Singapore's employment laws protect workers while allowing businesses flexibility

We refer to the letters by Mr Shawn Low (Strengthen employment laws to protect retrenched staff, 25 Jan) and Mr Too Kah Sam (Shape better work future by making retrenchment benefits mandatory, 10 Feb).

Singapore’s approach to managing retrenchment is to protect our workers, while ensuring that employers have the flexibility to adjust to market conditions. This balanced ecosystem creates more good jobs, which ensures that when workers are retrenched, the chances of them finding another job would be high.

The tripartite partners have extensively debated the issue of whether a baseline retrenchment benefit should be legislated before. We agreed that it does not guarantee better outcomes for workers. For example, legally mandating retrenchment benefit will affect the viability of employers that are already facing financial difficulties, putting other employees at risk.

According to our data, around 9 in 10 eligible employees received retrenchment benefits. There is no one-size-fits-all approach toward retrenchment benefits, and there are other countries which similarly do not have mandatory retrenchment benefits.

Apart from retrenchment benefits, we have built an ecosystem of upstream and downstream measures to support workers that take into account changing business trends. Upstream measures include encouraging and supporting workers to upskill and reskill, and build their employment resilience. Downstream measures include providing retrenched workers with employment facilitation. There are also support programmes such as Career Conversion Programmes, which provide salary support of up to 90% for individuals to reskill for new jobs. Such support programmes are regularly updated.

Nonetheless, we understand that retrenchment is a difficult and emotive process for employees. This is why the tripartite partners have worked closely together on the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, which guides employers in cutting costs to save jobs and use retrenchment only as the last resort. When unavoidable, employers should carry out retrenchment responsibly and sensitively. Unionised companies should also engage their unions early and work together to support the affected workers.

The tripartite partners stand committed to work together to protect workers’ interests and ensure that Singapore remains competitive to provide good jobs for our people.

Kandhavel Periyasamy 

Divisional Director, Labour Relations and Workplaces Division

Ministry of Manpower 

[Letter] ST: Strengthen employment laws to protect retrenched staff, B5, 25 Jan

After nearly three years in a senior leadership role at a global company in the creative industry, I was recently retrenched. The reason was “financial challenges” and not “an indication of my contributions or performance”.

I was informed that I would not be getting any severance benefits because there are no labour laws in effect that protect employees. I was specifically told that the Ministry of Manpower gives only broad recommendations – with any severance done purely out of goodwill, not because of legislation. Sadly, my contract did not include any provision for retrenchment benefits either.

A friend urged me to speak with the Tripartite Alliance for Dispute Management, which referred me to the Tripartite Alliance for Fair and Progressive Employment Practices. Both officers who spoke with me were sympathetic, but ultimately said they could only point my company to the best practice and could not enforce anything.

My story isn’t the only one.

The recent high-profile retrenchment exercise at Lazada has exposed a weakness in Singapore’s labour and workplace laws – these laws are geared towards supporting companies, not employees.

I have worked in Britain and Australia – both these countries have workplace laws that protect employees who are retrenched. These are common practices in many developed countries.

As a country that has ambition to be a hub for companies in the region, Singapore should update its Employment Act to give more legal protection to employees.

If we are unable to give adequate protection to employees and strike a fair balance in the employment relationship, I worry about how competitive we will be on the global stage.

Shawn Low  

[Letter] ST: Shape better work future by making retrenchment benefits mandatory, B9, 10 Feb

Tripartism has always been a competitive edge for Singapore since its founding days.  But the world has changed and so has Singapore.

With new headwinds coming our way, maybe we should relook how tripartism can still be that balanced and cooperative solution. The new businesses that Singapore hopes to attract have different profiles from those of the 1960s to 2000s.

Artificial intelligence and other newer technology-driven approaches will bring about both opportunities and disruptions. But common among the most innovative and emerging businesses is their need for speed and scale.

In that mad rush, successes and failures come quickly. With failures, retrenchments and closures are inevitable. When these new businesses fail, can we still say that tripartism still provides that balanced approach for all stakeholders?

The reality is that the business life cycle has shortened, as seen in businesses such as e-commerce, ride-sharing, fintech and even digital banking.

Employees are a critical part of the accelerated growth story, but when things go south, businesses will downsize and revisit their current business model if there is no alternative future ahead. 

Do not, however, let the “hire fast, scale fast, and cut headcount if things do not go well” model be accepted as inevitable in how businesses conduct themselves. 

Instead of the Ministry of Manpower’s oft-used “shaping the norms” phrase for all stakeholders, why not consider “shaping the outcomes” instead?

Let us be bold and legally enshrine what are the retrenchment benefits. If severance pay is a minimum two weeks’ pay for every year of service with a cap on the amount, let that be enshrined.

Will we lose out on attracting new investments? We are no longer the backwaters of the world. Workforce competitiveness is only a subset of what attracts investments to Singapore. 

By enshrining retrenchment benefits in law, we are not just shaping the norms, but we are also shaping the future.

Right from the onset, businesses have to factor in the implications of their conduct of business here. With such a move, we can shape a better future.

Too Kah Sam