Retrenchment Benefits for Unionised and Non-unionised Workers

Mr Patrick Tay Teck Guan (West Coast) asked the Minister for Manpower what can the Government do to assist non-unionised workers if their retrenchments are carried out irresponsibly such as when retrenchment benefits are not paid or short/no notice of retrenchment is given to the affected workers.

Mr Patrick Tay Teck Guan (West Coast) asked the Minister for Manpower in view of the fact that nine out of ten companies pay their retrenched staff some form of retrenchment benefits (a) what industries and sectors are these companies from; (b) what proportion of them are non-SMEs, local SMEs and micro-SMEs respectively; (c) what proportion of them are unionised and non-unionised companies respectively; and (d) what is the average amount of retrenchment benefit paid.

The Minister for Manpower (Mr Lim Swee Say): Mdm Speaker, may I have your permission to take Question Nos 20 and 21 together, please?

Mdm Speaker: Yes, please.

Mr Lim Swee Say: Thank you. Mdm Speaker, MOM conducts a survey on retrenchment once every four years. Based on the last survey conducted in 2013 for retrenchment carried out in 2012, nine in 10 companies paid retrenchment benefits. Sixty-eight percent of them came from manufacturing, wholesale and retail trade, and financial and insurance services. Eighty percent were non-unionised companies, and 66% were small and medium enterprises employing between 25 and 199 employees. We do not have data on smaller enterprises as the survey covered only establishments with at least 25 employees.

The same survey showed that the prevailing norm was to pay a retrenchment benefit of between two weeks and one month of salary per year of service. In view of the current economic situation, we have brought forward the next survey due in 2017 to this year. We have also extended coverage to smaller establishments employing between 10 and 24 employees.

Tripartite partners recognise that retrenchment is a difficult time for companies, affected employees and their families. We therefore issued and periodically update the Tripartite Guidelines on Managing Excess Manpower and Responsible Retrenchment.

The guideline covers, for example, the fair selection of employees for retrenchment, consultation with union, notification to MOM, to TAFEP, communication with the employees affected, retrenchment benefits based on industry norm and last but not least, providing employment facilitations to workers affected. This is to remind the employers to implement retrenchment exercise in a responsible and sensitive manner.

On the issue of retrenchment notice period, the Employment Act stipulates the minimum notice period for termination of employees covered under the Act – namely, rank-and-file employees, and professionals, managers and executives earning up to $4,500 per month.

On the issue of payment of retrenchment benefits, the Employment Act stipulates that no employee who has served less than two years shall be entitled to any retrenchment benefit. However, the Act does not mandate the payment of retrenchment benefits for employees who have served two years or more. The quantum of retrenchment benefits, if any, is at the employer's discretion. Even so, the vast majority of employers with 25 or more employees do pay retrenchment benefits commensurate with the industry norm, as shown in the survey I cited earlier.

Affected employees who encounter irresponsible retrenchment practices not in compliance with the Employment Act can approach MOM for assistance. Those not covered by the Act can approach their unions if they are union members. For non-union members, if their contract stipulates a notice period or the retrenchment benefits quantum, they have recourse through the Civil Courts. And with the setting up of the Employment Claims Tribunals in April 2017, they will have a more affordable and expeditious avenue to resolve their contractual disputes including retrenchment benefits.

Mr Patrick Tay Teck Guan (West Coast): I thank the Minister for the response to the question. I just have one point to suggest to Ministry of Manpower on the collation of retrenchment statistics. It is to pay more attention to some of these cases where they are "disguised retrenchments", meaning they may have, through "golden handshake" or some voluntary withdrawal service, laid off people in small numbers without notice of the public or even within the companies. I think we should pay particular attention to these small numbers of disguised retrenchments so that we accurately reflect the retrenchment situation.

Mr Lim Swee Say: Mdm Speaker, I agree with the Member. I think if any Member, especially unions, if you know of any such disguised retrenchment exercises, please let MOM know.

Mr Leon Perera (Non-Constituency Member): Thank you, Mdm Speaker. Just two supplementary questions for the Minister. Firstly, can I confirm in terms of the survey questions and the survey language, when we talk about retrenchment benefits, are these over and above the payment for notice, that is the salary that is paid for serving notice or the salary that is paid in lieu of serving notice. Is the retrenchment benefit as defined in the survey over and above that?

Secondly, the Minister alluded to industry norms for paying retrenchment benefits. Can I just query whether those industry norms are set by the Tripartite Alliance and are they published and publicly available?

Mr Lim Swee Say: Mdm Speaker, on the first point, whether this payment is above the payment for notice pay, the answer is yes. On the issue of industry norm, the Tripartite Partners do issue the tripartite guidelines and these industry norm of two weeks to one month is actually in the guideline. In other words, this is the industry norm today and the tripartite partners make an effort to ensure that this is known by companies on the whole.

At the same time the tripartite partners also emphasise that for unionised companies where the quantum of retrenchment benefits is incorporated in the collective agreement, the norm today is one month. All this information is in our guideline.

Ms K Thanaletchimi (Nominated Member): Madam, I have a supplementary question for the Minister. I would like to seek clarification, when companies retrench, is it compulsory for companies to notify MOM? If it is not, can we make it compulsory for them to notify so that we know the exact statistics and do something about it if non-payment is made?

Mr Lim Swee Say: Mdm Speaker, first of all let me separate the two issues of notification with statistics. Retrenchment statistics are done through survey, so we do this on a quarterly basis. In other words, regardless of whether the retrenchment exercise has been notified to MOM, we do a comprehensive survey, so the statistic should reflect the overall situation.

On the questions of notification, I think the tripartite partners have discussed this many times before. On the part of the employers, many of them expressed for pre-retrenchment notification, their main concern is confidentiality. This is an issue that up till now we have not been able to reach a consensus on.

Having said so, on the part of MOM, our primary concern is firstly about responsible retrenchment, but more importantly we want to ensure that we can offer timely employment facilitation to those workers affected by retrenchment. So what we did was since early this year, we have established a tripartite retrenchment response workforce, comprising of e2i, WDA, MOM and NTUC as well. What we have been doing is that once we have knowledge of any retrenchment exercise, the taskforce will move in.

We will work with the company, work with union very closely to gather information on who are the workers affected, their age profile, their education profile, their skill profile. We would even organise a job fair in the company, on-site, if there is enough critical mass. So, I think on the whole our primary concern is to ensure that the retrenched workers will receive not just a fair retrenchment treatment but more importantly, given the best employment support as well.