Here’s How Companies Can Carry Out A Retrenchment Or Restructuring Exercise Responsibly

Sometimes despite trying all other measures, there is no choice but to take the option of last resort: retrenchment. Laying off employees can be the most difficult choice that a company must make. Here is what companies can do to carry out a retrenchment or restructuring exercise responsibly. 

#1 Explore Other Options First

Before considering retrenching or restructuring, companies should explore other possible options to manage their manpower. This would include making alternative work arrangements with or without wage cuts, wage adjustments, temporary lay-offs and no-pay leave. 

For example, sending employees for training to upgrade their skills may be an option as employers can receive absentee payroll funding. Announced as part of the Resilience Budget, employers can claim 90% of the hourly basic salary, up from 80%, capped at $10 per hour. 

Companies may also implement flexible work arrangements, shorter work-week to manage their manpower needs. Part-time work, job-sharing and wage adjustments are also other ways reduce manpower costs. 

Companies are required to notify MOM if there is more than 25% reduction in gross monthly salary for local employees and more than 25% reduction in basic monthly salary. MOM must be notified within a week (7 calendar days) after wage adjustments has been made and this can be done online

However, sometimes all these alternatives may not work, and companies will have to seriously consider retrenchment as the final option. 

Read Also: Absentee Payroll Funding: Here’s How You Can Get Reimbursed 90% Off Employee Training Costs

#2 Develop A Communication Plan

In the case that retrenchment is inevitable, companies should prepare and develop a communication plan to convey a clear and consistent message. This should include:

  • The business rationale for change, such as the business situation faced by the company and measures already taken by the company to reduce business costs
  • How the retrenchment exercise will be carried out
  • The factors that will be used to select the affected employees for retrenchment
  • Types of assistance available for those affected

As much as possible, companies should give employees advance notice or offer pay in lieu of such notice. At minimum, companies are required to adhere to the Employment Act’s minimum notice period for termination of service.

However, responsible companies should strive to give affected employees a longer notice period to allow them to make alternative arrangements. If the company is unionised, the union should be consulted as early as possible or a month before notifying affect employees.

While the focus is on affected employees who are retrenched, the communication plan should also include employees remaining in the company who can be affected by the exercise. In order to minimise the negative impact on morale, it is important to engage and support your remaining employees as well.

#3 Provide Measures To Support Workers Through The Transition

Companies should provide supporting documentation (such as referral letters, service records and past training certificates) to facilitate the job search of affected employees.

Responsible companies may also help affected employees look for alternative jobs in associate companies, in other companies or through outplacement assistance programmes and linking them with employment/placement agencies. Other measures to help affected employees include engaging career coaches to provide advice to aid their job search and providing counselling support to help them cope with the stress of job loss.

Employers can work with the unions, SNEF and agencies such as WSG, NTUC’s Employment and Employability Institute (e2i), Job Security Council and U PME Centre, to help employees through employment facilitation services.

Read Also: Here Are 4 Severance Benefits You Can Offer When Cash Is Tight

#4 Inform Affected Employees Personally

While it is a difficult conversation, companies should inform affected employees in person, with the HR and the employee’s manager present, instead of during a mass meeting, telephone call or through email. It shows more respect and sensitivity to the employee and having the personal interaction may help them process the information better.

As an employer, be compassionate and empathetic in your interactions. Different people respond differently to change, so prepare for various scenarios, and respond as sensitively as possible. Keep an open line of dialogue and make time for employees’ questions and grievances. It is important to let them know that the retrenchment is not a reflection of their performance or the company’s impression of them.

#5 Notify The Relevant Agencies

While it is mandatory for companies with at least 10 employees who have retrenched 5 or more employees within any 6-month period to notify MOM, it is good practice to inform MOM of any retrenchment exercise. The notification should be submitted within 5 working days after the employee is notified of his/her retrenchment.

If the company is unionised, consult the union as soon as possible or at least one month before notifying the employees.

Additionally, companies may seek help from MOM in carrying out a retrenchment exercise by submitting an early alert. This will enable companies to receive information on government assistance schemes to support the restructuring exercise, receive advice on how to  apply the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment and obtain employment facilitation for affected employees.

Agencies such as WSG, NTUC’s Employment and Employability Institute (e2i), Job Security Council and U PME Centre, can help with employment facilitation services such as career counselling and job placement assistance.

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