Is Termination of Staff Employment in Singapore During COVID-19 Allowable?
Employers Should Make Retrenchment a Last Resort
The Government is doing their best to look after the local workforce during COVID-19 and urges termination of employment in Singapore should be made a last resort.
With still no sign of when things will go back to normal, some companies are resorting to terminating their employees. This is happening worldwide as companies are feeling the pinch of loss of revenue. Singapore is among the countries focused on measures to protect the local workforce. However, employers in Singapore still need to be consider the various issues involved where termination is concerned.
Can a Company Terminate Its Employees in Singapore?
A company in Singapore is permitted to terminate its employees based on three grounds:
- Poor performance
During an economic downturn, redundancy is often the reason for termination. Even then, termination needs to be handled in a sensitive and responsible manner. Singapore’s Ministry of Manpower (MOM) jointly issued an advisory with the National Trades Union Congress and Singapore National Employers Federation. In the advisory, employers are advised to consider any of the following before retrenchment is an option:
- No-pay leave
- Retraining employees to help upgrade their existing skills
- Consider redeploying the employees to other areas of the business where they might be a better fit
- Flexible schedules and work arrangements
- Temporary layoffs
- Shorter work-weeks
Only if the measures above do not work should a company consider termination of employee.
What About During COVID-19?
No doubt some businesses are feeling the impact of not making as much revenue as they normally would. However, employers are still advised to think of retrenchment as a last resort. Non-wage costs should be reduced first and employers should rely on the Government funding support to continue paying wages.
The National Wages Council states minimising wage bills should only be for companies who need it. Staff should be supported even if they had to take a second job to help supplement the loss of income. Meanwhile, companies who have already reduced the wages of their employees should lead by example.
Employers should only consider freezing wages if a wage cuts are implemented company-wide. Low-wage employees who have stepped up to help in any way they can during this difficult time should be considered for ex-gratia payments where possible.
What Are the Procedures Involved?
If a business resorts to termination of staff employment in Singapore, they will be required to inform MOM if 5-employees are being retrenched within a period of 6-months. This is applicable to both permanent and contract employees. Notifications must be submitted within 5 working days after the 5th employee has been retrenched.
Threatening employees with termination during the COVID-19 is deemed unacceptable practice. MOM takes complaints against errant employers seriously. Any employer found guilty of misconduct will be denied future waivers and waivers. They could even be at risk of having their work pass privileges curtailed.
The Job Support Scheme in Singapore will be extended until May, along with waived foreign worker levies fees. Companies who have reduced their employee’s wages will subsequently be getting lower payouts that correspond.