So many loopholes to escape the retrenchment statistics?

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By: Leong Sze Hian

9 in 10 companies paid retrenchment benefits

I refer to the article “More than nine in 10 companies paid retrenchment benefits in 2015: MOM survey” (Straits Times, Dec 28).

Establishments paying retrenchment benefits down from 95.7 to 90.6%

It states that “The proportion of establishments paying retrenchment benefits was 90.6 per cent in 2015, although it had fallen slightly from past years, a report by the Ministry of Manpower (MOM) revealed on Thursday (Dec 29).”

9.4% did not pay retrenchment benefits?

Does this mean that 9.4 per cent did not pay retrenchment benefits?

“The findings were part of the ministry’s Retrenchment Benefits Survey done every four years, which also showed that the 2015 rate was the lowest since 2004, when the retrenchment benefits payment rate was 95.7 per cent.

Unionised & large establishments more likely to pay retrenchment benefits

The report also said that unionised establishments and large establishments with at least 200 employees were more likely to pay retrenchment benefits.”

10.7% of non-unionised establishments did not pay retrenchment benefits?

As to “in 2015, while all unionised establishments continued to pay retrenchment benefits, the proportion of non-unionised establishments paying retrenchment benefits was 89.3 per cent, down from 93.9 per cent in 2004” – does this mean that 10.7 per cent did not pay retrenchment benefits?

Joining union gives workers more protection?

Also, it would appear that unionised establishments are only marginally better (1.3 per cent (90.6 – 89.3) more) than non-unionised establishments when it comes to paying retrenchment benefits.

This begs the question – shouldn’t joining a unionised establishment give better protection to workers?

So many loopholes to be not in the retrenchment statistics?

If you are asked to resign – you may not be captured in the retrenchment statistics.

If you are terminated for whatever reason or no reason – you may not be captured in the retrenchment statistics.

The definition of Retrenchment may be problematic as it “refers to the termination of employment of a permanent employee due to redundancy“. In other words, as long as the employer says that the termination was not due to redundancy – it may not be captured in the retrenchment statistics.

If your employer has less than 10 employees – you may not be captured in the retrenchment statistics because the retrenchment survey does not cover this group of employers.

With the trend of increasing outsourcing, contract, freelance, part-time workers, etc – more people who lose their jobs may also not be captured in the retrenchment statistics, because it refers to only “permanent employee(s)”.

Also, with the trend of increasing outsourcing, contract, freelance, part-time workers, etc – the total “permanent” employees’ head count of employers may be reducing. Thus, there may be less employers with at least 10 or 25 employees.

So, as I understand it – as long as the employer does not call it a retrenchment exercise – which typically means a group of employees retrenched at the same time at one go – the employee who loses his or her job may also may not be captured in the retrenchment statistics.

Only sampling of establishments with 10 to 24 employees?

In respect of “data are obtained from the Retrenchment Benefits Survey which covered all retrenching private sector establishments each with at least 25 employees in 2015, and a sample of retrenching establishments which employed 10 to 24 employees. The survey yielded a response rate of 92.1%” – the “sample of retrenching establishments which employed 10 to 24 employees” may not be truly representative of all employers in this category.

Non-respondents are those who did not pay retrenchment benefits?

In this connection, what was the response rate for this category? It may be likely that all those who did not respond may be more likely to be those that did not pay retrenchment benefits.

Eligibility shortened to 2 years = more don’t pay retrenchment benefits?

As to “in April 2015, the eligibility service period for retrenchment benefits was shortened from three years to two years, but it is not clear whether this was a factor in the drop in the proportion of establishments paying the benefits” – isn’t the fact that the drop in the percentage of employers paying retrenchment benefits – indicative that this is more likely to be the case?

More establishments paying less retrenchment benefits?

As to “some 83 per cent of establishments paid retrenchment benefits based on the number of years of service. However, the proportion paying benefits in a lump sum – typically one to two months’ salary – increased from 7 per cent in 2012 to 17 per cent in 2015” – does this mean that more employers may be paying less retrenchment benefits?.

Retrenched workers increased 20% in 1 year?

“Some 15,580 workers were retrenched in 2015, up from 12,930 in 2014.”

67% of establishments paid retrenchment benefits to those who served less than 2 years, but how much?

With regard to “For employees who served less than 2 years and hence not eligible for retrenchment benefits, 2  in 3 (67%) establishments paid retrenchment benefits to them” – what was the quantum of the retrenchment benefits paid – very little?

Employers with 10 to 24 employees – only 62% paid any retrenchment benefits?

In the category of employers with 10 to 24 employees – only 62% paid any retrenchment benefits.

So, does this mean that 38 per cent did not pay retrenchment benefits?

Less than 10 employees – not many paid retrenchment benefits?

For the unsurveyed category of less than 10 employees – the percentage paid retrenchment benefits may be very small.

Data may be skewed as before 2015 – only private sector establishments each with at least 25 employees? 

Since “before 2015, data pertain to private sector establishments each with at least 25 employees. From 2015 onwards, data also include private sector establishments each with at least 10 to 24 employees” – the subject four-year survey may be skewed and look better because before 2015 – only the larger establishments were surveyed.

Retrenchment legislation is so weak – report for what?

In the final analysis – what’s the point of a retrenchment report when the retrenchment legislation is so weak that there may be so many loopholes (as listed above) to not be captured in the retrenchment statistics?

How many get 1 month’s pay per year of service?

At the end of the day, I wonder how many people who lose their jobs actually get the preferred one month’s pay per year of service retrenchment benefits? Anecdotally, I estimate that perhaps as many as half of those who lose their jobs may not get the one month’s pay for every year of service.