The Covid-19 situation has resulted in sharp declines in volume and revenue for businesses in various sectors. Some employers have started to implement cost-saving measures.
In response, the tripartite partners – Ministry of Manpower (MOM), NTUC and the Singapore National Employers Federation (SNEF) – have updated the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment to guide affected employers on appropriate measures to manage excess manpower, with retrenchment always being the last resort.
The alternatives to retrenchment, which employers should consider, are as follows:
MOM Divisional Director of Labour Relations and Workplaces Division Then Yee Thoong said: “I strongly encourage employers to study the advisory, including the annex of the advisory that lays out the measures ordered in terms of severity of impact on employees’ livelihood, and work with their unions and employees on a set of mutually agreeable measures.”
Implementing a flexible work schedule (FWS) is one of the first measures companies can consider. It will allow employers to optimise the use of manpower when they go through ups and downs, while employees are assured of a stable monthly income.
Here is one example of how this can be done:
To illustrate, if the employee works OT for 60 hours in week 5 to week 8, the gross OT pay is 60 hours × $10/hour × 1.5 = $900. This effective OT pay due to the employee would be offset by the accrued wages of $560. A nett amount of $340 is due to the employee.
The accrued wages will reset at the end of cycle and any remaining wages that were not tapped on by week 8 cannot be deducted from the employees’ wage.
Any cost-saving measure by employers that affects the employees’ monthly salaries must be reported to MOM starting 12 March 2020. Companies need to seek the support of the unions and workers and thereafter apply to the Commissioner for Labour.
The new requirement applies to employers with 10 or more employees and is intended to be a temporary measure, until the economy recovers.
“Businesses will differ in their operation and financial circumstances. As such, they should evaluate the options and notify MOM after their adoption. This information will help the tripartite partners to better appreciate the ground and decide on further targeted support for employers and employees,” said SNEF Executive Director Koh Juan Kiat.
For employers who are prepared to invest and develop the capabilities of their employees, the Government provides significant assistance through training support schemes under the SkillsFuture movement, redeployment programmes under the Adapt and Grow initiative, and other Government grants.
Training and upskilling will enable employers to retain skilled employees and meet business demand when demand rebounds. Employees, on the other hand, can use this opportunity to update themselves with better skills and knowledge to improve their productivity.
NTUC Assistant Secretary-General Cham Hui Fong said: “During this downtime, we urge companies to work closely with our unions on cost-cutting measures to manage excess manpower. Companies can leverage Company Training Committees to drive transformation and ramp up training of their workers.”
“They can also join the NTUC Job Security Council for pre-emptive placement assistance for affected workers and necessary training to be placed in new jobs,” added Ms Cham.
