Should retrenchment benefits be mandatory?

by HRD13 Dec 2016
A new rule set forth by the Ministry of Manpower (MOM) stipulates that come 1 January, any firm looking to lay off workers is required to report retrenchment exercises to the government. Failure to do so will result to the company being fined.

Should the same rule now be applied when it comes to retrenchment benefits?

The Straits Times'  long-standing manpower correspondent, Toh Yong Chuan, said that MOM will not impose this rule “because the practice is already widespread”.

“According to its own surveys, as many as nine in 10 companies with retrenched workers paid such benefits,” he said. 

“It would rather give companies and unions the flexibility to negotiate such payments, rather than prescribing them under the law, because the circumstances of companies that retrenched workers are different and there cannot be a one-size-fits-all approach.”

MOM believes that imposing rigid labour laws regarding retrenchment benefits will discourage firms from hiring workers from the outset and this in turn will hurt the labour force, he added.

However, Toh admitted that the pressure on the government to make this mandatory will keep on increasing as workers become more educated about their rights.

“The government will have to balance the desire for more protection by workers against the flexibility that it gives companies in hiring and firing,” he said.

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