively and without discrimination against a particular group on the basis of age, race, gender, religion, marital status and family responsibility, or disability. Although there are other employment related guidelines in place, this is the clearest articulation against discrimination in the workplace.
- Notification to Relevant Authorities: In the case of a unionised company, the unions should be consulted as early as possible, usually a month before notifying the employee. Notification should also be provided to the MOM (Labor Relations & Workplace Division) and Tripartite Alliance for Fair and Progressive Practices.
- Communication to Employees: Communication of the intention to retrench should be conducted early, and before the public notice of retrenchment is given. The emotional needs of the affected employees should be considered and, if required, counselling support should be considered and offered.
- Retrenchment Notice Period to Affected Employees: Employers are encouraged to extend the usual notice period to give employees additional time to seek new employment. Consultation with the unions (through the Collective Agreement process) on this matter is recommended.
- Retrenchment Benefits: The guidelines encourage employers to grant retrenchment benefits to employees who have been employed for at least 2 years or more. This mirrors the legislative eligibility of employees to receive retrenchment benefits as per the Employment Act. However the Act does not impose a mandatory requirement upon employers to grant retrenchment benefits and this does not change under the new guidelines. There is still no official guidance as to the quantum of retrenchment benefits, although usual practice is between 2 weeks and a month per year of service.
- Employment Facilitation: Responsible employers should help the affected employees look for alternative opportunities by going beyond advisory assistance and taking practical measures such as engaging employment or placement agencies to assist affected employees.
What this means for employers
Perhaps the most interesting feature of these new guidelines is the reference to maintaining a "Singaporean Core". Although the guidelines do not go so far as requiring employees to select foreign employees over Singaporeans for retrenchment (unlike Malaysia and its "FOF": Foreigners out first rule), we can envisage challenges being made to the fairness of a dismissal, and the ministry structuring selection criteria. This coupled with the general focus on the number of Singaporeans in the workplace, should lead employers to look closely at both their hiring and firing processes.