The Big Read: Layoffs part and parcel of any business, but not all firms let workers go with dignity
In the age of disruption where industries could be turned on their heads overnight, it could be said that workers need to be better prepared for and protected against retrenchments, experts say.
SINGAPORE: There was a lot running through Ms Jacinta Goh’s mind when she and everyone else in her department got an email from their boss in the middle of 2016: They were told to reapply for their jobs as photo editors at an international media company which was undergoing reorganisation.
At that time, morale in her team had yet to recover from the shock retrenchment of two well-liked managers the year before - each of whom had served the firm for more than two decades.
When she got the dreaded email, Ms Goh, who was then 35, had a six-year old son to care for. Moreover, her husband worked in the same department as her, which meant that both of them could lose their jobs.
“It sucked because many of us had been working there for more than 10 years, or close to that,” said Ms Goh. “And yet we needed to justify our work to the bosses? It felt like they had no clue about what was going on, all these years. It was disheartening.”
A week after she took what she described as a “pseudo interview application”, she was led into a room alone with a human resource (HR) manager and her department head. She was given the axe, along with 10 others - at least her husband got to keep his job.
Nevertheless, the compensation was generous, she said. The retrenched workers were offered a month’s salary for each year of service with the firm, without a cap.
External trainers were also brought in to help affected staff polish up their curriculum vitae and interview techniques. The workers were also given an additional S$1,000 each to pay for training courses.
In order to receive the retrenchment package, the workers had to serve out a notice period that was several months long - to give the company sufficient time to set up a mirror unit in Poland.
Ms Goh, for example, served out three months’ notice while some of her former colleagues had to stay on for as long as eight months. While she understood the firm’s rationale, she said it “felt wrong”. “We were being held to ransom to get our severance,” she said, noting that many of her affected colleagues took medical leave during their notice period. Looking back, the entire situation was a “black comedy”, she said.
Ms Goh and her ex-colleagues are among the thousands of workers here who are laid off every year.
The number of workers retrenched in Singapore peaked at 23,430 in 2009, when the global financial crisis hit. The figure dipped under 10,000 for each of the two succeeding years (2010 and 2011).
Between 2013 and last year, the figure ranged from a low of 10,730 last year to a high of 19,170 in 2016. Latest statistics from the Ministry of Manpower (MOM) showed a total of 5,550 workers laid off in the first half of this year.
While the retrenchment numbers in recent years remain relatively low, there have been several high-profile retrenchment exercises which made the headlines.
Just earlier this week, media company Singapore Press Holdings announced it will lay off 5 per cent of its staff in the media group by end-November, as part of restructuring efforts.
Last month, travel retailer DFS Group also laid off about 60 workers, following an announcement by the Hong Kong-based company that it was scaling back its operations in Singapore. According to media reports, the workers at the DFS outlets in Scotts Road, Changi Airport, as well as its shared services centre in Chai Chee were not given any warning, and were told to leave with immediate effect.
In the age of disruption where industries could be turned on their heads overnight, it could be said that workers need to be better prepared for and protected against retrenchments. It also raises the question of whether Singapore’s existing framework - which seeks to strike a balance between the interests of businesses and workers - is adequate.
Union leaders we spoke to urged workers to join unions, which can help them fight for better terms should they be given the pink slip.
They noted that not many Singaporeans are aware of the work that unions do - until they are laid off, which may be too late.
As in the case of DFS’ retrenchment exercise, the unions carry out much of its work behind closed doors. This, together with the harmonious industrial relations that Singapore has enjoyed over the decades, has inadvertently resulted in the general population being unaware and unconvinced about the benefits of joining unions.
To date, the National Trades Union Congress (NTUC) has about 950,000 members in all, making up merely about 30 per cent of the workforce.
Joining a union is like buying insurance, said NTUC assistant secretary-general Cham Hui Fong. “You don’t wait until your company is hit by retrenchments then you join,” she said.
The manner in which DFS went about its retrenchment exercise was roundly criticised. It is currently being looked into by the authorities.
Writing on Facebook, Manpower Minister Josephine Teo said the firm “could have better handled their recent retrenchment exercise, particularly in the way they communicated with their employees and how they offered the severance packages".
DFS has since announced that it would offer the retrenched employees better severance packages, but some of those we interviewed remained upset about the way the company dropped the bombshell on them.
Sandra (not her real name), who had worked in DFS for over 40 years, was among those who were let go. She recounted how the company gathered a group of workers and told them on the spot that they were retrenched immediately.
“Some of us asked whether we still needed to go to work that day, and the management told us that we didn’t need to, that we should go back to take our belongings,” she said.
Sandra, who is in her 60s, said that many of the workers, especially those who had been with the company for over three decades, could not contain their emotions.
“When we all went to our workplace to get our things, a lot of us were very sad, and some of us were crying,” she said in Mandarin.
To add insult to injury, the company had security guards follow the retrenched workers out of the premises. “It was almost as if they thought we would steal things from them. We were not treated with dignity,” she said.
Another former DFS employee in her 50s, who had served the company for 17 years, said she is worried that she will now have problems paying for the study loans of her two children. They are currently studying in tertiary institutions.
“This month I can get the money (from the severance package) to pay their study loans, but how about next month? How am I going to pay when I haven’t gotten a job yet?”
DFS had initially offered the retrenched employees one week’s pay for each year of service, capped at 13 years of service - below the prevailing norm for retrenchment benefits stated in MOM’s advisory.
It later revised the severance package to two weeks' salary for each year of service, after several workers who were let go approached MOM and the Tripartite Alliance for Dispute Management for help.
Still, some of the retrenched staff felt that the revised offer was “insincere” and was just “meeting minimum guidelines”. They said they have asked DFS to compensate them one month of pay for each year of service, with a cap of 24 years. DFS is still revising the terms of the severance package.
However, not all companies have given short shrift to their employees at the lowest points in their careers.
In October last year, telco StarHub announced that it was laying off about 300 of its 2,500 employees as part of a restructuring exercise. The majority of those affected were senior managers who had worked in the company for more than 15 years.
Though many were initially shocked, a StarHub staff member said then that some of those retrenched were happy with their retrenchment packages.
The package had included a month's pay for each year of service, pro-rated annual wage supplement (commonly known as the “13th-month bonus”), and a variable bonus based on the company’s financial performance which was paid out by March this year.
StarHub said then that it had closely followed the guidelines laid down by MOM, and that its “overall package is more generous versus market practice”.
Mr David Ang, director of corporate services at Human Capital Singapore, stressed the need for employers to have empathy when carrying out a retrenchment exercise.
“A good employer (who is) responsible enough will know that retrenchment is a very painful process and is very personal to the employee,” he said.
Employers should take into account the “psychological and emotional aspect”. Some companies, for example, would arrange for counsellors to provide support to retrenched employees, said Mr Ang.
Speaking from his own experience, a manager with an aviation company, who declined to be named, said that his firm's HR department would break the news to a retrenched employee face-to-face in the presence of his supervisor.
“Even at later stages, after the employee has left, and he foresees some issues (in finding employment) and wants to engage professional help, he can still reach out to the company,” he said.
EXISTING LAWS & GUIDELINES
Under the Employment Act, companies are required to notify MOM within five working days of notifying the retrenched employees.
This requirement applies to companies that retrench at least five employees within a six-month period and employ at least 10 employees, said an MOM spokesperson in response to queries.
The notification allows the Taskforce for Responsible Retrenchment and Employment Facilitation to “monitor the employment landscape, engage retrenching companies on responsible retrenchment practices and provide retrenched employees with employment facilitation assistance”, the spokesperson added.
Separately, the MOM's Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment guides companies in managing the retrenchment of all employees, regardless of nationality.
Companies that refuse to follow the advisory’s guidelines risk having their work pass privileges curtailed, the MOM spokesperson said.
Among other things, the advisory states that only employees who have worked for more than two years are eligible for retrenchment benefits. Those who do not meet the requirement could be granted an ex-gratia payment.
If the company undergoing retrenchment is unionised, it will have to consult the union “as early as possible, with the prevailing norm being one month prior to notifying the employee”.
The MOM spokesperson reiterated that the advisory “only stipulates the prevailing norms for retrenchment benefits quantum, and gives companies the flexibility to vary retrenchment benefits according to their financial health”.
An MOM survey on retrenchment benefits in 2017 found that around 90 per cent of establishments which laid off workers paid retrenchment benefits. Of these, more than 70 per cent paid retrenchment benefits that met or exceeded the prevailing norms.
Apart from stating the prevailing norm for retrenchment benefits, the advisory also “guides employers on conducting retrenchments responsibly, such as communicating intent of retrenchment early, providing adequate notice to affected employees and facilitating emplacement of affected employees to new jobs”, said the MOM spokesperson.
The spokesperson reiterated that it is “not just about the quantum of retrenchment benefits”, the ministry also expects the company to properly manage the overall well-being of the affected employees.
In the case of DFS, human resource experts spoken to pointed out that even though the company had fallen short of the guidelines, it “technically” did no wrong.
Mr Paul Heng, founder of NeXT Career Consulting Group, Asia, said that because Singapore's labour laws do not stipulate the quantum of compensation arising from retrenchment, companies usually go by market practice.
If there is no collective agreement or contract of service, the quantum is to be negotiated between the employees (via their union in the case of a unionised company) and the employer.
As long as those employees with more than two years of service are paid something, which according to Mr Heng could amount to even a single dollar, then “employers would have done nothing wrong”.
Mr Ang pointed out that although DFS “might not have communicated sufficiently in terms of giving notice, it is within their employer rights to do what they have done”.
“If they are running out of money, then what could they do? If they’re going bankrupt, they can’t borrow to pay,” he said. “In that context I suppose DFS did what they needed to do.”
He added: “It might be a little high-handed but they’re still operating within the law.”
However, Mr Ang noted that while companies do not suffer legal repercussions when they fall short of the guidelines in MOM’s advisory, it may have to face other consequences.
In DFS’ case, should the firm continue to do business in Singapore, the bad press may mean that the company could have difficulties hiring in the future, Mr Ang said.
Agreeing, the Singapore National Employers Federation (SNEF) said that an employer which does not conduct its retrenchments responsibly may put its reputation at risk.
“Existing employees may lose morale. The company may have difficulty in hiring later,” said SNEF executive director Koh Juan Kiat.
In general, MOM can step in to conciliate between the parties if negotiations between the unions and companies reach a deadlock. Should that fail to resolve issues, the case may be referred to the Industrial Arbitration Court.
ARE TOUGHER LAWS NEEDED TO PROTECT WORKERS?
To accord better protection for Singapore workers, some - including Singapore Management University law lecturer Eugene Tan - felt that there could be room for tougher legislation, on top of the existing guidelines.
Assoc Prof Tan noted that currently, unionised employees tend to have better protection compared to workers who are not part of any unions.
“We shouldn't leave it to whether the worker is unionised and whether the companies will be mindful of their social responsibility to their workers,” he said.
“It would be better to have a (legal) framework so that workers will not be at the mercy of the employers who are more concerned about the bottom line at the expense of the well-being and welfare of the workers.”
While he acknowledged the limitations of legislation, having a legal framework is “certainly better than leaving it to chance” in an age of economic disruption, he said.
NTUC's Ms Cham, however, disagreed. Workers could be worse off if a minimum requirement for compensation is legislated, for example, she pointed out.
She noted in certain industries, such as oil refineries and banks, companies pay more than a month’s worth of salary for each year of service rendered by a worker being retrenched.“If the law stipulates that the minimum (retrenchment benefit) is one or two weeks instead, why should I (as an employer) pay extra?” she said.
The MOM spokesperson said that in coming up with the tripartite advisory, the consensus among unions, employers and the Government was that “making retrenchment benefits mandatory or specifying a minimum or maximum quantum for retrenchment benefits might not benefit employees or businesses”.
Echoing Ms Cham’s view, the spokesperson added: “A mandated level of minimum retrenchment benefits will likely become the norm, and would not benefit our employees in cases where the employers are able to pay higher amounts.
“On the other hand, setting the minimum retrenchment benefits too high would strain the financial health of businesses that are undergoing restructuring and could further jeopardise the jobs of the remaining employees.”
SNEF also cautioned against tougher legislation, which it believed could lead to a slew of problems.
Such laws would not be able to address the different circumstances that companies find themselves in when they have to lay off workers.
An employer who is in a bad financial shape may not be able to meet the minimum compensation requirements for those who are retrenched, and yet keep the rest of its business viable, SNEF said.
Also, the cost of retrenchment may be too prohibitive for some employers and this will impede economic restructuring for the "long-term good of the economy and the workforce", SNEF added.
HR experts and economists interviewed also felt that having laws instead of non-binding guidelines on retrenchment practices may erode Singapore’s competitiveness.
DBS Bank senior economist Irvin Seah said it would create “a lot of inflexibility into our business regulatory frameworks”. This could deter foreign companies from choosing to operate in the Republic, he said.
In the long term, the productivity of the workforce could also be affected, he said.
Laws to protect workers could end up encouraging “unproductive behaviour” if it prevents an underperforming worker from being retrenched, he added.
Mr Mayank Parekh, CEO of the Institute of Human Resource Professionals, believed that the current framework provides a middle ground with a “mix of guidelines and advisories (ensuring) a judicious balance between flexibility for companies and the rights of employees”.
"This has served us well, having stood the test of time with successive downturns and company restructurings," he said.
UNIONS’ ROLE DURING RETRENCHMENT PROCESS
Union leaders said that retrenchment should always be the last resort taken by companies, and by and large, the unions try to minimise the number of workers affected.
Explaining the unions’ role during the retrenchment process, Mr Melvin Yong, the executive secretary for the United Workers of Electronics & Electrical Industries (UWEEI) and the National Transport Workers’ Union, said that unions step in to negotiate with unionised companies the moment they hear about any restructuring efforts that may affect workers.
While it is recommended that unionised companies inform their respective unions about impending retrenchments at least a month in advance, he said it would be ideal if companies could inform them months or even a year ahead.
This would give the unions ample time to prepare a smooth transition for the affected workers, said Mr Yong, who is also a Member of Parliament (MP) for Tanjong Pagar Group Representation Constituency.
Once notified, the unions will work with the companies to identify which workers might be affected, and whether they can be redeployed should their current job scope be made redundant.
Mr Sazali Zainal, president of the Singapore Industrial and Services Employees' Union, said that his union will negotiate for a fair support package in cases where workers have to be retrenched.
In the case of unionised companies, the union will negotiate for a compensation package, which is usually given to all affected employees. Employees who are union members could also get other forms of support such as training grants, assistance for hardship or medical cases, and job referrals.
“Sometimes the compensation (benefits) are also stated within the collective agreement,” said Mr Sazali, referring to an agreement between an employer and the trade union on the employees’ terms and conditions of employment. A collective agreement is valid for between two and three years.
Retrenchment benefits for union members are typically a month’s salary per year worked, said Ms Cham, though they may vary for certain unions.
On UWEEI’s part, Mr Yong said the union will also negotiate for ex-gratia payments for its members.
In the event that companies disagree with the terms of negotiations and refuse to cooperate further - which both Mr Sazali and Mr Yong said is rare - discussions can be escalated to the MOM or the Industrial Arbitration Court.
Within the manufacturing sector, which is where the bulk of retrenchments tend to come from, Mr Yong said there is a tendency to let foreign workers go first, before Singaporeans.
When the retrenchment is over, there will often be a period when the unions will check in on their members to see if they need further help getting another job, he added.
WHAT ABOUT WORKERS WHO ARE NOT PART OF A UNION?
For those working in non-unionised companies, but are members of a registered trade union, there is a tripartite mediation framework to resolve common employment disputes, said Ms Cham.
The framework was set up by MOM, with the support of SNEF and NTUC.
The mediation covers a wide range of issues: Salary arrears, employment statutory benefits, payment of retrenchment benefits, breach of individual employment contract by an employer, re-employment issues, and wrongful dismissal claims.
As for non-union members, they can seek help from the Tripartite Alliance for Dispute Management (TADM), though the assistance offered will be limited compared to what a union member could expect.
For instance, non-union members will only be able to receive 30 minutes of advisory for free regarding all workplace issues.
For salary-related claims, TADM will only help advise on the Employment Claims Tribunal process for a claim of up to S$20,000, while unionised members will be able to seek help for claims of up to S$30,000.
HOW WORKERS CAN PROTECT THEMSELVES
With Singapore’s workforce rapidly ageing and facing widespread disruption in many industries, there is particular concern for older workers who may be at risk of being laid off.
Ms K Thanaletchimi, president of the Healthcare Services Employees’ Union, noted that older workers have to grapple with a steep learning curve brought about by industry transformation.
To stave off the threat of retrenchment, “it is important for older workers to learn new skills as simple as using technology for daily chores to help them to remain independent and relevant,” said Ms Thanaletchimi, who is a former Nominated MP and a current vice-president of the NTUC Central Committee.
Even so, she urged companies not to automate jobs at the expense of workers. On its part, the Government can also do more to help older workers remain in employment by “heavily cross-subsidising their wages”.
The Government has introduced the Special Employment Credits scheme which provides wage offsets to employers hiring older Singaporean workers aged 55 and above.
However, Ms Thanaletchimi noted that many companies are lamenting that the employment credits under the existing scheme are not enough for them to hold on to older workers.
The need to stay relevant also applies to younger workers who are by no means immune to retrenchments - something that Ms Goh knows too well.
After she was retrenched from the international media company, Ms Goh is now working as a ballet teacher.
On hindsight, she felt that she had “gotten comfortable” in her previous job. Getting retrenched was the rude awakening which she needed, she said.
Offering practical advice to those who are worried about being laid off, she suggested that they go out of their way to attend job fairs and have their curriculum vitae “always ready”
“And don’t be afraid to find out about your rights from your union, if you have one,” she said.