Out-Law / Your Daily Need-To-Know

Singapore to end employer salary cut notification requirement

Out-Law News | 27 Jul 2022 | 1:49 am | 1 min. read

Employers in Singapore will no longer need to notify the Ministry of Manpower (MOM) about cuts to employee wages with effect from 1 August.

According to a statement by MOM, once effective, local employers will no longer need to notify MOM about cost-saving measures that affect their employees’ monthly salaries. MOM will also end its Advisory on Retrenchment Benefit Payable to Retrenched Employees as a Result of Business Difficulties due to Covid-19 (Advisory) on the same date.

MOM first introduced a rule requiring employers with over 10 workers to notify the ministry if they take any cost-saving measures that affect their employees’ salaries in March 2020. It issued the Advisory later in May 2020 to provide employers with more flexibility in granting retrenchment benefit payments. This was intended to protect local workers from the measures that businesses were adopting to cope with the economic challenges posed by the Covid-19 pandemic.

MOM made the decision to end the measures because of the sustained fall in number of notifications and assistance sought on retrenchment benefit. The number of employers submitting cost-saving notifications decreased to a monthly average of eight in the first three months of 2022 from its peak of 1713 employers in April 2020, while the number of cases of employees seeking assistance on retrenchment benefits decreased to a monthly average of eight cases in the first three months of 2022 from its peak of 198 cases in August 2020.

The National Wage Council has also urged local employers to take a longer-term view on their manpower needs instead of relying on cost-saving measures as a stop-gap solution to their financial difficulties. MOM recommends that employers refer to the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment for guidance on managing excess manpower.

Mayumi Soh of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons said: “Employers should take note of the applicable guidelines to refer to for retrenchment payments and seek legal advice if they are unsure of their obligations in this regard.”