Number of firms paying retrenchment benefits down

by HRD03 Jan 2017
According to the Ministry of Manpower (MOM), a smaller number of employers paid retrenchment benefits in 2015 while the size of payouts also decreased.

In their periodic survey on retrenchment benefits released late December 2016, MOM reported that only 90% of employers paid benefits to eligible employees, down over four per cent from the survey they conducted in 2012.

This also meant that 2015’s payout rate was the lowest over the past decade.

The survey covered private organisations that retrenched at least 25 employees and claimed that the dip was due to non-unionised companies.

“The decline in the proportion which paid retrenchment benefits to eligible employees was due to non-unionised establishments, which formed 88% of the retrenching establishments,” said the report.

“Among the remaining 12% retrenching establishments which were unionised, all of them paid retrenchment benefits in 2015.”

“Large establishments with at least 200 employees (97%) were more likely to provide retrenchment benefits compared to the smaller establishments. The proportion of establishments with 10 to 24 employees which paid retrenchment benefits was comparable to those with 25 to 199 employees (both 88%),” they added.

More than 50% of companies that paid out a retrenchment package compensated laid off staff with a monthly salary for each year of service, down from the 63% in 2012.

However, the number of firms that opted to pay a lump sum rose more than 10% when compared to statistics from 2012.

A total of 15,580 workers were laid off in 2015 and with numbers showing that more than 13,000 workers were retrenched in the first nine months of 2016, MOM is projecting the total number of retrenched workers to be even higher.

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