Asia employment law bulletin 2020
As with many other countries in the Asia Pacific, Singapore has not been immune to the disruptive effects of the US-China trade war and even the protracted protests in Hong Kong.
To cite a couple of more recent examples, Hong Kong-based duty-free retail operator DFS Group announced in late August 2019 that after a 38-year tenure, it will be pulling out of Singapore’s Changi Airport by June 2020. DFS then retrenched more workers from its branch in Singapore’s main shopping district, reportedly due to “pressure from the trade war and turmoil in Hong Kong”. The move drew widespread criticism from Singapore’s Ministry of Manpower and employee unions, as the retrenchment was initially done with little advance warning and poor retrenchment benefits. Then in early December 2019, Hong Kong based cosmetics retailer Sasa - an early pioneer in makeup retail in Singapore, followed suit by announcing that it will be pulling out of Singapore entirely and closing down its 22 stores. Reported reasons included its core market in Hong Kong facing a “drastic decline in Mainland tourist arrivals”, as well as a decision to concentrate on e-commerce.
As global economic headwinds and uncertainty continue into 2020, one can expect even more such redundancy exercises to take place. Technological disruption is also expected to contribute to this trend. In this regard, a joint-study released by Cisco Systems and Oxford Economics in September 2018 predicted that by 2028, 20.6% of Singapore’s workforce will be displaced by new technology.
All that said, Singapore’s unemployment and retrenchment rates held relatively steady in 2019. We expect at least a few more retrenchment exercises in 2020 though, in light of the ongoing geopolitical ructions and the relentless march of technology.
Employers considering retrenchment exercises should take note of a number of issues. They are strongly encouraged to refer to the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, which sets out formulae for calculating retrenchment benefits and encourages the provision of other forms of assistance. Though not presently statutorily binding, this advisory has often been referred to by the Ministry of Manpower, which is able to bring considerable pressure to bear through various extra-legal means including withholding work pass privileges to recalcitrants. Employers should also bear in mind that dissatisfied trade unions could bring retrenchment disputes before Singapore’s Industrial Arbitration Court, which, unlike the regular Courts in Singapore, is statutorily empowered to act in accordance with common equity and fairness. The disaffected employees could also commence claims before the Employment Claims Tribunals (ECT) if they feel that they have been wrongfully dismissed, if they take the view that the retrenchment selection process was unfair or if there is no “genuine” retrenchment and it was just an excuse for termination.
Ian Lim, TSMP