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Majority of employers reasonable and fair when implementing cost-saving measures

  1. The Ministry of Manpower (MOM), together with the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP), have released key findings on the cost-saving measures adopted by employers severely impacted by the COVID-19 situation.
  2. The findings also cover efforts made by the Ministry and TAFEP to help businesses implement cost-saving measures fairly and responsibly.

    Key observations from employers' notifications on cost-saving measures
  3. With effect from 12 March 2020, employers with 10 or more employees are required to notify MOM if they implement cost-saving measures that affect employee’s monthly salaries. In the following three months, more than 4,800 employers submitted notifications on cost-saving measures, affecting more than 187,000 employees.
  4. The majority of these employers are from sectors severely impacted by COVID-19, namely, accommodation and food services (24%), construction (16%), and wholesale and retail trade (15%). The number of employees affected in these sectors are as follows:

     Sector (% of notifications)  Number of employees affected* 
     Accommodation and food services (24%)
    (e.g. hotels, restaurants)
     45,000
     Construction (16%)
    (e.g. builders, demolition companies)
    25,000
     Wholesale and retail trade (15%)
    (e.g. food & beverage outlets, departmental stores, wholesale of household goods)
     19,000
    *Rounded down to the nearest thousand.

  5. The top three cost-saving measures implemented were no-pay leave, adjustments to monthly salary components and shorter work week. Based on the notifications received, most employees experienced salary reductions of up to 25% as a result of cost-saving measures implemented.

    TAFEP proactively reached out to employers to review cost-saving measures to better support employees
  6. If an employer’s cost-saving measures appeared to be excessive in the notification submitted to MOM, TAFEP would intervene to further assess if the measures were fair and reasonable, taking reference from the relevant advisories issued by the tripartite partners. Over the three-month period, TAFEP engaged about 700 employers employing over 33,000 affected employees.
  7. Following TAFEP's intervention:

    • About 300 employers agreed to review their measures, including to provide more wage support or require employees to clear fewer days of annual leave. Some examples can be found in Annex A.
    • The remaining employers were able to justify the necessity of their cost-saving measures for business survival. For example, funding support from the Government were channelled into covering fixed overheads during business suspension to keep the business viable and prevent retrenchment.

    MOM found that majority of complaints arose due to poor or delayed communications
  8. Even as TAFEP proactively engages employers to assess their cost-saving measures, MOM has also been helping individual employees. More than 600 employees have approached MOM for assistance as they felt the measures implemented by their company were unfair or unreasonable. This is understandable given the adjustments employees have had to make during this period in terms of their work and salary arrangements.
  9. The most common issue raised was whether it was acceptable for employers to ask employees to consume annual leave or take no-pay leave, given that employers are receiving Government support such as the Jobs Support Scheme (JSS) and the Foreign Worker Levy (FWL) rebates. To manage cost pressures and conserve manpower for when they are most needed, the tripartite partners agreed that it is reasonable for employers to ask employees to tap on existing leave entitlements or even take some no-pay leave when business activity has been sharply reduced. It is a shared responsibility and employees are encouraged to support their companies’ cost-saving measures to help the company tide through this difficult period, in order to avoid the worse alternative of retrenchment.
  10. Thus far, there has not been a case of an employer who wilfully refuses to channel Government support funding to proper use. Our interventions revealed that in the majority of cases (74%), misunderstandings arose because employers did not communicate the measures well and/or failed to explain the necessity for adopting the cost-saving measures. At the start of the Circuit Breaker, some employers were also unsure of the quantum of support they would be receiving and how they should use the JSS payout. Examples of common complaints and misunderstandings are highlighted in Annex B.
  11. Upon MOM’s engagement, employers were cooperative and prepared to review their practices. Employees were also willing to accept the cost-saving measures to save their jobs, including consuming their annual leave entitlements to receive more salary support when they were not working or even taking no-pay leave when employers faced genuine cashflow issues.

    Efforts to ensure companies adopt fair and responsible cost-saving measures
  12. The Government support allows employers to recalibrate their cost-saving measures so as to provide baseline support for employees. Based on the engagement by MOM and TAFEP, many disputes can be avoided if both parties communicate, make some sacrifices, and work together to help the company pull through this crisis. MOM and TAFEP will continue its engagement efforts to guide and support both employees and employers, so that together, we can weather the impact of COVID-19 in the months ahead as Singapore embarks on the long road to recovery.
  13. Mrs Roslyn Ten, General Manager, TAFEP said, “To get through this crisis and save jobs, everyone must come together and do their part. The Government has rolled out the JSS to support employers to retain employees and avoid retrenchment for as long as possible. Employers will need to be responsible in how they adopt cost-saving measures to keep their businesses afloat. Employers also need to be open and transparent with employees on the need for cost-saving measures, and how these are to be implemented. Open and honest communication will go a long way in ensuring that these sometimes painful measures are carried out smoothly. TAFEP will continue to engage employers to advise them on how to better support their employees during this difficult time.”
  14. Ms Christine Loh, Director, Employment Standards Enforcement, Ministry of Manpower, said, “To weather the impact of COVID-19 in the months ahead, employers and employees have a shared responsibility to work together and make sacrifices to prevent retrenchment and preserve jobs. MOM will investigate complaints and take actions against employers who do not treat employees fairly.”