Retrenchment Benefits Paid Out by Companies that Retrench Workers for Reasons not Related to Financial Distress
Ministry of ManpowerSpeakers
Summary
This question concerns Mr Pritam Singh’s inquiry into the levers used to ensure retrenchment benefits meet industry norms for companies retrenching for reasons unrelated to financial distress. Minister for Manpower Josephine Teo stated that benefits are mandatory if stipulated in employment contracts or collective agreements for staff with at least two years of service. She highlighted the Tripartite Advisory, which sets a norm of two weeks to one month of salary per year of service depending on industry practices. Data shows 90% of retrenching firms paid benefits in 2017, with over 70% of those meeting or exceeding these tripartite norms. Redress is available through the Tripartite Alliance for Dispute Management, the Employment Claims Tribunals, or union-led conciliation and arbitration at the Industrial Arbitration Court.
Transcript
79 Mr Pritam Singh asked the Minister for Manpower what levers are available to the Ministry to ensure that retrenchment benefits meet industry norms in the case of companies that retrench workers for reasons not related to financial distress.
Mrs Josephine Teo: Companies must pay retrenchment benefits to workers who have served two years and above, if it is specified in their individual employment contracts or the collective agreements negotiated by their unions.
The tripartite partners recognise that retrenchment is a difficult time for companies and affected employees. In this regard, we issued the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment to provide guidance to employers on implementing retrenchment in a fair and responsible manner. The Advisory states that the prevailing norm is to pay a retrenchment benefit of between two weeks to one month of salary per year of service, depending on the financial position of the company and industry practices. According to our survey on retrenchment benefits in 2017, around 90% of establishments which retrenched workers paid retrenchment benefits, of which more than 70% paid retrenchment benefits that met or exceeded the prevailing norms.
Retrenched workers who have not been paid retrenchment benefits as specified in their employment contracts can lodge a claim at the Tripartite Alliance for Dispute Management (TADM) for mediation. If mediation fails, the claim will be heard at the Employment Claims Tribunals. Retrenched workers who do not have retrenchment benefits specified in their employment contracts can also approach TADM for advisory and mediation services. For eligible union members with retrenchment benefit disputes, the unions will help to negotiate an agreement with the employer. If no agreement can be reached, the unions can refer the disputes to the Ministry of Manpower for conciliation, failing which, the disputes can be arbitrated at the Industrial Arbitration Court.