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Alternatives to retrenchment

As an employer, you should consider alternatives to retrenchment to help keep your businesses viable and support your employees during economic downturns, so that fewer jobs are lost.

Employers must notify MOM on cost-saving measures that affect your employees’ salaries. This excludes adjustments such as bonuses and increments

What are the alternatives

The Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment include training, redeployment, flexible work schedule, shorter work week and temporary layoff.

Training

Training and skills upgrading of employees is one of the key strategies recommended by tripartite partners. Employers could also receive absentee payroll subsidies for employees undergoing training.

Employers can tap on training support scheme under the SkillsFuture movement, redeployment programmes under the Adapt & Grow initiative and other government grants.

Redeployment

If changes are structural, you can redeploy or rotate employees within your company when the job scope is enlarged, enriched or restructured.

Employees who are redeployed should also be provided with the relevant training.

Implementing a shorter work week

You can ask employees to work only a few days a week for a short time.

This reduced duration:

  • Should not exceed 3 days in a week.
    A reduction of 3 days should only be implemented if the company’s performance is severely affected.
  • Should not last more than 3 months.
If salaries are affected, you must notify MOM.

Temporary layoffs

You can ask employees to stop coming to work for a short period.

However, you still have obligations towards your employees:

  • You must pay at least 50% of their gross salary during the days that they are temporarily laid off.
  • You can ask your employees to take up to 50% of their earned annual leave.
  • You should implement the layoff period such that it does not exceed 1 month at any one instance subject to review.
If salaries are affected, you must notify MOM.

Other cost-saving measures

If you are suffering from extremely poor or uncertain business conditions that are likely to be long term, you can consider making direct adjustment to wages to further reduce manpower costs.

This could be in the form of adjustments to the annual wage increment, monthly variable component or other allowances.

As a last resort, you may also resort to no-pay leave.

If salaries are affected, you must notify MOM.

Resources

For employers Read MOM’s study on Managing Excess Manpower – how some companies have successfully managed their excess manpower.
For employees

You can visit the following centres for employment assistance:

  • Workforce Singapore’s (WSG) Careers Connect.
  • NTUC's Employment and Employability Institute's (e2i) career centres.