Mr Pritam Singh (Aljunied): Chairman, according to the preliminary estimates released by MOM, retrenchments in Singapore have more than doubled in 2023 from 2022 to 14,320 cases. Recent stories about ongoing retrenchment and redundancy exercises in companies such as Lazada and Electrolux have only intensified discussions in public about retrenchment.
With the threat of retrenchment for our workers all too real, it comes as a surprise to many Singaporeans that the right to retrenchment benefits is not enshrined in legislation here in Singapore for any category of worker. Generally, benefits upon retrenchment depend on the company’s policy of severance package and retrenchment benefits, as well as the terms of the contract of employment.
In the LifeSG guide on retrenchment benefits, the prevailing norms on paying retrenchment benefits are around two weeks to one month for each year of service, with unionised companies seeing one month of salary for each year of service. In contrast to our prevailing practice, many jurisdictions around East Asia have enshrined both the right to some form of retrenchment benefits and the amounts to be paid.
For instance, under Part 5A of the Employment Ordinance in Hong Kong, both the right to severance payments except in cases of dismissals and the amount of severance payment to be paid are enshrined in legislation. Malaysia regulates both the employment termination and layoff benefits regulations. Thailand’s Labour Protection Act also determines the severance pay amount for workers depending on their employment period. South Korea grants full-time employees severance pay under the Labour Standards Act regardless of reasons of termination. Taiwan sees employers liable to pay severance pay under the Labour Standards Act. Indonesia has a minimum statutory severance and long service pay. In general, such payouts are close to a month’s wages for every year of service.
In 2018, I asked the previous Minister of Manpower how it ensures companies pay retrenchment benefits that meet industry norms as defined by the tripartite standards for companies that retrench workers for reasons not related to financial distress.
The Minister confirmed that according to the MOM’s survey on retrenchment benefits in 2017, around 90% of establishments which retrenched workers paid retrenchment benefits while more than 70% of them paid benefits which met or exceeded prevailing norms.
Sir, the Forward Singapore exercise made it a point to identify Singaporean workers who undertake hand and heart work, such as trade professionals like electricians and plumbers, as well as those in the healthcare and aged care sector. It called to ensure that they are rewarded fairly, since these workers contribute to our collective higher standard of living. In view of the respectable number of employers according to the Retrenchment Benefits 2017 report who are already providing retrenchment benefits meeting or exceeding the prevailing norms, I ask MOM to review its position on retrenchment benefits and progressively consider mandating retrenchment benefits for hand and heart workers to nudge employers to do so.
At the same time, we should also look at mandating retrenchment benefits for workmen and employees covered by Part 4 of the Employment Act to start with. Some groups I mentioned are the most deserving among us with wages below the median and it is crucial that we pay special attention to them. Legislating their right to retrenchment benefits would be one concrete way of supporting workers in the name of Forward Singapore.
The Minister for Manpower (Dr Tan See Leng): On Mr Pritam Singh’s proposal to legislate retrenchment benefit, including for those in “hands” and “heart” roles, we have no plans to do so. This is consistent with our stance on retrenchment benefit for all employees. Legally mandating retrenchment benefit will affect the viability of businesses which are already in financial difficulty and put existing employees at risk. Additionally, the businesses that can afford to pay more will default to the legislated minimum.
The Chairman: There are at least nine Members who have raised your hands. I will be fair to every Member. Anyone who attempts to make a speech, I will cut you off. Mr Pritam Singh.
Mr Pritam Singh: Thank you, Chair. I will be brief. Thank you to Minister for responding to my cut on retrenchment. Just a quick question, for the companies that currently pay retrenchment benefit, how many of them pay more than the recommended retrenchment benefits as listed by the tripartite partners?
Secondly, I understand every four years, MOM carries out a survey on retrenchment and in the last report – I understand that it is publicly available – is Retrenchment Benefit 2017, published by MOM Manpower Research and Statistics Department in September 2018. Can I confirm with the Minister that the Ministry is going to continue publishing surveys on retrenchment benefit every four years?
Dr Tan See Leng: I thank the Leader of the Opposition for his clarification. I do not have all the numbers with me currently. I will revert with regards to his question on whether they pay over the recommended retrenchment benefits. From the survey, nine in 10, or 90%, of them pay the retrenchment benefits, typically ranging from about two weeks to a month per year of service.
For the ongoing surveys, we hope to sharpen the survey each time we conduct it, using the insights that we have from previous surveys to make it even more precise, because it allows us to better plan our policies. As I said, we will constantly work hard at improving the livelihoods for all of our workers. I hope that gives you the reassurance.
Ministry of Manpower
4 March 2024
https://sprs.parl.gov.sg/search/#/sprs3topic?reportid=budget-2369
Office of the Leader of the Opposition 