22 December, 2016
From 1 January 2017, employers will be required to notify the Ministry of Manpower of certain retrenchments. Employers should take note of this mandatory requirement, as currently the Tripartite Guidelines on Managing Excess Manpower and Responsible Retrenchment only encourage employers to notify of any retrenchments.
What is the new requirement?
Employers who employ at least 10 employees will be required from 1 January 2017 to notify the Ministry of Manpower if five or more employees are retrenched within any six month period. The notification must be submitted within 5 working days from when the fifth employee to be retrenched (in a six month period) is notified of his/her retrenchment. Employers should notify the Ministry of Manpower by submitting a Retrenchment Notification Form which will include information about the employer and the impacted employees.
What will be considered retrenchment?
The MOM has advised that it considers a retrenchment to be a dismissal on the ground of redundancy or by reason of any reorganisation of the employer’s profession, business, trade or work. It will apply to all permanent employees and to contract employees on a fixed term where the term is at least six months.
What will the consequences of non-compliance be?
If employers do not notify the Ministry of Manpower within the required time period, it will be an offence and the employer may be liable on conviction for penalties that include a fine of up to SG$5,000.
What this means for employers The introduction of this requirement is the latest in a series of measures introduced by the Singapore government to increase oversight and management of employment practices. Employers must ensure they are not only compliant with the notification obligations but are also following the Tripartite Guidelines on Managing Excess Manpower and Responsible Retrenchment which were revised earlier this year.
The Retrenchment Notification Form to be submitted will include information on the composition of the employer's workforce (by Singaporean, Permanent Resident and foreign employee) before the retrenchments occurred which is another way the MOM may seek to monitor efforts by organisations to maintain a Singaporean Core.
Given the various new requirements to take effect in 2017, including increases to certain leave entitlements and to the re-employment age and the establishment of the Employment Claims Tribunal, employers will be busy reviewing theiremployment processes and documentation to ensure they are compliant.
For further information, please contact:
Fatim Jumabhoy, Of Counsel, Herbert Smith Freehills LLP
fatim.jumabhoy@hsf.com
