The rapidly evolving COVID-19 situation around the globe has created uncertainties and business disruptions. Locally, the Government has imposed various measures to manage the outbreak, including declining new work pass applications and implementing workplace closures. This has resulted in many employers facing severe manpower issues.
In this note, we intend to address the following issues relevant to employers amidst the COVID-19 outbreak:
- Continuing business operations amidst COVID-19
- How an employer may implement cost-cutting measures
- Government assistance to employers, such as the Jobs Support Scheme and tax measures
1. How should employers continue business operations in light of COVID-19?
Under the Workplace Safety and Health Act (Cap. 354A) of Singapore, every employer has the duty to take, so far as is reasonably practicable, such measures as are necessary to ensure the safety and health of employees at work. In response to the COVID-19 outbreak, various government agencies including the Ministry of Manpower ("MOM") and Ministry of Health have issued various advisories to prevent the transmission of the disease both within and outside the workplace.
On 3 April 2020, the Ministry of Trade and Industry issued a guidance document, announcing that save for essential services (such as food, transportation and healthcare) and their related supply chains and service providers, all other business, social or other activities that cannot be conducted via telecommuting or other means from home shall be suspended from 7 April 2020 to 4 May 2020 (i.e. the "circuit-breaker" period). While entities providing essential services may continue operating at the workplace, they must nonetheless comply with safety measures such as:
- Allowing all activities that can be conducted through telecommuting to be done from home; and
- Implementing safe distancing measures to reduce physical interactions, such as staggering working hours, postponing group events, and implementing shift work and/or split team arrangements.
The MOM has also announced that enforcement operations will begin from 7 April 2020 to ensure that only businesses exempted from suspension are operating from workplace premises.
As the COVID-19 situation is constantly developing and evolving, the MOM and other government agencies have been active in addressing the situation and issuing fresh advisories and guidelines throughout this period. Accordingly, employers should continue monitoring for government announcements.
2. How should employers implement cost-cutting measures?
Absent a contractual right, employers are not entitled to unilaterally reduce working hours, cut wages, or place employees on unpaid leave.
The Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (the "Tripartite Advisory") was updated on 11 March 2020 to include suggested measures to employers on keeping their businesses viable while supporting employees during this period of economic uncertainty. These measures are broadly categorised based on the severity of impact to employees:
- Adjustments to work arrangements without wage cuts;
- Adjustments to work arrangements with wage cuts;
- Direct adjustments to wages; and
- No-pay leave
While employers may implement different cost-cutting measures tailored to their business needs, employees' consent should generally be obtained before implementing any such measures that deviate from the terms of the employment contract, be they reducing working hours or salary, or asking employees to go on unpaid leave. Unilaterally imposing such changes may run the risk of employee claims for constructive dismissal.
Employers registered in Singapore who employ 10 or more employees are required to notify the MOM of any cost-cutting measures implemented during the "circuit breaker" period if the measures result in employees' salaries falling below (a) 75% of gross monthly salary for local employees; or (b) 75% of basic monthly salary for foreign employees. This notification may be made online.
Generally, employers who intend to terminate the employment of employees must do so either by providing notice or payment in lieu of notice. Employers who have at least 10 employees in Singapore and have notified at least five employees of their retrenchment within any six-month period must notify the MOM. This mandatory retrenchment notification must be made within five working days after notifying the fifth employee of retrenchment in any six-month period, and every employee similarly notified thereafter.
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Originally published Shook Lin & Bok LLP, May 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.