NTUC Expresses Concern over “Disguised Retrenchments” Trend Picking Up in Singapore

October 31, 201612:23 pm543 views

The National Trades Union Congress (NTUC) is concerned about the increasing trend of termination of workers contracts in non-unionised firms at one month’s notice. These are actually disquieting examples of “disguised retrenchments.”

Raising this issue in Parliament last month, assistant secretary-general Patrick Tay has called on the Government to pay more attention to this issue for a better reflection of layoff numbers. Speaking to Today Online, Tay expressed unhappiness and concern over this veiled layoffs wherein firms get away with not having to pay workers retrenchment benefits.

To avoid bad press or business repercussions if the word gets out, the firms axe staff but don’t say it’s a redundancy, Mr Tay added. Currently, the firms are not required to notify the Government of any forthcoming retrenchment exercises, so they are encouraged to do so.

Also, retrenchment benefits are not mandatory as per the law, and the quantum hinges on agreements between employers and employees. Quantums are to be negotiated between the two parties if no provisions are made.

Recently, the labour movement’s U PME Centre observed rising number of one particular type of disguised retrenchment, wherein contracts are terminated at one month’s notice. This is generally permissible under provisions in employment contracts, and firms shedding headcount. These workers did not get the retrenchment benefits. In 2015, the centre handled 15 to 20 of such cases all in non-unionised firms, in comparison to fewer than 10 the year before.

Adding to these findings, is the recent MOM’s labour market report that showed layoffs for the first half of this year vaulting to 9,510, the highest since 2009. In other instances, workers are asked to resign voluntarily when firms wade into troubled times. Also in certain cases, where contracts are terminated with poor performance as the reason, it comes abruptly on the back of consistently good ratings.

Normally workers in non-unionised firms risk the benefits, while they could still turn to the unfair-dismissal provisions in the Employment Act. However, this covers only those earning up to S$4,500 a month.

“The new Employment Claims Tribunals, which will, from April, hear salary-related disputes for all workers, regardless of income, may close this gap, but even this avenue is “useless” if employment contracts are silent on retrenchment benefits,” Mr Tay added.

Workers should therefore ensure that such benefits are spelt out in their contracts before they sign on the dotted line. The Tripartite Guidelines on Managing Excess Manpower and Responsible Retrenchment offer guidance on responsible retrenchment practices, such as retrenchment benefits.

The prevailing norm is to pay benefits of between two weeks’ and one month’s wage for every year worked, depending on the firm’s financial position and industry norms. Mr Tay asserts that notifying the ministry of retrenchment activities should be made mandatory, such that help can be offered to these workers.
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