ST Explains: Next steps to take after getting retrenched in Singapore

SINGAPORE – The topic of layoffs is in the spotlight again in the first week of January, as e-commerce giant Lazada reportedly retrenched workers of all stripes from Jan 3 to 5.

Such exercises had abated in recent months from the highs following the Covid-19 pandemic.

The Straits Times looks at the rights retrenched workers have in Singapore.

Q: Was I retrenched or terminated?

A: The Employment Act defines retrenchment as “dismissal on the ground of redundancy or by reason of any re-organisation of the employer’s profession, business, trade or work”.

This means that an employer can be said to have retrenched workers only under certain conditions, such as if the company is restructuring or the jobs are no longer there after the business has dwindled, and not any instance in which a contract of service is terminated.

An employee is presumed to have been retrenched if the employer is unable to show plans to hire a replacement, even if the employer attempts to sidestep the obligation to pay retrenchment benefits by calling the retrenchment something else.

Q: Is there a minimum notice period?

A: The Employment Act stipulates minimum notice periods that employers are required to give when ceasing employment of their workers.

The notice periods range from one day for those who have served less than 26 weeks to four weeks for those who have worked with the employer for five or more years.

However, an employer can pay the retrenched worker a quantum, such as an amount equivalent to the worker’s pay for the notice period, in lieu of the notice.

Q: Are workers entitled to retrenchment payouts?

A: Only workers who have worked for the employer for two years or more, and have these payouts stipulated in either a union’s collective agreement with the company or the workers’ individual contracts, are entitled to these payouts.

Those who have worked for the employer for less than two years are not entitled to payouts, but companies may choose to make a goodwill payment.

Retrenched workers who are pregnant are also entitled to maternity benefits if they have worked for the employer for at least three months and were certified by a doctor to be pregnant before their job was cut.

A tripartite advisory on how companies should manage excess manpower and carry out retrenchments responsibly states that the prevailing norm is for employers to pay a retrenchment benefit amounting to between two weeks’ and a month’s salary for each year of service.

This advisory, however, has no force of law, according to an employment lawyer whom ST spoke to recently.

Instead, it is more common for an employer to specify retrenchment benefits in an internal policy, as opposed to an employment contract, which would generally not grant employees any rights or entitlements to retrenchment benefits.

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