Do companies hide retrenchment plans? | Deep Dive (ft Withers KhattarWong's Amarjit Kaur)

Key Concepts

• Retrenchment: The process of reducing the number of employees in a company, often due to economic reasons or restructuring.
• Statutory Obligations: Legal requirements that companies must adhere to, such as those related to employee notification during retrenchment.
• Reputational Risk: The potential for negative public perception and damage to a company's brand image.
• Employee Activism: The increasing tendency of employees to voice concerns and take action regarding their rights and working conditions.
• Notice Period: The period of time an employee is entitled to work or be paid for after being informed of termination.
• Salary in Lieu of Notice: Payment made to an employee equivalent to their salary for the notice period, allowing for immediate termination.
• Ministry of Manpower (MOM): The government agency in Singapore responsible for labor matters.

Circumventing Retrenchment Notification

Companies frequently approach consultants seeking ways to avoid informing their staff about impending retrenchment exercises. This desire stems from a concern about creating "mass panic and drama." As a result, some companies opt to hold town hall meetings and announce retrenchments only on the cusp of employees receiving their termination letters. In certain instances, employees are not even permitted to serve out their notice period and are instead paid "salary in lieu of notice," leading to immediate dismissal.

Sidestepping MOM Notification Requirements

The hesitation to inform employees extends to the notification process with the Ministry of Manpower (MOM). Companies have been known to inquire about ways to "sidestep" these requirements, particularly when the retrenchment affects 10 or more employees, which triggers specific notification obligations. Consultants typically advise against such attempts, stating that "you cannot contractually opt out of statutory obligations. If it's an obligation, then it should be upheld."

Convincing Employers to Inform Staff

The primary argument for informing staff prior to retrenchment centers on appealing to the company's self-interest. Consultants emphasize that a lack of transparency can severely damage a company's ability to attract and retain talent.

• Reputational Risk:

  • Negative media coverage for attempting to "disadvantage employees" can lead to significant hiring and retention challenges.
  • Such actions "tarnish your brand" and create an undesirable association for the company.

• Employee Activism:

  • The current era is characterized by heightened employee activism, where individuals are more empowered to speak up than in the past.
  • Employees are increasingly using social media, screenshots, live streaming, videos, and audio recordings to document and publicize their experiences. This poses a significant risk of public exposure for companies that handle retrenchments poorly.

• Impact on Remaining Employees:

  • The manner in which retrenchments are conducted is closely observed by the remaining workforce.
  • If employees witness colleagues being treated with a lack of dignity or respect, it can lead to anxiety and prompt them to "start looking for other options." This can result in further attrition and employee relations issues.

The Importance of Dignity and Respect

The core message conveyed to employers is that treating employees with "dignity and respect" is crucial and "always pays off in the long term." This approach not only mitigates reputational risks but also fosters a more stable and positive environment for the remaining employees, preventing further HR and employee relations problems.

Conclusion

The transcript highlights a prevalent trend of companies seeking to minimize or avoid direct communication with employees and regulatory bodies during retrenchment. However, expert advice strongly advocates for transparency and respectful treatment, emphasizing the long-term benefits of maintaining a positive company reputation and employee morale, even in difficult times. The increasing power of employee activism further underscores the risks associated with opaque retrenchment practices.