9 in 10 companies paid retrenchment benefits in 2015: MOM report

SINGAPORE: Nine in 10 establishments continued to pay retrenchment benefits to eligible employees although the eligibility service period for retrenchment benefits was shortened, according to the “Retrenchment Benefits 2015” report released by the Ministry of Manpower (MOM) on Thursday (Dec 29).

In line with shorter employment tenures, the eligibility service period for retrenchment benefits was shortened from three years to two years and this took effect on Apr 1, 2015.

Even so, the report said that around 90 per cent of companies continued to pay retrenchment benefits to eligible employees.

A total of 15,580 workers were laid off in 2015 compared to 12,930 in 2014 amid softer economic conditions and ongoing business restructuring, MOM said.

The proportion of establishments which paid retrenchment benefits to eligible employees remained high in 2015 (91 per cent).

Large establishments with at least 200 employees (97 per cent) and unionised establishments (100 per cent) were more likely to pay retrenchment benefits.

For employees who served less than two years and hence were not eligible for retrenchment benefits, two in three establishments still paid retrenchment benefits to them.

For smaller companies with more than nine but fewer than 25 employees, the proportion of these firms which paid retrenchment benefits was as high as those with 25-199 employees, the report added.

In addition, the report noted that most companies continued to pay one month of salary per year of service, although more were giving out lump sum payments.

The report said 83 per cent of companies “paid retrenchment benefits by years of service in 2015, with more than half paying one month of salary per year of service” while large and unionised firms tended to pay higher retrenchment benefits.

Also, the proportion of establishments which paid retrenchment benefits in lump sum (typically 1 to 2 months of salary) increased in 2015, to 17 per cent, up from 7 per cent in 2012.

From Jan 1, 2017, it will be mandatory for employers to notify MOM of retrenchment exercises within 5 working days.

This will enable Workforce Singapore (WSG) and tripartite partners to better assist retrenched workers in finding alternative employment and relevant training, according to MOM.

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