MOM stepped in for Lazada retrenchment exercise, said firm’s action not aligned with tripartite advisory

According to the advisory, Lazada should have notified the union.

Khine Zin Htet | February 06, 2024, 10:16 AM



The Ministry of Manpower (MOM) had stepped in after Lazada's recent retrenchment exercise as it was not in line with the Tripartite Advisory on Managing Excess Manpower (TAMEM).

Minister for Manpower Tan See Leng said during the parliamentary session on Feb. 5, 2024, that MOM reminded Lazada that they should have notified the Food, Drinks and Allied Workers Union (FDAWU).

MOM then facilitated the "amicable settlement" between the two for an "improved overall retrenchment package" for retrenched workers, Tan said.

Lazada not notifying union goes against TAMEM

Not notifying the FDAWU of the retrenchment exercise was not in line with the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (TAMEM), Tan said.

TAMEM sets out guidelines for employers on how to manage retrenchment exercises fairly and responsibly, he explained.

Lazada has since apologized to the union, which has accepted the apology, he said.

He added that MOM facilitated many rounds of negotiations between FDAWU and Lazada to ensure a fair outcome for the affected employees and to prevent such an incident from occurring again.

Tan said this resulted in an "amicable settlement" between Lazada and FDAWU, and the union managed to secure an "improved overall retrenchment package" with benefits that align with industry standards.

"Lazada is also committed to working in closer partnership with FDAWU," Tan said.

Response to incident demonstrates Singapore's model of tripartism: Tan

Tan said that the end result of the incident "clearly demonstrates the success of Singapore's unique model of tripartism".

"This is a model where unions, companies and governments work together in a collaborative spirit to find solutions and build even stronger partnerships," he explained.

Many other countries might have approached similar issues in "perhaps a more confrontational manner", Tan said, adding that this would have resulted in more conflicts with "potentially acrimonious and longer-term negative implications" for all parties involved.

Singapore's ability to resolve such incidents attests to the high levels of trust among the tripartite partners, Tan said.

"This is also why unionised companies should always consult their unions while making decisions that fundamentally impact workers, such as retrenchment," he added.

Tan pointed out that retrenchment exercises impact all workers emotionally, psychologically and financially.

He said unions will have the expertise to ensure that retrenchment exercises are carried out fairly and responsibly and communicated sensitively to affected workers.

This will help to smoothen the process for companies and enable the affected workers going through "this difficult period" to be better supported, he added.

Singapore's approach to retrenchment issues

Tan said that Singapore's overall approach to retrenchment issues has always been balanced — one that protects workers while giving businesses flexibility.

"First, we engage and educate employees to act responsibly," he said.

"Secondly, employers are required to notify MOM within five days of the retrenchment exercise."

"Third, we protect workers and we will not wait until retrenchment happens to do so. We also help workers build career resilience so that they can find new and better jobs when they face disruptions."

In response to some MPs calling for stronger action to protect workers, Tan said that data from 2019 to 2023 shows that around nine in 10 eligible employees received retrenchment benefits even without legal mandates.

"While we protect the workers, we must continue to preserve that flexibility for businesses to adjust the market conditions because this will ultimately create and can sustain more good jobs for Singaporeans," he said.

Retrenchment is difficult for both employers and employees

Tan said that while Singapore's economy is projected to improve in 2024, there are still downside risks in the global economy.

In response to concerns following several "high profile retrenchments", Tan said that the ministry is continuing to work with tripartite partners to "keep a close watch" on the situation to be ready to provide employment facilitation and to ensure that any retrenched worker will be treated fairly.

Tan acknowledged that retrenchment is a difficult phase for both employees and employers, especially for companies experiencing financial difficulties or restructuring their operations.

However, it is even more difficult for workers because it takes an emotional toll on them when it affects their livelihoods, Tan said.

Tan said the tripartite partners understood this difficulty and developed TAMEM to guide companies in carrying out retrenchment exercises responsibly if retrenchment is ultimately unavoidable.

From the example of how the Lazada case was managed, the "spirit of collaboration and tripartism in Singapore remains strong", Tan added.

"We will continue to stand committed to work together to protect our workers' interests, and we will at the same time also do our best to ensure that Singapore continues to remain competitive to provide good jobs."

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