The consequences of 'unfair' retrenchment practices in Singapore

What happens if a retrenched employee accuses you of carrying out ‘unfair dismissals’?

In a parliamentary speech, Singapore’s Manpower Minister Josephine Teo broke down how the Ministry of Manpower (MOM) handled employee complaints against ‘unfair’ retrenchment practices.

• Firstly, MOM engages the employer to review their workforce before and after retrenchment.
• Next, they investigate the reasons behind the process – the criteria used for selection, and whether ‘these are objective and rational’.
• If MOM finds the employer guilty of bias, they will take necessary action, including withholding financial support like wage subsidies, or suspending work pass privileges.
• Also, employers may be ordered to compensate or reinstate employees if it was found that they were unfairly dismissed due to discrimination.

READ MORE: How to calculate retrenchment benefits

Advice for a ‘fair’ retrenchment exercise
In the same speech, Minister Teo acknowledged employers’ struggle on deciding who to retain and who to let go. She then reiterated the tripartite partners’ guidelines on how to carry out layoffs in a compassionate and responsible manner.

“Ultimately, they have to go back to why this drastic step needs to be taken – for the business and the people it supports to have the best chance of survival, or to restructure for continued longer-term viability,” Teo said.

“If after the retrenchment, the business still falters, the workers who didn’t get retrenched will also be hurt.”

Employers thus must strike a ‘very delicate balance’ between bolstering the company’s financial health, as well as considering employees’ needs, whether they’re retained or retrenched.

To make a fair assessment on the best course of action, leaders need to first determine a clear business direction.

Then, consider the abilities of the staff, their skills, and how those are relevant to the business – in the short as well as long-term.

READ MORE: Retrenchment checklist: 10 ways to keep it a 'fair' exercise

Following the latest tripartite advisory on retrenchments, Teo reminded employers to ‘upkeep the Singaporean core’ if they had to choose between equally capable staff of different nationalities.

“Retrenchments are never easy,” she said. “I know this, having been involved in supporting retrenched workers for well over a decade, since I was in NTUC.

“It brings great stress to the workers, including to their families. This is why the retrenchment option should be taken only as a last resort.”