MOM, NTUC and SNEF update advisory on managing excess manpower and responsible retrenchment in view of Covid-19: Allen & Gledhill

27 March 2020

The Ministry of Manpower (“MOM”), the National Trades Union Congress (“NTUC”), and the Singapore National Employers Federation (“SNEF”) (together, “Tripartite Partners”) have updated the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (“Advisory”) in view of the evolving Covid-19 situation. This was jointly announced by MOM, NTUC and SNEF on 11 March 2020.

The Covid-19 situation has caused businesses in some sectors to suffer sharp declines in volume and revenue. As a result, some employers have started to implement cost-saving measures. The Tripartite Partners have updated the Advisory to provide clearer guidance to affected employers on the appropriate measures to manage excess manpower.

Flexible work schedule

As businesses slow during this period, employers may consider reducing weekly working hours and creating a “timebank” of unused working hours. These unused working hours can be used to offset an increase in working hours in subsequent periods. In offsetting future overtime pay, the employee (or union, if the company is unionised) and employer may agree on the rate at which the accrued hours are to be valued.

Implementing a flexible work schedule (“FWS”) in this way allows employers to optimise the use of manpower when they go through cyclical troughs and peaks, and employees are assured of a stable monthly income.

Employers who wish to implement an FWS are required to seek the support of the employees (and union, if the company is unionised) and thereafter apply to the Commissioner for Labour.

Mandatory reporting to MOM on cost-saving measures

With effect from 12 March 2020, a new notification requirement has been introduced in the Advisory whereby employers with 10 employees or more are required to notify MOM if they implement any cost-saving measures during this period that impact the employees’ monthly salaries. Employers need to indicate that they have implemented the cost-saving measures fairly. Employers should consult and obtain the consent of employees and unions (if employees are unionised) and communicate the impact of the measures clearly, before implementation.

Employers must notify MOM within one week (seven calendar days) after their cost-saving measures are implemented.

Employers adjusting the salaries of foreign employees need to separately seek approval from the Controller of Work Passes after the employer has notified MOM on the cost-saving measures.

The new notification requirement is intended to be a temporary measure until the economy recovers.

Training and upskilling

The updated Advisory also highlights that focusing on training and upskilling during a business downturn greatly benefits both employers and employees as employers will be able to retain skilled employees to enable the company to meet demands when business rebounds. Employees can also update themselves with better skills and knowledge to improve their productivity.

In this regard, the Government provides significant support to employers who wish to invest and develop capabilities in their employees. Employers may tap on training support schemes under the SkillsFuture movement, redeployment programmes under the Adapt and Grow initiative, and other government grants, including those provided as part of the Stabilisation and Support Package announced in Budget 2020.

Reference materials

The following materials are available on the MOM website www.mom.gov.sg:

Further information