An Overview on Retrenchment Benefit for Employees in Singapore During COVID-19
Relief Provided for Employees Whose Livelihoods Are Affected
The COVID-19 has significantly impacted the livelihoods of businesses and employees. Hence the tripartite partners have issued a retrenchment benefit for employees to assist during this difficult time.
The Singapore Government has implemented several support measures. These include financial support and grants aimed at helping business owners manage the cost of manpower. Employers will receive payouts under the Job Support Scheme (JSS) in April, May, July and October 2020. April and May’s payouts will be enhanced by 75% of the monthly wages.
These measures are meant to encourage businesses to consider retrenchment only as a last resort to manage manpower costs. Using the JSS scheme, businesses are encouraged to retain employees. They are also encouraged to provide the employee with baseline wages even if they cannot work. The baseline wage should be mutually agreed upon between the employer and the employee.
However, if retrenchment is unavoidable, then the retrenchment benefit for employees should be based on the business’s financial position:
- Employers in a strong financial position should continue paying retrenchment benefits per the existing contract.
- Employers who have been financially affected should renegotiate a fair retrenchment benefit or work with the union. The retrenchment benefit for employees should be linked to their years of service.
- Employers who have been severely affected should negotiate with unions if they are unionised. Non-union employers should provide a lump sum benefit.
Retrenchment Benefit for Employees Who Earn Lower Wages
If retrenchment is needed, employers are encouraged to consider their lower-wage employees and be generous. They should consider all relevant factors fairly and carefully before implementing the decision to retrench employees. Support for the lower wage employees could be in the form of:
- More retrenchment benefit pay-out weeks
- Referring employees to Employment and Employability Institute (e2i) or Workforce Singapore (WSG)
- Join the NTUC’s Job Security Council (JSC).
Treat Them With Kindness
Employers are reminded to treat all employees with dignity, kindness and empathy if retrenchment is needed.
Should you have at least 10 employees and decide to retrench your employee, you must notify the Ministry of Manpower (MOM) Singapore. You should do this if you plan to retrench 5 or more employees within a 6-month period.
For MOM advisory details, please click here.