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Opinion: Poor Employment Practices – Lack of Compensation Package

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Our Poor Employment Practics – Lack of Compensation Package

Written by: Gilbert Goh

Many people who were retrenched during the recent recession lamented how badly they were treated after been laid off by their companies. Though retrenchment is generally expected by many people when there is a down turn, more can be done by the authorities to ensure that compensation is paid out when someone is being laid off.

A huge majority who were laid off without any severance pay were even escorted out of their offices by security personnel. They could not find the time to bid their colleague farewell and left a place which they treated as a second home with sadness and disappointment. Many have worked in their jobs for several years and deserved to be treated better.

News of how our women workers who were sacked by errant employers when they got pregnant make us realised that alot more can be done to ensure that workers’ rights are uphold. The government’s advocation of using tripatism as the only way to ensure that the workforce is in syche with the general employment trend remains largely unimpressive. Moreover, the ruling that executives who earned above $2,500 not be represented by unions, have left a bad taste in many. The professional workers felt unrepresented and left out when they have a labour dispute. Who can they really turn to for redress?

A check with the Ministry of Manpower (MOM) website revealed the following “Good employment practices and guidelines”:-

Recruiting and treating employees fairly and equally, without prejudice or discrimination;
Safeguarding employee rights and interests through the:
- Provision of acceptable terms and conditions including leave entitlement, welfare, retrenchment benefits, and housing (where applicable), and
- Timely payment of wages;
Ensuring a safe and healthy workplace so that employees can work safely and more efficiently;
Providing channels and opportunities for meaningful communication between management and employees/unions, in order to enhance labour-management relations;
Providing opportunities for training and development to improve employee job competency and allow them to advance in their careers;
Implementing performance-based wage systems and effective performance management systems that reward employees according to their contributions and performance;
Implementing policies and programmes that help employees achieve Work-Life Harmony; and
Implementing age-friendly employment practices that promote the employability of older employees.

Strangely, employers can easily get away with poor employment practices unless the employee seeks assistance at MOM and there is no gurarantee that he will get adequate redress. Many I heard were also told to seek legal recourse when the case gets complicated. If the employment contract does not specify any payment of retrenchment benefit, the case is also considered a tough one. It is no wonder that employers will mostly left out such benefit in the contract as a way out when necessary. Which company wants to dig from it’s shallow pocket during down time to pay workers that are laid off? This not only hurt the bottom line of the company when times are bad but also jeopardise the jobs of the other remaining workforce.

Employers have lost alot of good will when they treat their laid-off staff with indignity and distaste. People talked and when the economy improves, it is not surprising that such employers will continue to face difficulty attracting talented workers to work for them. Big giant corporations such as Citibank famous for their hiring and firing practices have proper severance payout facilitites written out in black and white. It is only fair that when a company releases a worker from their payroll, certain compensation is in place to ensure that he is adequately taken care of.

A friend who worked for a foreign bank in the forex industry was fortunate enough to be paid the remaining duration of his contract before he was laid off. As he was in the five-figure monthly salary range, his pay off was substantial enough for him to take a well-deserved rest during the downturn. He later found the similar job in another bank but drawing half the salary he commanded before. “Got job ok lah,” he told me in jest.

Currently, though there is an Employment Act in place, it lacks the bite to tackle the poor employment practices here. It is also a employer market now as employers have a huge pool of unemployed workers to choose from. It is for this reason that many well educated PMETs continue to be rehired at salaries well below their expected pay range. Many also take on jobs that do not commensurate with their expertise meaning that much under-employment is currently going on. An engineer would work as a senior technician for the sake of survival. Under employment is not good for the general well being of any economy as it means that the person is not well utilised by virtue of his skills and expertise.

Moreover, our lax employment labour law has more often than not allow employers to get away with non-payment of severance package. In fact, except for multi national corporations (MNCs), most small and medium enteprises (SME) do not write any severance package into the employment contract. To rub salt to the wound, it is not compulsory for companies to pay severance when one is being laid off. Though the laid off worker can complaint to MOM (Ministry of Manpower), many know that little can be done by way of legislation to make the employer pays. It is for this reason that many retrenched people told me that they rather bite the bullet and look for another job than waste the time making a fruitless trip to MOM. The emotional upheaval created

Those companies who give out retrenchment benefits generally provide for a one month of severance for every year of service limited to fifteen months of payout. I have also heard that some only receive half a month’s severance for every year of service. Some companies write out such pay out clearly in the employment contract whereas others left them out totally. I have told my friends to look out for such facility in their terms of contract as without a contract proper, they have nothing much to bargain for when they are being laid off during a downturn. Even MOM needs your contract’s terms before they can put out a case for you.

Some friends told me that such severance package helped them alot to tide over the period when they are looking for alternative work. In a severe downturn like the one we have seen last year, a laid-off worker could be out of work for at least 6 months. As our government does not provide for unemployment welfare benefit, severance pay out will help the unemployed worker to go through a difficult period. I have heard of how lack of finances have drive many families apart as our bills still need to be paid when there is no money coming in every month. Many I know resort to borrowing from friends and relatives to make ends meet during that period.

It is perhaps for this reason that loansharks make a roaring business during a recession. Knowing that this group of unemployed workers could not borrow from the banks by way of unsecured credit as they do not have a salary slip to back them up, they prey on their desperation to allow them an “easy” loan. Normally, they will be able to borrow $5000 maximum but with interest rate as high as 20% monthly, such loan quickly snowballed.

In conclusion, I advocate that MOM enforces the ruling that severance package be written into the employment’s terms of contract. It is surprising that employes can get away from not paying compensation when a worker is laid off due to a down turn. It is for this reason that many foreigners who settle in Singapore decide to run their own businesses. Without having to abide by the minimum salary ruling and proper employment regulations, many businesses find Singapore to be the perfect place to make money in a First World economy. We indeed have third world employment practices in a First World economy.