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Nine in 10 firms paid retrenchment benefits in 2015: MOM

15,580 workers laid off in 2015 - the highest number since 2009 global financial crisis

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More than nine out of every 10 companies that laid off workers in 2015 paid benefits to eligible employees who were affected, a Ministry of Manpower (MOM) survey on retrenchment benefits has found.

Singapore

MORE than nine out of every 10 companies that laid off workers in 2015 paid benefits to eligible employees who were affected, a Ministry of Manpower (MOM) survey on retrenchment benefits has found.

The figure of 90.6 per cent that did so is lower than the 94.3 per cent in 2012 - the last time such a survey was conducted - and just a shade below the 91 per cent in 2008. The retrenchment benefits payment rate was 95.7 per cent in both 2004 and 2006.

Retrenchment benefits exclude salary-in-lieu of retrenchment notice, bonuses and salary that are owed to the employees at the point of retrenchment. Salary-in-lieu is additional salary paid for not giving employees advance retrenchment notice.

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This latest MOM poll was conducted over a seven-week period from June to August by the ministry's Manpower Research and Statistics Department. The findings were released on Thursday morning. The survey covered all retrenching private sector establishments with at least 25 employees in 2015, and a sample of retrenching firms that employed 10-24 staff. The survey yielded a response rate of 92.1 per cent, and the reference period was for the entire 2015 calendar year.

A total of 15,580 workers were laid off in 2015 - the highest number since the 2009 global financial crisis and a 20.5 per cent increase from the 12,930 in 2014. MOM attributed the higher figure to the softer economic conditions and ongoing business restructuring in Singapore.

The survey showed that large establishments with at least 200 people on their payroll were more likely to give out retrenchment benefits, with 97.5 per cent of them doing so.

This was higher than the rate seen in smaller establishments with 25-199 employees (87.9 per cent) and 10-24 employees (88.3 per cent).

The ministry noted that 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 April 1, 2015.

For employees who served less than two years and were not eligible for retrenchment benefits as a result, two in three (67 per cent) establishments paid such benefits to them.

The decline in the proportion which paid retrenchment benefits to eligible employees was due to non-unionised establishments, which formed 88 per cent of the retrenching companies. Among the remaining 12 per cent which were unionised, all of them paid retrenchment benefits in 2015.

The MOM survey also found that the majority of companies continued to pay a month's salary for each year of service, although more opted to do so in lump-sum payments. More than eight in 10 companies (83 per cent) in 2015 paid retrenchment benefits by years of service. This is lower than the 93 per cent in 2012.

In 2015, 17 per cent of the establishments gave out retrenchment benefits in a lump sum, more than double the 7 per cent rate in 2012. The lump-sum quantum was typically 1-2 months' salary.

Similar to large establishments, an overwhelming majority of unionised establishments (95 per cent) gave out retrenchment benefits by years of service. The proportion which did so was higher than non-unionised establishments (81 per cent).

Across establishments of different sizes and union status, the rate of payout based on years of service was commonly one month's salary.

In a statement, MOM noted that the proportion of establishments giving retrenchment benefits remained high. It also took the opportunity to remind employers that, starting Jan 1, 2017, it will be mandatory for them to notify the ministry of any retrenchment exercises within five working days.

"This will enable Workforce Singapore and our tripartite partners to better assist retrenched locals in finding alternative employment and relevant training. Together with SkillsFuture and Adapt and Grow initiatives, we will help them enhance their employability and seize new job opportunities," the ministry said.

The full report on the MOM retrenchment benefits survey can be downloaded at stats.mom.gov.sg/Pages/Home.aspx

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