Duty Free Singapore (DFS) was the latest to succumb to difficult challenges in the retail industry – sandwiched between paying landlords high rental and ever-increasing manpower costs. They decided to bow out of Changi Airport’s tender for duty-free liquor and tobacco concession, which meant they had to lay off staff.

However, the “unfair and abrupt” manner in which they retrenched staff was brought to the attention of the Singapore Manual and Mercantile Workers’ Union (SMMWU) as well as Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP).

Choice quotes from some employees who went through the retrenchment exercise included:

“In this whole exercise, money is the top consideration, not people. That’s what made us feel very, very upset.”

“We are like a piece of used tissue paper,”

“There was no pre-warning, too sudden, no dialogue.”

We share 4 lessons from this saga that employers should learn from.

#1: Communicate

Staff were told on the spot that they would be retrenched with immediate effect, and given until the next day noon to sign the retrenchment package. They were also told they needed to pack their belongings and asked to go immediately. This took many of the retrenched staff by surprise, leaving many of them who worked for DFS for more than 15 years, disappointed and shocked. Some, even in tears.

A Facebook post by Manpower Minister Josephine Teo also highlighted how DFS should have provided adequate notice and support such as placement assistance.

Josephine Teo DFS retrenchment exercise fiasco statement
A screenshot of Minister Josephine Teo’s statement on Facebook.

It is only fair to give staff advanced notice so that they would be able to make alternative career plans. There should also always be open and transparent communication with employees.

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#2: Be fair with the retrenchment package

To add insult to injury, employees were only offered one week’s pay per year of service, capped at 13 weeks. This drew quite a lot of unhappiness and criticism, especially with many affected staff being long-time employees.

David Yeo, secretary-general of Singapore Manual and Mercantile Workers’ Union (SMMWU), spoke to media to explain that for unionised companies, the norm was one month’s salary for each year of service. For older employers, the union even tries to fight for an ex gratis payment so that it can go towards helping them upgrade their skills or engage in job switch training.

Ultimately, employers need to be mindful of the tripartite guidelines on managing excess manpower and be responsible during retrenchment exercises.

#3: Retrenchment as the last resort

Let’s face it, running a business is not easy and sometimes, there are situations where the company is no longer commercially viable.

However, companies that find themselves with excess manpower should first consider re-deploying the affected staff to other business units or functions. Retrenchment should be the last resort and even then, employers owe it to staff to handle things properly.

#4: Going the distance to help retrenched employees

Companies who are considering retrenchment need to pre-empt what sort of assistance they can provide to affected employees. In the case of DFS, it was the Singapore Manual and Mercantile Workers’ Union that served DFS a claim for recognition so that it can represent its workers in negotiations for remaining staff as well as assist in helping affected workers find placements.

Companies can work with their unions and the Employment and Employability Institute (e2i) to get retrenched workers trained by career coaches and update them on career fairs for placement opportunities. Being a compassionate employer in such instances can help soften the blow on affected staff.

It boils down to being a responsible employer

As a company in the world of business, manpower adjustments are to sometimes be expected. However, the manner in which these adjustments are conducted are crucial to one’s reputation in the industry. Handling such issues haphazardly could result in remaining employees losing confidence in the company or bad press shaking up investor confidence. On top of that, it is highly likely that the National Trades Union Congress, Ministry of Manpower and the Tripartite Alliance for Fair and Progressive Employment Practices might come knocking at your door.

So remember, folks, be a responsible employer!

Emphasis ours.

The article appeared originally on SBO under the title ‘4 Lessons For Employers After The DFS Retrenchment Fiasco

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