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Written Answer by Mrs Josephine Teo, Minister for Manpower, to Parliamentary Question on retrenchment benefits

Employment practices

NOTICE PAPER NO. 1286 OF 2018 FOR THE SITTING ON 6 AUGUST

QUESTION NO. 2153 FOR ORAL ANSWER

MP: Mr Pritam Singh

To ask the Minister for Manpower what levers are available to the Minister to ensure that retrenchment benefits meet industry norms in the case of companies that retrench workers for reasons not related to financial distress.

Answer

  1. Companies must pay retrenchment benefits to workers who have served two years and above, if it is specified in their individual employment contracts or the collective agreements negotiated by their unions.
  2. Tripartite partners recognise that retrenchment is a difficult time for companies and affected employees. In this regard, we issued the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment to provide guidance to employers on implementing retrenchment in a fair and responsible manner. The Advisory states that the prevailing norm is to pay a retrenchment benefit of between 2 weeks to 1 month of salary per year of service, depending on the financial position of the company and industry practices. According to our survey on retrenchment benefits in 2017, around 90% of establishments which retrenched workers paid retrenchment benefits, of which more than 70% paid retrenchment benefits that met or exceeded the prevailing norms.
  3. Retrenched workers who have not been paid retrenchment benefits as specified in their employment contracts can lodge a claim at the Tripartite Alliance for Dispute Management (TADM) for mediation. If mediation fails, the claim will be heard at the Employment Claims Tribunals. Retrenched workers who do not have retrenchment benefits specified in their employment contracts can also approach TADM for advisory and mediation services. For eligible union members with retrenchment benefit disputes, the unions will help to negotiate an agreement with the employer. If no agreement can be reached, the unions can refer the disputes to the Ministry of Manpower for conciliation, failing which the disputes can be arbitrated at the Industrial Arbitration Court.