Oral Answer by Mr Lim Swee Say, Minister for Manpower, to Parliamentary Question on Retrenchment Assistance

Question No. 477 For Oral Answer

MP: Mr Patrick Tay Teck Guan

To ask 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.

1. Madam Speaker, may I have your permission to take questions 20 and 21 together. 
2. MOM conducts a survey on retrenchment once every 4 years. Based on the last survey conducted in 2013 for retrenchment carried out in 2012, 9 in 10 companies paid retrenchment benefits. 68% of them came from manufacturing, wholesale & retail trade, and financial & insurance services. 80% 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. 
3. The same survey showed that the prevailing norm was to pay a retrenchment benefit of between 2 weeks and 1 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. 
4. 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 guidelines cover, for example, the fair selection of employees for retrenchment, consultation with unions, notification to MOM and TAFEP, communication to the employees affected, retrenchment benefits based on industry norm, and last but not least providing employment facilitation to workers affected. This is to remind the employers to implement retrenchment exercises in a responsible and sensitive manner. 
5. 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. 
6. On the issue of payment of retrenchment benefits, the Employment Act stipulates that no employee who has served less than 2 years shall be entitled to any retrenchment benefit. However, the Act does not mandate the payment of retrenchment benefits for employees who have served 2 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. 
7. 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. 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.