Last month, 54 employees of a Singapore Government-linked company, Surbana Jurong, were terminated from employment. A local newspaper, Today, reported that the Group Chief Executive of Surbana had sent a firm-wide email explaining the firm’s decision to terminate these employees and labelling them as poor performers who could not be allowed to drag down the rest of the organization.

The episode – which dominated local newspaper headlines – led to the Minister for Manpower addressing questions raised by parliamentarians at a recent parliament sitting. The General Secretary of the Singapore Industrial and Services Employees’ Union considered the timing of the termination – which took place just before the Lunar New Year – “heartless to the extreme”. The obvious question is whether due process had been observed in respect of the termination of these employees, and some trade unions have vowed to seek redress should it transpire that it had not.

A more disquieting question is whether this episode typifies a growing trend of employers which attempt to pass off retrenchment exercises as a case of terminating employees on grounds of poor individual work performance. In September 2016, the Assistant Secretary-General of the National Trades Union Congress (NTUC), Mr Patrick Tay, raised in Parliament the worrying trend of “disguised retrenchments”, where firms had terminated employees citing performance-related issues. Mr Tay reported that these “veiled layoffs” allowed firms to get away with not having to pay workers retrenchment benefits, and called on the authorities to pay more attention to this issue.

As mentioned in an earlier post, new employment laws came into force in 1 January 2017 mandating Singapore employers to notify the Ministry of Manpower when five or more employees are retrenched within a six-month period. However, there is some doubt as to the extent to which terminating a large number of employees on the alleged grounds of poor performance constitutes retrenchment per se. If it does not, then it is obvious that the notification requirement will not be the most effective deterrent to this problem.

A tempting (and plausibly knee-jerk) reaction might be to introduce more regulations to make it tougher for employers to terminate workers, even the workers are poor performers. Such regulations would ideally have a measure of flexibility in being able to go behind terminations in order to discern if the terminations are in reality retrenchments. However, any proposed regulation ought not to unduly impede a business’ ability to stay nimble and, to the extent that it is legally permissible, adjust its workforce swiftly in order to adapt to the prevailing economic conditions.

Critical macroeconomic considerations such as labour flexibility have to be carefully weighed for the sake of economic resilience. A company has a relationship with its employees and, as in most instances, ending a relationship needs to be handled with the sensitivity and respect due.

[This writer is grateful for the assistance rendered by Daniel Law, a placement in our Singapore office.]

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