Commentary: Can more be done to protect Singapore workers from sudden layoffs?

SINGAPORE: The sudden closure of bakery chain Twelve Cupcakes and resulting layoffs caught employees by surprise and prompted sharp criticism from the Food, Drinks and Allied Workers Union (FDAWU).

According to FDAWU, there was no prior consultation with the union or advance notice given, despite the company being unionised.

It isn’t the first time this year that unions have taken companies to task for retrenching workers in a manner deemed unfair or lacking due process. In September, the National Trades Union Congress (NTUC) and the Singapore Industrial & Services Employees Union (SISEU) expressed concern over travel firm Agoda’s severance terms, which allegedly discouraged retrenched employees from approaching government bodies for help.

These instances raise the question of whether employment safeguards for workers are adequate.

MORAL SUASION MORE EFFECTIVE FOR ESTABLISHED COMPANIES

Protection for workers takes two forms: the legal provisions that safeguard employee rights, and the influence that the government and unions can exercise over companies.

The latter works fairly well with companies that have a significant presence in Singapore and hence need to stay in the government’s good graces. In 2024, when e-commerce firm Lazada retrenched around 100 workers without consulting the union, FDAWU escalated the matter to the Ministry of Manpower. The company swiftly apologised and promised to consult the union in future. 

Similarly, Agoda clarified that retrenched staff have the right to seek support from government agencies and unions, and the company has reaffirmed its commitment to upholding fair employment standards. 

The context is different when a company shuts down entirely, as in the case of Twelve Cupcakes. In such instances, it is not obvious that moral suasion would work as well, given that the company or its liquidators have nothing to lose. The only recourse for employees would be the law. 

LAWS SEEK TO BALANCE WORKER PROTECTION AND EMPLOYER FLEXIBILITY

Here is where the government has to strike a balance between protecting workers and giving employers autonomy.

Singapore has long had pro-business employment laws that make hiring and firing relatively straightforward. At the same time, a robust economy and investment in skills have kept unemployment low, while tripartite cooperation has secured win-win outcomes for workers and businesses. 

Over the years, new policies have strengthened protection for workers. The Fair Consideration Framework and the Complementarity Assessment Framework were introduced in 2014 and 2023 respectively to ensure that local workers have fair opportunities vis-a-vis foreign workers to secure jobs.

When the Workplace Fairness Act takes effect by end-2027, there will be, for the first time, legislated protection against job discrimination.

Meanwhile, the Platform Workers Act, in force since the beginning of 2025, provides work injury compensation, Central Provident Fund (CPF) contributions and union-like representation for platform workers, a segment that falls outside the ambit of the Employment Act.

SUPPORT FOR RETRENCHED WORKERS

In regard to retrenchment, the authorities have trodden carefully. Companies in Singapore have always had the right to release workers on grounds of reorganisation or redundancy. 

However, providing timely job assistance to retrenched workers is a priority. Since November 2021, the Ministry of Manpower has mandated that all companies with at least 10 employees inform MOM within five days after notifying employees of retrenchment, regardless of the number of workers retrenched. This is to give MOM and relevant agencies sufficient time to extend support to affected workers. 

It is worth considering NTUC’s recent call for MOM to be informed of retrenchments before they take place, rather than after employees are notified.

On retrenchment benefits, MOM and NTUC have prescribed norms rather than mandated payments. Employees with at least two years of service should be paid retrenchment benefits based on their employment contract, or collective agreement for unionised companies. Benefits should be negotiated with employees in the absence of contractual provisions.

The prevailing norm is for a payout of two weeks' to one month's salary per year of service, depending on industry practice and the company’s financial position. 

The government has also opted to provide unemployment benefits via the new SkillsFuture Jobseeker Support scheme. The scheme grants jobseekers who were involuntarily unemployed up to S$6,000 over six months. MOM has indicated that this support is not intended to replace retrenchment benefits, which companies are still obliged to provide.

PUBLIC EDUCATION AND MARKET FORCES COULD HELP 

In the absence of new laws to strengthen retrenchment safeguards or mandate benefits, it would fall to market forces to reward companies that follow responsible retrenchment practices.

Workers should be mindful of retrenchment clauses – or the lack thereof – in employment contracts when they join a company. More established, unionised companies could also be seen as safer bets for prospective employees. 

Public education can help. When assessing job offers, workers should pay attention to whether an organisation has union coverage, and whether it has previously paid retrenchment\ benefits in line with tripartite guidelines. They should also consider its reputation for treating staff fairly, as well as its financial stability and business outlook. 

Responsible retrenchment could be seen as a mark of a good employer, alongside other indicators such as the recently launched Singapore Opportunity Index. This could help reinforce norms for responsible retrenchment practices even without further legislative protections.

Terence Ho is Associate Professor (Practice) at the Singapore University of Social Sciences. He is the author of Future-Ready Governance: Perspectives on Singapore and the World (2024).