Employers should offer fair retrenchment package to workers: MOM

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Employers who need to lay off employees during this Covid-19 pandemic should provide retrenchment benefits according to their financial position and treat their employees with "empathy and dignity", said the Ministry of Manpower (MOM) yesterday.

Companies that are in sound financial position should pay out the benefits agreed on in their employment contracts, collective agreements, memoranda of understanding, or the prevailing norms - between two weeks and one month of salary for each year of service - stated in the tripartite advisory on managing excess manpower and responsible retrenchment.

Those whose operations and business prospects have been adversely affected by the virus outbreak should work with their union or the employee to renegotiate a fair package linked to the worker's years of service with the firm, said MOM in a new tripartite advisory specifically for Covid-19. It was jointly issued with the Singapore National Employers Federation and the National Trades Union Congress (NTUC).

Companies in severe financial difficulties despite the government help available should negotiate a retrenchment benefit package with their union, if they are unionised, or else they should support the affected staff by providing a lump sum benefit of between one and three months' salary.

MOM urged employers to be more generous to lower-wage workers being laid off, such as those earning up to $2,300 a month who would be eligible for the Workfare Income Supplement.

Retrenchment in the first three months of the year rose to 3,000, up from 2,670 in the previous quarter, and is expected to rise further.


Workers whose employments are terminated due to poor performance are not entitled to retrenchment benefits. The onus is on the employer to substantiate the poor performance when necessary or should a dispute arise, said MOM.

NTUC assistant secretary-general Patrick Tay said in a Facebook post yesterday that he is concerned about "disguised retrenchments", where employees are contractually terminated with notice when in fact there were redundancies.

Such workers can approach their unions or the Tripartite Alliance for Dispute Management for help, he said.