With effect from 12 March 2020, employers with 10 or more employees are required to notify the Ministry of Manpower (MOM) if they implement cost-saving measures that affect employee’s monthly salaries.

Since then, MOM, together with the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP), have been engaging both employers and employees to help businesses implement cost-saving measures fairly and responsibly, and assist employees who felt the measures implemented by their company were unfair or unreasonable.

Key observations from the engagements were recently compiled and released. They revealed that to date, more than 600 employees have approached MOM for assistance as they felt the cost-saving measures implemented by their company were unfair or unreasonable.

Is it reasonable to ask employees to consume annual leave or take no-pay leave?

The most common issue was whether it was acceptable for employers to ask employees to consume annual leave or take no-pay leave, given that employers are receiving Government support such as the Jobs Support Scheme (JSS) and the Foreign Worker Levy (FWL) rebates.

To this point, the tripartite partners agreed that it is reasonable for employers to ask employees to tap on existing leave entitlements or even take some no-pay leave when business activity has been sharply reduced.

“It is a shared responsibility and employees are encouraged to support their companies’ cost-saving measures to help the company tide through this difficult period, in order to avoid the worse alternative of retrenchment,” the report said.

Communication lapses are the biggest cause of complaints

The good news is, interventions by the tripartite partners revealed that thus far, there has not been a case of an employer who wilfully refuses to channel Government support funding to proper use.

If that’s the case, why were so many complaints received?

The fact of the matter is, the majority of cases (74%) were misunderstandings, because employers did not communicate the measures well and/or failed to explain the necessity for adopting the cost-saving measures.

At the start of the Circuit Breaker, some employers were also unsure of the quantum of support they would be receiving and how they should use the JSS payout.

Thankfully, upon MOM’s engagement, employers were cooperative and prepared to review their practices. Employees were also willing to accept the cost-saving measures to save their jobs, including consuming their annual leave entitlements to receive more salary support when they were not working or even taking no-pay leave when employers faced genuine cashflow issues.

Christine Loh, Director, Employment Standards Enforcement, Ministry of Manpower, said: “To weather the impact of COVID-19 in the months ahead, employers and employees have a shared responsibility to work together and make sacrifices to prevent retrenchment and preserve jobs. MOM will investigate complaints and take actions against employers who do not treat employees fairly.”

Roslyn Ten, General Manager, TAFEP added: “Open and honest communication will go a long way in ensuring that these sometimes painful measures are carried out smoothly. TAFEP will continue to engage employers to advise them on how to better support their employees during this difficult time.”

More than 4,800 employers in Singapore implemented cost-saving measures, affecting 187,000 employees

From March to June, more than 4,800 employers submitted notifications to MOM on cost-saving measures affecting more than 187,000 employees.

The bulk of these employers were from sectors severely impacted by COVID-19, namely, accommodation and food services (24% of notifications, affecting 45,000 employees), construction (16% of notifications, affecting 25,000 employees), and wholesale and retail trade (15% of notifications, affecting 19,000 employees).

No-pay leave, adjustments salary components, and shorter workweek were the most common cost-saving measures in Singapore

The top three cost-saving measures implemented were no-pay leave, adjustments to monthly salary components and shorter work week. Based on the notifications received, most employees experienced salary reductions of up to 25% as a result of cost-saving measures implemented.

Notably, if an employer’s cost-saving measures appeared to be excessive in the notification submitted to MOM, TAFEP would intervene to further assess if the measures were fair and reasonable, taking reference from the relevant advisories issued by the tripartite partners.

Over the three-month period, TAFEP engaged about 700 employers employing over 33,000 affected employees.

Following TAFEP's intervention:

  • About 300 employers agreed to review their measures, including to provide more wage support or require employees to clear fewer days of annual leave.
  • The remaining employers were able to justify the necessity of their cost-saving measures for business survival. For example, funding support from the Government were channelled into covering fixed overheads during business suspension to keep the business viable and prevent retrenchment.

Ten said: “To get through this crisis and save jobs, everyone must come together and do their part. The Government has rolled out the JSS to support employers to retain employees and avoid retrenchment for as long as possible. Employers will need to be responsible in how they adopt cost-saving measures to keep their businesses afloat. Employers also need to be open and transparent with employees on the need for cost-saving measures, and how these are to be implemented.”

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