On 25 November 2016, the Ministry of Manpower (MOM) announced that a new requirement on mandatory retrenchment notifications will take effect from 1 January 2017. The tripartite partners i.e. MOM, the National Trades Union Congress and the Singapore National Employers Federation have released an advisory entitled "Tripartite Advisory on Mandatory Retrenchment Notifications" to guide employers on complying with this requirement.
Previously, there was no legal requirement to notify MOM with respect to retrenchments. Any notification was on a voluntary basis. Accordingly, employers intending to undergo retrenchment exercises need to take note of this new requirement. We have set out the details of this new requirement below.
Employers who employ at least 10 employees are required to notify MOM if 5 or more employees are retrenched within any 6 month period beginning 1 January 2017.
Retrenchments are defined as dismissal on the ground of redundancy or by reason of any reorganisation of the employer’s profession, business, trade or work. This applies to permanent employees, as well as contract workers with full contract terms of at least 6 months.
The notification must be submitted within 5 working days after the employee is notified of his/her retrenchment. For the first 4 employees to be retrenched, the notification must be submitted within 5 working days after the 5th employee is notified. Thereafter, the notification must be submitted within 5 working days after each employee is notified.
To make a notification, employers need to complete the retrenchment notification form. The following information will have to be submitted:
- Company UEN (i.e. registration number)
- Company contact person details
- Size of workforce before retrenchment (Singaporean / Permanent Resident / Foreigner)
- Details of workers to be retrenched / who have been retrenched
- Residential status
- Date of retrenchment
- Job Title
Failure to notify within the required timeline is an offence and the employer may be liable on conviction to penalties, including a fine not exceeding SGD 5,000.
The rationale for this change is to provide more complete and timely retrenchment information to the Singapore government such that it will be able to better assist retrenched local employees to find alternative employment and relevant training to enhance their employability. Our view is that this change has come about due to the fact that there has been an increase in retrenchments taking place in 2016 due to the uncertain economic outlook and the fact that the information collected under the previous voluntary notifications system was inadequate for the Singapore government to assist local employees with finding new employment. Accordingly employers need to ensure that any retrenchment exercise being undertaken needs to be notified to MOM in a timely fashion.