Companies that 'disguise' retrenchments could have JSS wage support withdrawn: Josephine Teo

COMPANIES found to have disguised their retrenchments could have their wage support and work pass privileges withdrawn, Manpower Minister Josephine Teo said on Thursday.

"Even during the Covid-19 period, whatever the termination of employment is called, an employee is presumed to have been retrenched if the employer cannot show a plan to fill the vacancy any time soon," Mrs Teo said in Parliament in response to questions from members of Parliament (MPs) on fair retrenchments and dismissals.

"If the retrenchment benefit is spelt out in the employment contract or collective agreement, the employer has a clear obligation to pay. He cannot side-step it by calling the retrenchment something else."

If they are found to do so, Mrs Teo said they could see their wage support under the Jobs Support Scheme (JSS) and their work pass privileges withdrawn.

However, she noted that the bigger challenge in today's context is not that employers pretend it is not a retrenchment, but that they may not have the means to fulfil their obligations.

The tripartite partners have therefore agreed that in instances of genuine financial difficulty, retrenchment benefit may be renegotiated or moderated, she said, and the norms may have to be set aside in these abnormal times.

Mrs Teo said her ministry's interventions have revealed that quite often, it is poor communication that causes workers to suspect they have not been fairly treated by their employers.

In a separate question, Saktiandi Supaat, MP for Bishan-Toa Payoh Group Representation Constituency (GRC), asked if the Ministry of Manpower (MOM) would consider stopping employers from asking job seekers to declare their last drawn salary so that they can move up the wage scale, especially in a post-Covid-19 environment.

Louis Ng, MP for Nee Soon GRC, added that a study showed that California saw its gender pay gap narrow after the state banned this practice.

Mrs Teo said there is no rule that job seekers must comply and employers cannot insist on it. Instead, she said a practical approach should be taken on whether employers are allowed to ask for such information.

"The last drawn salary is a relevant input to employers seeking to gauge a candidate’s seniority or to make an appropriate job offer. However, if employers use last drawn salary to screen applicants, they risk losing out on good candidates who are prepared to adjust their salary expectations, especially in today’s context," she said.

Referring to her previous experience as a human resources (HR) director, Mrs Teo said the last drawn salary is only one of the many factors employers consider when hiring someone.

"If a HR practitioner or firm is so short-sighted as to look rigidly at the last drawn pay as an indication of the candidate's worth to the organisation, then my advice to the applicant is, look for another employer. It's not a company that you should spend too much time on," she said.

Seah Kian Peng, MP for Marine Parade GRC, asked if the government would consider a temporary reduction of Central Provident Fund (CPF) contributions by both the employee and employer until after the economy has recovered from the Covid-19 crisis, as a means to preserve jobs. 

Mrs Teo said while this cannot be ruled out, this move needs to be considered very carefully as any loss in retirement savings to an individual is permanent and it would take a very long time to restore the rates that have been cut.

She added that the JSS and other schemes under the government's four economic relief packages are helping to cushion the impact on the labour market.