Workplace & Employment

Managing Manpower Costs: New Guidelines on Wage Cuts and Updated Tripartite Advisory on Retrenchments

In an encouraging sign, Singapore's third-quarter economic growth has expanded by 7.9% in the third quarter from the 13.2% contraction in the preceding quarter. However the economic fallout of COVID-19 will not dissipate anytime soon, especially as new waves of infections continue to surge worldwide. While the government has been encouraging businesses to retain workers where possible, it is now acknowledged that retrenchments and/or wage cuts may be inevitable. Accordingly, there have been two new developments for employers to take note of:

1. Release of the National Wages Council's ("NWC") 2020/2021 Supplementary Guidelines ("Supplementary Guidelines"), which will apply from 1 November 2020 to 30 June 2021; and
2. Updates to the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment as of 17 October 2020 ("Updated Advisory") issued by the tripartite partners, being the Ministry of Manpower ("MOM"), the National Trades Union Congress ("NTUC") and the Singapore National Employers Federation ("SNEF").

The Supplementary Guidelines sets out principles for wage cuts, while the Updated Advisory provides guidance on conducting retrenchment exercises. We provide an overview of both developments in this Update.