Employers face penalties if they disguise retrenchments

Companies in Singapore face getting their work pass privileges and Jobs Support Scheme wage subsidies revoked for not paying retrenchment benefits.
By: | June 9, 2020

Companies in Singapore might be penalised if they are found to have “disguised their retrenchments”, said Minister for Manpower Josephine Teo.

With the COVID-19 pandemic impacting many businesses in the city-state, employers have resorted to cutting jobs in order to survive these challenging times.

But Teo has warned that companies who do so without paying the retrenchment benefits spelt out in employment contracts or collective agreement might face penalties such as getting their work pass privileges and Jobs Support Scheme wage subsidies revoked.

“Even during the COVID-19 period, whatever the termination of employment is called, an employee is presumed to have been retrenched if the employer cannot show a plan to fill the vacancy any time soon,” she said in Parliament, adding that employers cannot “sidestep it by calling the retrenchment something else”.

However, employers will be allowed to re-negotiate retrenchment benefits if they genuinely do not have the financial means.

“The tripartite partners have therefore agreed that in instances of genuine financial difficulty for the employer, retrenchment benefits may be re-negotiated or moderated,” she added.

“The norms may have to be set aside in these abnormal times. Nevertheless, businesses should still give some support to retrenched employees, to the extent that they can afford.”