Employment Obligations in light of COVID-19 – Managing Excess Manpower

Find out your obligations as an employer when facing excess manpower in light of Covid-19.

28 Apr 2020 Articles Retrenchment Trending Best practices

This article is part of a series to help you better understand your employment obligations towards your employees. We hope this information is of help when you review your HR practices and to ensure you correctly apply the statutory provisions, in compliance with the Employment Act, towards being a responsible and progressive employer. 

 

In this article, we will focus on the topic of managing excess manpower, following the recommendations found in the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment.

 

Q: Due to the COVID-19 situation, my event organising company has been adversely affected by the cancellation of events over the next six months, which has resulted in excess of manpower. What are some measures that I can implement to mitigate the business costs and to sustain my business in the near future? What should I do if I need to let some of my employees go in order to sustain my business?

TAFEP: In view of the current COVID-19 situation, employers will need to focus their attention and resources on the continued survival of the business, while also ensuring that their employees behave responsibly during their quarantine/leave of absence/stay-home notice. 

Even amidst this challenging situation, employers are strongly encouraged to take a long-term view of their manpower needs, including the need to maintain a strong Singaporean core. When managing excess manpower, retrenchment should be treated as a last resort, once all other options have been considered and found to be to be unworkable.

Below are some suggestions employers can implement at the workplace to upskill their employees during this period, so as to capitalise on growth opportunities by swiftly mobilising trained and skilled manpower when the economy recovers.

  • Tap on Government Training Grants and Schemes. Upgrade employees’  skills and increase their employability through various Government training support schemes under SkillsFuture, redeployment programmes under the Adapt & Grow initiative, and other government grants.
  • Create Mentoring Opportunities. Identify long serving older workers to mentor newer and less experienced employees by sharing institutional knowledge and skills acquired over the years. This invaluable transfer of skills and learning can help to groom the next generation of managers and leaders. 
  • Cross-train Employees. As the workforce develops secondary skills across different functional or technical areas within the company, this provides employers with greater flexibility in manpower deployment.

In addition to upgrading employees’ skills and employability, the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment also recommends these cost-saving measures for employers to manage their excess manpower:

  • Redeploy employees to alternative roles within the company, as the business requires.
  • Implement flexible work schedule, flexible work arrangements, a shorter work-week, or temporary layoffs.
  • Adjust wages in line with tripartite norms.
  • Implement no-pay leave as a last resort after having considered or implemented other measures.

Before implementing any of the cost-saving measures, employers must first consult the employees and union and obtain their consent. Employees should be given the opportunity to acknowledge or raise their concerns or objections to the measures, which may affect their salaries. Employers do not need to obtain prior approval from MOM to implement any of the measures.

However, when implementing any of the cost-saving measures, employers (including senior management) will need to exercise fairness, due care and consideration as these have significant impact on employees’ livelihoods and careers. Employers will need to:

  • Lead by example when implementing any of the measures.
  • Consult and reach a mutual agreement with unions and employees early.
  • Clearly communicate the implications of the measures to employees.
  • Manage the impact of the measures on their employees, particularly low-wage employees.

Employers who have implemented any cost-saving measures that affects employees’ salaries (excluding adjustments to discretionary payments such as bonuses and increments) must notify MOM within 1 week (or 7 calendar days).

In the case of foreign employees, employers are first required to notify MOM on the cost-saving measures if there is an impact on their salaries; separately, employers are required to apply and seek approval from Controller of Work Passes* to reduce their salaries.

*Employers that implement cost-saving measures between 7 April to 1 June 2020 (Circuit Breaker period) will only need to fill in a notification form. They will not need to separately seek approval from the Controller of Work Passes to adjust the salaries of their foreign employees. Click here for frequently asked questions on measures to manage excess manpower.

In the event that retrenchment is inevitable, employers are expected to do so in a fair and responsible manner, ensuring that employees are treated with dignity and respect, and follow the recommendations in the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, including:

  • Complying with the Mandatory Retrenchment Notifications requirement under the EA 
    (i.e. MOM and unions of retrenchment).
  • Selecting employees for retrenchment fairly.
  • Communicating retrenchment to employees early.
  • Offering retrenchment benefits at the prevailing norm.
  • Providing employment facilitation to affect employees. 

For more information on retrenchment, please visit MOM’s website at the following link:

https://www.mom.gov.sg/employment-practices/retrenchment

Additional resources

Employer Advisory Service @ TAFEP (EAS) – EAS consultants will provide scenario-based advice to employers on the Employment Act and relevant parts of the Child Development Co-Savings Act, Employment of Foreign Manpower Act, and Retirement and Re-employment Act, which impact employment terms and conditions.

EAS consultants do not provide legal advice and will not discuss points of law. We will only provide practical guidance on the application of the Employment Act and other labour laws related to the specific scenarios that are raised by employers and share good employment practices that are adopted by industry peers and employers in Singapore.

For more information on EAS@TAFEP, please visit https://www.tafep.sg/eastafep

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