CNA Explains: What to do if you're retrenched

SINGAPORE: With a recent spate of mass layoffs in the technology sector coming amid an uncertain economic outlook, the possibility of getting retrenched is top-of-mind for more employees now.

And for the Lazada workers who did get laid off at the start of 2024, the process only left them baffled and anxious over a lack of transparency from the e-commerce giant.

“The key here is that the more you treat the employees with dignity, and the more empathetic you are, the easier they can accept the retrenchment,” said Mr Ian Liew, a human resources manager with more than 10 years of experience.

If you ever find yourself called into that dreaded meeting, here are the most common questions that may come to mind – and the answers, according to experts.

Why was I chosen? How many others are being retrenched?

After finding out you've been retrenched, you should first clarify the reasons for the exercise.

Employees also have the right to know how many people are affected, and how they were selected, said HR professionals.

“That gives you a fair idea that it’s not just you, but this is just the criteria through which people were selected, and (you) can also try to understand the reasons,” said senior HR leader Monica Divik Agarwal.

For example, you might be told that your business unit is not doing well and the company does not want to continue operations there. 

Can I be transferred somewhere else instead?

Asking for the reasons behind your retrenchment could open up opportunities to negotiate a reallocation or transfer to another department. 

You could ask, for example, “can I be considered for other departments that are still functioning and have open positions?” said Ms Christine Chan, who trains HR professionals. 

Expats can ask if there are open positions back home. Full-time staff can also ask about possible contract roles, she added.

The employee would already be familiar with the environment – a plus for the company since it would not need to train someone new, said Ms Chan.

Even if there are no other open positions at moment, you can ask to be considered for others further down the line, or be rehired if similar roles open up.

Can I go on garden leave instead? 

You could also ask to be put on garden leave instead of being served notice immediately, said Ms Agarwal. 

This is a period of time where the employer requests an employee not to report for work, although the employee’s employment contract has not expired. This means you are still technically an employee, and it reduces the employment gap on your resume.

Am I being rightly compensated? 

After being hit with the news of retrenchment, you may feel like a deer in headlights and unable to focus on the matter at hand, said Mr Liew, the HR manager. 

But you should definitely take note that you're being compensated correctly for the notice period laid out in your employment contract, he added, observing that companies may sometimes get this wrong. 

Singapore's Employment Act indicates the minimum period of notice to be given when terminating employees, and that they should be served their contractual notice period or be paid salary in lieu of notice.

For example, an employee may have originally agreed to a two-month notice period in their employment contract. This means that they should either serve out that period or be paid two months of salary in lieu.

Other combinations may also be possible. The same employee could serve a two-week notice and be paid one-and-a-half months salary in lieu of the remaining notice. 

What's going into my severance package?

Additional retrenchment or severance benefits are not governed by legislation in Singapore, HR experts noted. 

A tripartite advisory encourages employers to pay a “reasonable sum” of retrenchment benefits, but this also depends on their financial circumstances at the time. 

The advisory is issued by the Manpower Ministry, the National Trades Union Congress and the Singapore National Employers Federation. It has no legal force.

It sets out a recommended range of two weeks to one month of salary for each year of service, for employees with at least two years’ service. Those who have worked for a shorter period could be granted an "ex-gratia" or voluntary goodwill payment.

Every company will have different packages and in some cases, may offer less than what's recommended by the advisory, said Ms Chan. 

“Then (you can ask) if they can look into the compensation, and try to negotiate a little bit. Maybe if it's nearing the year-end and you were expecting some performance bonuses, can you be rewarded with these since it’s for efforts for the past year?”

What happens to my benefits?

Upon receiving the terms of your retrenchment, you should look closely at the details of the benefits outlined in the severance letter and contract, and these should be very clear, said Ms Lim Mei Yu, who works as a recruiter with an MNC. 

For example, employees can ask about whether the company will continue to provide medical insurance – and for how long – after they leave. 

Some companies may also not allow any more reimbursements or claims after employees are informed of their retrenchment.

If in doubt, ask what benefits you can still enjoy from the point when you were informed of the retrenchment until your last day, said Ms Lim. 

Ms Chan, the trainer, said an employee’s remaining leave days – including those for the current financial year and any other days that were brought forward from previous years – should also be appropriately compensated. 

If unclear about how a retrenchment package was computed, employees should ask for a breakdown, she said, adding that this is “very basic”. 

Experts said most HR departments would consider it a reasonable request if an employee needs more time to take a closer look at terms, and wants to take the documents home before signing them.

Can I get help finding a new job?

Retrenched employees may ask for outplacement support, which refers to assistance in finding a new job.

For example, you could ask: “Can you send me for training maybe to upskill myself, before I go?” said Mr Liew. 

In some cases, companies may engage vendors to conduct workshops to teach employees how to prepare their resumes, where to look for jobs and how to attend interviews.

This would be particularly useful for long-time employees of the company, who would not have interviewed for new jobs recently, experts said. 

Other companies may hire recruitment agencies to help their retrenched employees look for new roles. In this scenario, employees should check how long this agreement will last, said HR leader Ms Agarwal.

They can also try to negotiate to keep this benefit until they find their next role. 

Employees may even find it useful to ask if they can retain their laptops to update their resumes, apply for jobs and take online interviews, she added. 

“Just check with the organisation if they’re okay with you to have the laptop … until the end of the year or financial year,” she said, adding that the company can always revoke access to proprietary information and networks, turning the device into a regular laptop. 

What happens to my non-compete clause?

If there was a non-compete clause on your employment contract when you joined the company, you should negotiate for it to be revoked, regardless of whether it's addressed or not, experts said. 

“One should definitely question, does this still hold true? Because I am not leaving the company; the company is letting go of me,” said Ms Agarwhal. 

“In that case, whatever opportunity comes my way, I will pick it up, because I need to find a job, I have bills to pay.” 

Non-compete clauses that apply after an employee is terminated are enforceable in Singapore only if the scope is reasonable and they protect a “legitimate proprietary interest” of the employer, said Mr Darren Tan, deputy managing director at Invictus Law. 

For example, a non-compete clause would likely be held unreasonable – and therefore unenforceable – if it prevents the employee from working in the same industry entirely, has no fixed duration of operation, or has no geographical limits.