Year 2020 pandemic-Covid19 is affecting almost everyone globally. Not only it took away life but also a huge dramatic change in our daily routines. Economic downturn and businesses are depleting their reserves to stay afloat. Unfortunately, not all companies have a strong reserve to battle this pandemic in the long run. Hence, cost cutting measures are the only solution hoping business sustainability till its recovery. 

In any operation, labour cost is one of the biggest expenditure and in order to last stand, retrenchments are inevitable. In this painful process, employees are made redundant affecting their livelihood. 

In Singapore context, retrenchment benefit is not a statutory benefit but employers do consider paying retrenchment benefits to affected workers, including management staff as a good and fair employment practice. The quantum is based on an individual Employment Contract or Collective Agreement (CA) with industrial unions. Else, there is no obligation for the Company on this fulfilment. 

The only mandatory requirement stated in the Employment Act is the notification to the Ministry of Manpower (MOM) 5 days before exercising.

Some pointers employers should take note. 

  1. Be sensitive when communicating with affected employees. 
  2. Conduct the retrenchment exercise fairly
  3. Abide by the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment
  4. Ensure parity retrenchment package offered

The Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment is a comprehensive guide that may assist you in reducing the numbers or at least does a responsible retrenchment. The guide does provide relevant government agencies contact details in finding placement in this critical period diminishing their financial shock. 

A retrenchment exercise is never a pleasant situation for both the employer and the employee. However, when it is required for business continuity, employers must ensure that affected employees are fairly treated and supported in their re-employment efforts. With careful planning and good communication, companies can provide a compassionate exit for the individual. 

The saving grace of the current situation started to show improvement and we are moving toward Phase 3. I trust most of us are looking forward to our yearly Christmas parties and gathering. Not forgetting to welcome a hopeful 2021.