Tripartite partners introduce guidelines for 'responsible retrenchment'

Tripartite partners introduce guidelines for 'responsible retrenchment'

The latest revision to the Tripartite Guidelines on Managing Excess Manpower shortens the recommended length of service for employees to be eligible for retrenchment benefits from three years to two years, among other changes.

workers Singapore file
File photo of people walking on a street in Singapore. (File photo: Ngau Kai Yan)

SINGAPORE: The Ministry of Manpower (MOM), Singapore National Employers Federation (SNEF) and the National Trades Union Congress (NTUC) have added new guidelines to the Tripartite Guidelines on Managing Excess Manpower to help companies implement their retrenchment in a "responsible and sensitive manner" when such an event is inevitable.

In a joint press release announcing the revised guidelines on Tuesday (May 24), the parties said the revisions emphasise the need for companies to maintain a "strong Singaporean Core and avenues to help workers who have been displaced", and are part of overall efforts to strengthen support for companies and workers.

"As businesses adjust, they should consider alternative ways of managing their excess manpower such as upskilling employees and redesigning jobs. However, if retrenchment is inevitable, companies should do so in a responsible manner," they said in the release.

Introduced in 2008, the guidelines lay out recommendations for companies on managing their local manpower when facing structural changes. It was last revised in 2009, during an economic downturn.


Among multiple changes, the latest revision shortens the recommended length of service for employees to be eligible for retrenchment benefits from three years to two years and specifies that companies should pay all salaries and retrenchment benefits due to affected employees by the last day of work.

Last month in Parliament, Manpower Minister Lim Swee Say said that nine in ten companies retrenching employees in Singapore had the "standard practice" of paying retrenchment benefits.

However, he stopped short of supporting compulsory retrenchment benefits, saying that the tripartite partners agree it is important to allow for the “flexibility to negotiate … rather than prescribing it in the law”.


Among the additions to the guidelines, the tripartite partners spelled out ways that companies should communicate their intentions for retrenchment to their employees before public notice of retrenchment is given. This may include explaining the business situation of the company, outlining the way the retrenchment exercise will be carried out, elaborating on factors that will be considered and specifying the assistance offered to those affected.

In addition, the new guidelines recommend that companies should be sensitive to the emotional needs of affected employees when issuing the retrenchment notice, and consider counselling support where necessary.

The guidelines also encourage employers to adopt a longer retrenchment notice period compared to the normal termination of employment contracts or pay in lieu of such notice. The period of notice should be worked out with unions in collective agreements, with employees in their contracts or codified in company HR books, the tripartite partners added.

While the previous guidelines already recommended that companies help affected employees look for alternative jobs, the new guidelines urge companies to "go beyond advisory assistance, and make practicable efforts to place affected employees in their next jobs, possibly with the help of intermediaries such as employment/placement agencies."

To facilitate this, the guidelines say supporting documentation such as referral letters, service records and past training certificates should be provided where relevant, and companies can work with unions and SNEF to provide employment facilitation services to assist the affected employees.


MOM Divisional Director of Workplace Policy & Strategy Alvin Lim also called on employers to notify MOM and the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) of their impending retrenchment exercises early.

“Early notification to MOM or TAFEP will allow the tripartite partners and the relevant agencies such as WDA and the Employment and Employability Institute (e2i) to work with companies and help their affected Singaporean employees find alternative employment. We also encourage workers to tap on Government assistance schemes, such as the Adapt and Grow initiative.”

"As (the) local workforce growth is expected to grow by only 1 per cent per annum until 2020, we urge employers to take a longer term view of their manpower needs and make efforts towards strengthening their competencies and maintaining a strong Singaporean core. These will enable their companies to seize growth opportunities quickly once their business rebounds," said SNEF's Executive Director Koh Juan Kiat.

Meanwhile, NTUC Assistant Secretary-General Cham Hui Fong said that while retrenchment may be inevitable at times, companies should conduct the exercise in a "fair and sensitive manner".

"Unionised companies should inform their unions earlier on any impending retrenchment and work with unions closely to ensure that fair retrenchment packages are offered and displaced workers are assisted with proper outplacement services," Ms Cham said.

MOM said it will also investigate complaints of discriminatory employment practices, including retrenchments that unfairly target Singaporeans or result in Singaporeans being replaced with foreigners. If the complaints are substantiated, companies may have their work pass privileges curtailed, it added.

Source: CNA/mz