Complying With Covid-19 Manpower Management Measures

Introduction

The past few months have been a challenging time for most businesses since the government commenced measures to contain the spread of Covid-19 in Singapore and continues to be so even as the country now moves into Phase 2. In this update, we will discuss some common issues faced by businesses in adapting to the government’s measures.

Managing manpower

On 9 June 2020, the MOM issued an “Updated Advisory on Salary and Leave Arrangements” which supersedes an earlier advisory updated on 25 April 2020.

Cost saving measures

For employers who have implemented cost saving measures, these cost saving measures may continue but in doing so:

• The cost saving measures should take into account the Job Support Scheme (JSS) payouts received. If employers are found to act irresponsibly and unfair towards their employees in spite of receiving the JSS¹, employers may be taken to task and be denied future JSS payouts and have their work pass privileges curtailed. Employers should, where possible, follow the Ministry’s recommended salary arrangements;
• Cost saving measures such as pay reduction and placing employees on no-pay leave should be done with the consent of employees. Where possible, this should not be a permanent variation to the terms of employment but a temporary one subject to prevailing business conditions

For example, employers should present their employees with the proposed variation of their employment terms in writing and get their employees to sign if they are in agreement. If employees do not consent, employers should not take it upon themselves to unilaterally vary the terms of employment.

¹Employers are expected to comply with the MOM’s advisory on salary and leave arrangements:
https://www.mom.gov.sg/covid-19/advisory-on-salary-and-leave

• If cost cutting measures are required, these measures should be first applied to management and senior employees and only where necessary applied to the lower wage employees.

On 29 May 2020, the Employment (Returns on Salary Reduction Measures) Notification 2020 came into effect. Employers with more than 10 employees must inform the Commissioner for Labour if one of the following cost cutting measures are implemented:

1. Reducing the number of hours that an employee is required to work which results in a reduction of salary payable to the employee;
2. Putting an employee on leave of absence with reduced salary or without salary for an agreed period; and
3. Reducing an employee’s gross rate of pay, but not including a reduction or withholding of a wage increment.

The notice must be served within 7 days of the implementation of the cost cutting measures.

Retrenchment

Employers who have no choice but to retrench employees may do so, but bearing in mind the following considerations:

1. Retrenchment should be a last resort, after implementing other cost cutting measures;
2. The MOM and the union (if applicable) should be informed early before the retrenchment exercise is carried out. Employers should try to do so at least one month before the employees are notified; and
3. Comply with the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment.

Employers with at least 10 employees and that retrench 5 or more employees within a 6 month period are required to notify MOM of the retrenchment within 5 days of the retrenchment notice being given to the employees.

For this purpose, the Tripartite Guidelines define retrenchment as “dismissal on the ground of redundancy or by reason of any reorganisation of the employer’s profession, business, trade or work” and recently, Minister for Manpower Josephine Teo said in parliament on 4 June that an employee is “presumed to have been retrenched if the employer cannot show a plan to fill the vacancy any time soon”. This means that if an employee is dismissed because his role is no longer required or because his role had been subsumed under another employee’s role due to a reorganization, that employee would be deemed to be retrenched. If the company cannot show that it had plans to replace the role soon, there will be a presumption of retrenchment.

Conclusion

While the government has introduced various schemes to help businesses through this difficult period, it is inevitable that some businesses which are severely affected by Covid-19 will still need to implement cost-saving measures to survive. In doing so, business owners must make sure that they are fair and responsible to employees, and fully in compliance with the government’s guidelines.