When employers find themselves in the challenging position of retrenching their workforce, it’s crucial to approach this process with responsibility and fairness. Here’s a breakdown of the considerations and requirements for executing retrenchment ethically:

Factors to Consider Before Retrenchment:

1. Long-Term Manpower Planning: Take a comprehensive view of your organization’s future staffing requirements, prioritizing the cultivation of a robust local workforce.
2. Notification: Inform the Ministry of Manpower (MOM) before initiating any retrenchment measures.
3. Union Consultation: If your company is unionized, engage in dialogue with the relevant union representatives.
4. Non-Discrimination: Ensure that selection criteria for retrenchment are based on factors relevant to the company’s future needs, avoiding discrimination against any individual or group.
5. Dignified Treatment: Treat affected employees with respect and dignity throughout the process.
6. Extended Notice Period: Consider providing a longer notice period to affected employees to facilitate their transition.

During the Retrenchment Process:

1. Ensure timely payment of all salaries, including accrued leave and notice pay, on the employees’ last day of work.
2. Support affected employees in finding alternative employment through internal opportunities, external job markets, or outplacement assistance programs such as job fairs and career counseling.
3. Seeking Assistance Before Retrenchment:
4. Government Support: Explore available government assistance schemes designed to support organizational restructuring efforts.
5. Tripartite Advisory Compliance: Familiarize yourself with the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment and adhere to its guidelines.
6. Employment Facilitation: Provide support to employees in their job search endeavors.

Notification Procedures:

1. Notify MOM: Employers planning retrenchment measures are encouraged to formally notify MOM of their intentions.
2. Informing Employees: Notify affected employees in accordance with the termination terms outlined in their employment contracts, ideally providing a generous notice period to facilitate their transition.

Retrenchment Benefits:

Eligibility:

1. Employees with a minimum tenure of two years are eligible for retrenchment benefits, while those with less tenure may receive ex-gratia payments as a gesture of goodwill.

Compensation:

• The amount of retrenchment benefits is typically outlined in the employment contract or collective agreement, with norms ranging from two weeks to one month’s salary per year of service, depending on industry standards and company financial health.
• Unionized companies often adhere to collective agreement provisions, which may specify a standard of one month’s salary per year of service.
• In cases where retrenchment follows recent salary reductions, compensation calculations should be based on pre-reduction salary levels.
• Neither employers nor employees are required to make CPF contributions for retrenchment benefits.

Exploring Alternatives to downsize or retrench:

Consider alternative measures to minimize job losses during economic downturns:

Training and Skills Development: Invest in training and skills upgrading for employees, leveraging available subsidies and government grants.

Redeployment: Explore opportunities to redeploy or rotate employees within the organization, providing necessary training for new roles.

Implementing Flexible Work Arrangements: Consider options such as shorter work weeks or temporary layoffs to manage staffing levels while preserving jobs. Cost-Saving Measures: In cases of prolonged business uncertainty, explore direct adjustments to wages or allowances as a means of reducing labor costs, with unpaid leave considered as a last resort.