by

June 3, 2026

No comments

12 minutes

Read Time

Singapore

NTUC concerned about employers presenting retrenchments as ‘new opportunities’ by asking workers to reapply for roles abroad

Some employers take this approach in order to avoid the optics of a retrenchment, say manpower experts.

New: You can now listen to articles.

This audio is generated by an AI tool.

Ang Hwee Min

Read a summary of this article on FAST.

Get bite-sized news via a new
cards interface. Give it a try.

Click here to return to FAST
Tap here to return to FAST

FAST

SINGAPORE: Employees who lose their jobs in Singapore are considered to have been retrenched even if new or similar roles in their organisations are available overseas which they successfully apply for, the Manpower Ministry (MOM) and National Trades Union Congress (NTUC) have told CNA.

Responding to queries, NTUC said it was concerned about “practices where workers are asked to reapply for roles locally or for roles that have moved overseas but (are) presented as new opportunities” amid business restructuring.

“If the outcome of these practices is that a worker’s role in Singapore is made redundant, such arrangements are recognised and treated as retrenchment,” the union said.

“To elaborate, when a worker’s employment is with a local company, and if that position or employment is lost due to redundancy, the worker’s relationship with the local entity ends.”

Guess Word
Crack the word, one row at a time

Buzzword
Create words using the given letters

Mini Sudoku
Tiny puzzle, mighty brain teaser

Mini Crossword
Small grid, big challenge

Word Search
Spot as many words as you can

Show Less

Responding to CNA, MOM said: “Should an employee lose his job as the role has been made redundant in Singapore – for example, where the role no longer exists or has been shifted overseas – this would constitute a retrenchment.

“This applies regardless of whether the employee has applied for an overseas role and the outcome of that application.”

NTUC and MOM’s responses came after H&M informed staff members on May 11 that it will carry out a restructuring exercise to move its Southeast Asia headquarters from Singapore to Malaysia.

The Swedish fashion retailer asked its employees across East Asia, which includes Singapore, to reapply for 178 jobs around the region as part of the restructuring, according to several staff members who spoke to CNA.

Employees can nominate themselves for up to two roles, many of which have moved from Singapore to other countries. They must pass interviews and evaluations to secure the positions.

Those who are unsuccessful face “mutual separation” in line with local labour laws, according to staff members.

On Tuesday (Jun 2), MOM confirmed that it had received a mandatory retrenchment notification from H&M, and that it was within the required window of five working days after affected employees are informed of their retrenchment.

H&M, which is not unionised in Singapore, did not confirm if there were layoffs or relocations when earlier approached by CNA.

When H&M was asked for its response to the concerns raised by NTUC, a representative said: “As previously stated, we are fully committed to supporting all of our colleagues in any organisational changes and will continue to fulfil our obligations according to local labour law requirements.”

RESTRUCTURING OR RETRENCHMENT?

In recent years, the BBC and HSBC have reportedly also asked employees to reapply for roles during restructuring exercises.

Some employers want to avoid the optics of using the term “retrenchment” while seeking to restructure operations and relocate jobs, said several manpower experts.

Speaking in general terms, they said companies could adopt similar wordings in their communication to affected staff to disguise an impending retrenchment.

Ultimately, these displaced workers could lose out in retrenchment negotiations and the amounts they receive through severance packages, said experts.

Tripartite partners define retrenchment as dismissal on the grounds of redundancy or due to any reorganisation of the employer’s profession, business, trade or work.

An employer who terminates an employment contract and does not plan to fill the vacancy any time soon is presumed to have retrenched the employee.

While retrenchment benefits are not required by law, the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (TAMEM) – which has no legal force – recommends a norm of two weeks to one month’s salary per year of service.

Under pressure to optimise costs and stay competitive, some companies are gravitating towards restructuring or “calibration” exercises instead of overt retrenchments, said Ms Archana Srinivasan, founder and director of human resources consultancy Alchemy People Partners.

This pattern is becoming more common in the current macroeconomic climate, said the senior HR professional, who is accredited by the Institute for Human Resource Professionals (IHRP).

Some of these calibration exercises could be genuine, necessitated by regionalisation or automation, and still result in job losses, she said.

“But in other cases, the framing could be meant to soften the optics of what is, in substance, a workforce reduction,” she added.

Companies that reduce headcount through restructuring or “calibration” instead of retrenching employees directly may be sensitive to the optics of the exercise, said Mr Ian Liew, an HR practitioner with more than 10 years of experience.

“It doesn’t make any material difference other than branding and communications,” he said.

He pointed to a few factors that can determine whether a company is using mutual separation agreements or job redeployments to disguise retrenchments.

These include how genuine the company is in redeployment, whether employees are given fair opportunities to interview for alternative roles, and if the company provides proper compensation and relocation support for these roles.

MUTUAL SEPARATION A ‘GREY AREA’

Lawyers and HR professionals said mutual separation arrangements generally do not absolve employers of their retrenchment obligations, but there may be some ambiguities.

In their statements to CNA, both MOM and NTUC said that retrenchment should be a last resort after employers have explored alternatives, such as redeployment and reskilling.

Responsible retrenchment includes informing affected employees early and communicating clearly on how the retrenchment will be carried out to give employees time to plan and adjust, MOM added.

Employers that retrench workers must deal with their employment obligations under Singapore law and the applicable contracts, and adopt the responsible retrenchment practices in TAMEM, said NTUC in its statement to CNA.

Where job losses cannot be avoided, employers should inform their unions in advance, added NTUC.

They should also use objective and fair selection criteria when identifying workers to be retrenched, clearly communicate the impact of the exercise and provide enough notice, compensation and support for them to find new jobs, said the union.

From a legal perspective, no conclusions about what an employee is or is not legally entitled to can be made from the term “mutual separation”, said Mr Terence Seah, a partner at Virtus Law.

Given the general absence of mandatory retrenchment requirements in Singapore, he said what the employer must do largely depends on the employment contract.

“I suspect simply not calling it a retrenchment wouldn’t help any company avoid what it has to do in a specific situation that the contracts have provided for,” he added.

Agreeing, Ms Srinivasan, the senior HR professional, said that when jobs are lost in a restructuring, “calling it a ‘calibration exercise’ does not alter that fundamental reality”.

She added that if the exercise is effectively a retrenchment, then the company would still be obliged to notify MOM regardless of how it was packaged.

“Having said that, if employees exit via mutual separation agreements that they sign voluntarily, some employers may argue no retrenchment was declared because no one was formally retrenched,” she added.

“Hence this is a grey area.”

Ms Srinivasan said mutual separation is not usually recorded as retrenchment given this grey area.

The terms of separation will hence be as detailed in the mutual separation agreement, and she advised employees to seek professional guidance before signing such agreements.

“It is also important to note that companies cannot force employees to enter into mutual separation,” she said.

RETRENCHMENT PACKAGES

Employees with mutual separation agreements could lose out because the proposed package may be lower than the retrenchment benefits called for in TAMEM, Ms Srinivasan added.

HR practitioner Mr Liew pointed out that while retrenchment benefits are not taxable, the resulting package from a mutual separation agreement is.

Retrenchment payments to compensate for the loss of employment are not taxable, according to the Inland Revenue Authority of Singapore (IRAS). Other non-taxable items include payments for agreeing to a non-compete clause and for outplacement support.

But payouts under mutual separation agreements are termed as “ex-gratia” payments, said Mr Liew. Ex-gratia payments are taxable as part of income, because they are considered payments for past services rendered, according to IRAS.

“For the employee, they actually lose out if it’s a mutual separation, from a tax perspective. For the company, there’s no difference” whether the amount is given as a retrenchment or ex-gratia payment, said Mr Liew.

If employers want to do right by their employees, they would say that the reason for the payouts is retrenchment, he added.

“I wouldn’t say that mutual separation is a good HR practice,” said Ms Srinivasan.

“If there’s no material difference or additional benefit for the employees or if the reason for pursuing mutual separation is not clear, then yes – it could be a way to disguise retrenchment.”

She added that good HR practice is grounded in transparency, fairness and respect for employees, and not “process design that minimises employer liability”.

“If not executed properly, such exercises may affect the reputation and trust in a company, which can take years to repair,” she said.

RECOURSE FOR WRONGFUL DISMISSAL

Lawyers said there can be grounds for seeking legal recourse if the worker is dismissed because he declines to reapply for the overseas role.

This depends heavily on the facts of the situation and the terms of the employment contract, said lawyer Nicolas Tang, managing director of Farallon Law.

A substantial unilateral change to the place of work, especially if an overseas relocation is required, could be a breach of contract, he said.

“Relevant considerations would include whether the employment contract contains a mobility or relocation clause, whether the relocation is reasonable and genuinely necessary, whether alternative arrangements were offered, and whether the employee was effectively pressured into leaving,” he said.

Employers need to exercise caution in how such exercises are implemented, said Mr Tang.

“If the process appears designed primarily to avoid retrenchment obligations or place indirect pressure on employees to resign, it may expose the employer to wrongful dismissal or constructive dismissal allegations,” he said.

Workers in Singapore can pursue wrongful dismissal claims through the Tripartite Alliance for Dispute Management.

Constructive dismissal refers to a situation where an employee is forced to leave their job against their will because of their employer’s conduct.

This typically involves the employer “acting in a way which is so egregious and unlawful that it knows the employee would quit”, said lawyer Mr Seah.

However, constructive dismissal does not apply in a situation where the employer moves the role overseas as there “isn’t anything sinister” about economic circumstances that give employees no choice but to leave, he said.

In employment contracts, both the employer and employee have the right to give notice of termination without cause, noted Mr Seah.

A company that tries to deploy an employee to another country, assuming they pass the selection, could be “acting with goodwill to see if there is any way for the relationship to be preserved”, he added.

BEYOND LEGAL OBLIGATIONS

Restructuring exercises can sometimes become more complex in practice, acknowledged Singapore Human Resources Institute CEO Alvin Aloysius Goh.

“Employees may feel uncertain if alternative roles offered are significantly different, impractical or not reasonably viable for their circumstances,” he added.

Organisations should ensure that redeployment discussions and separation processes are handled fairly, transparently and with genuine consideration for affected employees, said Mr Goh.

“Beyond legal compliance, employers and HR professionals have a responsibility to ensure that employees are treated fairly, respectfully, and with dignity throughout the process,” he added.

While the opportunity to reapply for roles in the organisation may seem good on the surface, it may also cause anxiety arising from unanswered questions about the new package, which still has to be negotiated, said HR consultant Christine Chan.

For example, if employees are offered relocated positions but not given information about relocating, they will feel very lost, she added.

This ambiguity is not good practice because employees do not know what is coming up next, said Ms Chan.

“That feeling is lousy. That feeling is like, I can’t go because I still wanted to hear from the company whether there is anything for me.”

Mr Liew also brought up the importance of transparency.

“When you do this kind of announcement, you have to provide as much information as possible to the employee. You have to put yourself in the employee’s shoes,” he said.

Source: CNA/dv(nj)

Inbox