Lazada’s layoffs raise questions on responsible retrenchment practices
THE stir over e-commerce player Lazada’s mass layoffs on Jan 3 has put employee rights and the role of labour unions once again in the spotlight.
The tech sector has seen numerous job cuts since 2022, so this move doesn’t come entirely as a surprise for industry watchers. But beyond the dismal timing of Lazada’s job cuts – in the first days of a new year – what stood out was how it was carried out and why the union was left in the dark.
Lazada, operating under one of Alibaba’s six main business units, is no fledgling startup or unknown small enterprise. Founded in 2012, Lazada Singapore is the regional headquarters of Alibaba’s e-commerce ventures in South-east Asia. Given its brand-name heft and the resources at its disposal, one would expect better of its human resource practices, including carrying out a retrenchment exercise responsibly. It is also not Lazada’s first layoff in the past year.
The question is whether the company’s failure to consult or notify the union representing its workers stemmed from sheer negligence or was perhaps a calculated decision.
After all, not involving the Food, Drinks and Allied Workers Union (FDAWU), an affiliate of the National Trades Union Congress (NTUC), meant that the company decided on the retrenchment terms, including payout, without consultation. As it is, Lazada’s axed staff would receive two weeks’ salary for each year of service – lower than what others in the tech industry such as Grab and Shopee had offered to their laid-off employees.
A joint statement by NTUC and FDAWU on Jan 6 said the payout was not satisfactory, and the union is now negotiating for additional benefits for eligible affected workers. While the discussions are still pending, it will be challenging to claw anything through force of law as retrenchment payouts have to be stipulated in either a union’s collective agreement with the company or the workers’ individual contracts. It is unclear if that is the case with Lazada.
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The prevailing norm for unionised companies sees employers paying a retrenchment benefit of between two weeks’ and a month’s salary for each year of service, but even that is not legally binding. Whatever additional concessions that Lazada might make would more likely be out of goodwill or pressure. There is no overarching law that statutorily protects retrenched workers.
The fact that the unions can be easily left out of the picture doesn’t reflect well on both sides. For Lazada, this is likely to affect the morale of existing staff and this could also have an impact on the future hiring of talent to grow its business.
As for the unions, the fact that they were either forgotten or dismissed in the layoff exercise also shows their standing, or lack thereof. NTUC and FDAWU expressed “deep disappointment” and asserted that “such a move is unacceptable” in Lazada’s case. But if an apology and a slap on the wrist are all that come out of it, trust in the union’s role could be further eroded.
All eyes will be on what comes out of the talks; a none-too-encouraging outcome may just set a precedent for other employers who, instead of heeding tripartite guidelines, may try to get away with the bare minimum when retrenching staff.
The bar for severance pay may also trend downwards, worsening the plight of affected workers.
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