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Oral Answer to PQ on Responsible retrenchment and contractual clauses

NOTICE PAPER NO. 2499 OF 2024 FOR SITTING ON OR AFTER 6 FEBRUARY 2024
QUESTION NO. 5591 FOR ORAL ANSWER

MP: Dr Tan Wu Meng

To ask the Minister for Manpower over the past five years (a) how many unionised firms have carried out a retrenchment exercise without notifying the Ministry; (b) what sectors are these firms in; (c) what policy measures exist to ensure responsible human resource practices and tripartism are maintained when a firm decides to retrench employees, especially at a unionised firm; and (d) what action can be taken against firms and employers who are recalcitrant.

NOTICE PAPER NO. 2543 OF 2024 FOR THE SITTING ON OR AFTER 6 FEBRUARY 2024
QUESTION NO. 5696 FOR ORAL ANSWER

MP: Assoc Prof Jamus Jerome Lim

To ask the Minister for Manpower (a) whether the Ministry tracks the prevalence of restricted stock units (RSUs) that are issued as compensation for mid-level employees in companies; and (b) if so, whether the Ministry condones the forfeiting of unvested RSUs by companies even in the event of a retrenchment, rather than a resignation.

NOTICE PAPER NO. 2543 OF 2024 FOR THE SITTING ON OR AFTER 6 FEBRUARY 2024
QUESTION NO. 5697 FOR ORAL ANSWER

MP: Assoc Prof Jamus Jerome Lim

To ask the Minister for Manpower (a) whether the Ministry tracks the prevalence of non-compete clauses in employment contracts for mid-level employees in companies; (b) if so, whether the Ministry condones the enforcement of such clauses even in the event of a retrenchment rather than a resignation of employees; and (c) what efforts have the Ministry taken to better protect employees from exploitative employment contracts.

NOTICE PAPER NO. 2505 OF 2024 FOR THE SITTING ON OR AFTER 6 FEBRUARY 2024
QUESTION NO. 5354 FOR WRITTEN ANSWER

MP: Mr Christopher de Souza

To ask the Minister for Manpower how does the Ministry ensure that employers act responsibly in safeguarding the interests of employees when considering cost-cutting measures.

NOTICE PAPER NO. 2505 OF 2024 FOR THE SITTING ON OR AFTER 6 FEBRUARY 2024
QUESTION NO. 5355 FOR WRITTEN ANSWER

MP: Mr Christopher de Souza

To ask the Minister for Manpower whether there are any penalties when an employer who is required to inform the union about a retrenchment exercise does not do so.

Answer:

1. Mr Speaker, may I have your permission to address 3 oral PQs, No. 1 to No. 3 together for today’s sitting. My response will also cover the matters raised in the two written questions by Mr Christopher de Souza scheduled for 7 February 2024. This builds on my response to retrenchment-related issues at yesterday’s sitting.

Responsible Retrenchment Practices

2. Dr Tan Wu Meng and Mr Christopher de Souza asked about the measures to ensure responsible retrenchment practices, and action that can be taken against recalcitrant employers. Let me first emphasise that Singapore’s approach is a balanced one that protects workers, while giving businesses flexibility to adjust to market conditions. This ultimately creates more good jobs for Singaporeans, and ensures that even when workers are retrenched, the chances of them finding another good job are high. This is demonstrated by our low long-term unemployment and high labour force participation rates.

3. On responsible practices, we worked closely with the tripartite partners to formulate clear guidance for employers when undertaking cost-cutting measures. This guidance is contained in the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, or TAMEM. TAMEM also guides unionised companies to notify their unions early about an upcoming retrenchment exercise. Where it is provided for in the collective agreement, the norm is one month before notifying the employees.

4. If an employer does not follow the TAMEM, the Tripartite Alliance for Fair and Progressive Employment Practices, or TAFEP, will engage the employer to adhere to the advisory. Most employers are cooperative when approached by TAFEP or MOM. This shows that our tripartite advisories are working well without the need for additional penalties, which may negatively affect the wider business environment in Singapore. Unionised companies in particular have an interest to maintain a good working relationship with their unions as it is a long-term partnership and should not need penalties to do so. The majority of unionised companies have a good relationship with their unions to secure win-win outcomes.

5. We also work with tripartite partners to assist the affected workers in a timely manner, after we receive the mandatory retrenchment notifications or MRNs. MOM has not received any cases of unionised companies who have not submitted MRNs after carrying out a retrenchment exercise. More importantly, we continue to help workers upskill, reskill and remain employable. This is so that they can find new and better jobs even when they face disruptions.

Non-compete clauses and restricted stock units

6. Assoc Professor Jamus Lim raised questions on non-compete clauses and restricted stock units (RSUs). To be clear, MOM does not condone any exploitative employment contracts. On non-compete (or restraint of trade) clauses in employment contracts, the civil courts have clear established principles on when such clauses are acceptable and can be upheld in court; and when such clauses are unreasonable, unjustified, and thus declared void. The civil courts will assess if there is a genuine business need and whether the company has scoped the clause reasonably based on sector, geographical areas and duration. The courts will also balance employers’ needs to safeguard their businesses and employees’ ability to earn a living, and take into account that the clause should not be used to help businesses gain unfair advantages. Employees who believe that they are affected by unreasonable or unjustified restraint of trade clauses can seek assistance from their unions, TAFEP or MOM.

7. We understand that overly restrictive restraint of trade clauses can disadvantage retrenched employees and create difficulties in finding employment. MOM and the
tripartite partners are hence also developing a set of tripartite guidelines to provide guidance on the reasonable use of such clauses. This will help educate employers and shape norms, similar to how TAMEM is used. These guidelines are currently being finalised and we target to release them in the second half of this year.

8. On restricted stock units, or RSUs. Under the Employment Act, only non-workmen, which means those that are not mainly involved in manual labour, may be paid salary via stock options such as RSUs. Such matters are best discussed between the employer and employee as part of their employment contract. Employment contracts should clearly indicate the conditions under which unvested RSUs are forfeited. As these RSUs are typically given to employees in senior positions, they would be able to negotiate the terms with their employers. Hence, MOM does not track the prevalence of RSUs issued. Employees with disputes over RSUs may file a claim with the Tripartite Alliance for Dispute Management (TADM) for mediation, failing which the claim may be referred to the Employment Claims Tribunals for adjudication. For claims that exceed the claims limits of the Tribunals, employees would need to start a civil claim at the Courts.

Conclusion

9. In conclusion, we understand that for employees, the loss of employment is a much more destructive and disruptive process that goes beyond the loss of wages. We will continue to work with companies to educate them on possible cost-saving measures, so that retrenchment remains a last resort. The government will also continue to work closely with tripartite partners to protect workers’ interests and ensure that Singapore remains a competitive global hub that provides good jobs.