Companies that Fail to Give Mandatory Notification to Government When They Retrench Employees

Dr Tan Wu Meng asked the Minister for Manpower (a) whether the retrenchment exercise carried out by an e-commerce company in early January 2024 has been notified to the Ministry in line with mandatory requirements for employers with Singapore-registered businesses with at least 10 employees; (b) if so, what has been the timeline and what action has been taken by the Ministry following the notification; and (c) if not notified, what action has the Ministry taken regarding the non-compliance with mandatory retrenchment notification requirements.

Mr Neil Parekh Nimil Rajnikant asked the Minister for Manpower in view of the recent episodes of manpower reduction exercises carried out by several leading companies, what is the Ministry's overall view of the job market in the next few months.

Ms Hazel Poa asked the Minister for Manpower regarding the recent layoffs by an e-commerce company which was not notified to the unions (a) whether the Ministry has data on the number of employees who were laid off with a breakdown by nationality; and (b) whether the Ministry will consider regulating non-compete clauses in employment contracts.

Mr Neil Parekh Nimil Rajnikant asked the Minister for Manpower in view of the sudden retrenchment exercise in early January 2024 that was conducted by a large e-commerce company before consulting the workers’ union, what steps will the Ministry take to ensure that tripartism is maintained when companies carry out retrenchment exercises.

Mr Chua Kheng Wee Louis asked the Minister for Manpower (a) whether there are any penalties for companies who carry out retrenchment exercises without notifying and consulting the relevant trade unions; and (b) what specific measures is the Ministry taking to ensure that companies operating in Singapore adhere to fair labour practices, particularly in terms of providing advance notice and adequate compensation to employees in the event of lay-offs.

Members have filed these Parliamentary Questions (PQs) on various issues related to retrenchment and arising from a recent retrenchment exercise that has been in the news. I am taking these PQs collectively so as to provide a more comprehensive and holistic response.

I will begin by first addressing the Lazada Group's retrenchment exercise conducted in January 2024. I believe that this was the e-commerce company referred to by Dr Tan Wu Meng, Ms Hazel Poa, Mr Yip Hon Weng and Mr Neil Parekh Nimil Rajnikant in their PQs.

First and foremost, I would like to assure Members that the Ministry of Manpower (MOM) has been actively involved in this matter to ensure that Lazada's retrenchment is conducted in a fair and responsible manner. To recap, in early January this year, there were reports of sudden layoffs at Lazada Singapore Pte Ltd which is conducted without consultation with the union, which is the Food, Drinks and Allied Workers Union (FDAWU). If Lazada had correctly notified the FDAWU early, they would have been able to work together with the union to ensure that the retrenchment exercise was carried out fairly and responsibly, and proper support was given to the affected workers.

However, Lazada did not notify the FDAWU of the retrenchment exercise. This was not in line with the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (TAMEM). TAMEM sets out guidelines for employers on how to manage retrenchment exercises in a fair and responsible manner. MOM immediately stepped in to inform Lazada that their action was not aligned with TAMEM.

Through MOM's intervention, Lazada apologised to the union and acknowledged that they should have notified them before informing employees. FDAWU accepted Lazada’s apology. In the past few weeks, MOM has been actively facilitating many rounds of negotiations between FDAWU and Lazada. This is to ensure a fair outcome for the affected employees and to ensure that such an incident does not occur again. As you may have heard in the news, MOM has managed to facilitate an amicable settlement between Lazada and FDAWU. FDAWU managed to secure an improved overall retrenchment package, with retrenchment benefits that are in line with industry standards. Lazada has also committed to working in closer partnership with FDAWU moving forward.

To Dr Tan Wu Meng’s question, Lazada had submitted the Mandatory Retrenchment Notifications (MRNs) for its January 2024 retrenchment exercise on time. This is within five working days after the employees were notified. Following the submission, the Taskforce for Responsible Retrenchment and Employment Facilitation worked with Lazada to provide the affected employees with career facilitation services and information kits on career resources. This taskforce comprises representatives from the MOM, Workforce Singapore (WSG), the National Trades Union Congress (NTUC), NTUC’s Employment and Employability Institute (e2i) and Enterprise Singapore (ESG).

To Ms Hazel Poa's question about the number and nationality profile of the affected Lazada employees, MOM does not publicly provide such information about a company’s business operations. Nonetheless, we reiterate that employers must conduct retrenchment exercises based on objective selection criteria.

Mr Speaker and Members, Mr Yip Hon Weng asked about the lessons learnt from the Lazada incident. Dr Tan Wu Meng and Mr Neil Parekh also asked about steps to ensure that tripartism is maintained.

The Lazada incident clearly demonstrates the success of Singapore's unique model of tripartism. While there was an initial lapse on Lazada's part in not notifying the union on the retrenchment exercise which contravened the TAMEM, MOM actively stepped in and facilitated the discussions between Lazada and the FDAWU to help them arrive at an amicable and fair resolution that achieved win-win outcomes for the affected workers and the company. Lazada has also committed to working closely with FDAWU in the future.

The satisfactory resolution to this matter was possible because of tripartism. This is a model where unions, companies and Government work together in a collaborative spirit to find solutions and build even stronger partnerships. In many other countries, the unions and companies would have approached similar issues in, perhaps, a more confrontational manner. This would have resulted in more conflicts, with potentially acrimonious and longer-term negative implications for all of the parties involved.

However, in Singapore, this particular incident, was quite swiftly resolved. So, the ability to resolve such incidents attests to the high levels of trust amongst the tripartite partners.

This is also why unionised companies should always consult their unions when making decisions that fundamentally impact workers, such as retrenchments. Members of the House, retrenchment exercises impact all of our workers emotionally, psychologically and, of course, financially. Unions will have the expertise to ensure that the exercise is carried out fairly, responsibly and communicated in a sensitive manner to affected workers. This will help to smoothen the process for companies and enable the affected workers going through this difficult period to be better supported.

Beyond this specific incident, several Members have also asked about how we ensure that retrenchment exercises are conducted in a fair and responsible manner. Mr Yip Hon Weng asked whether MOM should mandate all companies with at least 10 workers to notify unions about upcoming lay-offs. Mr Christopher de Souza and Mr Louis Chua asked whether there should be penalties on companies who do not notify and consult unions about a retrenchment exercise and whether adequate compensation is made to employees.  Mr Patrick Tay, Dr Tan Wu Meng, Mr Chua again and Mr Christopher de Souza asked about the measures to ensure responsible employment practices, compliance of companies with regard to MRN requirements and what actions can be taken against employers who are recalcitrant.

I will address these questions together and start with our overall approach towards retrenchment issues. Singapore’s approach has always been one that is balanced and one that protects workers, whilst giving businesses flexibility. Let me make three points in our approach.

Yes. First, we engage and educate employers to act responsibly. I am going to try and jump forward quickly.

Secondly, employers are required to notify MOM within five days of the retrenchment exercise. I will publish the entire transcript on the Hansard so that Members can read through.

And third, we protect workers and we will not wait until retrenchment happens to do so. We also help workers to build career resilience, so that they can find new and better jobs when they face disruptions.

I want to record the point and address the point that whilst some amongst us have called for stronger action to protect workers, even without legally mandating the retrenchment benefits, our MRN data from 2019 to 2023 shows that around nine in 10 eligible employees received retrenchment benefits.

So, as I have alluded to on our approach, ensuring that while we protect the workers, we must continue to preserve the flexibility for businesses to adjust to market conditions because this will ultimately create and can sustain more good jobs for Singaporeans.

During this particular period, with regard to this issue, Mr Gan and many other Members, a few other Members of the House also asked about collective agreements (CAs), non-compete clauses and restricted stock units.

Suffice to say, whether or not a CA should be put in place, our approach has been to let the employer and the union decide. But any disagreements, including whether a CA should be put in place, can be raised to MOM for conciliation and the Industrial Arbitration Court (IAC) for arbitration if conciliation is unsuccessful.

For the rest of it, I would like to reassure Members of the House that whilst there have been a few high-profile retrenchments, Mr Neil Parekh has, in particular, asked about the Singapore job market over the next few months.

Our assessment is that while the economy is projected to improve in 2024, there are still downside risks in the global economy. What we are doing is to make sure that we continue to work with our tripartite partners to keep a close watch on the situation to continue to be ready to provide employment facilitation and to ensure that any retrenched worker will be treated fairly.

I want to end by exhorting all of our employers that retrenchment is a difficult phase that both employees and employers have to go through, especially when they are undergoing financial difficulties for companies or when they are restructuring their operations. However, it is even more difficult for our workers because it takes an emotional toll on them when it affects their livelihoods.

Our tripartite partners understood this and developed TAMEM to guide companies to carry out retrenchment exercises responsibly if retrenchment is ultimately unavoidable.

We will work closely and from the example of how the Lazada case was managed, the spirit of collaboration and tripartism in Singapore remains strong. We will continue to stand committed to work together to protect our workers' interests and we will, at the same time, also do our best to ensure that Singapore continues to remain competitive to provide good jobs.