Guidelines and cost-saving measures to manage excess manpower - Singapore Budget 2020
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Guidelines
and
cost-saving
measures to
manage
excess
manpower
Time of Update : 9 April 2020
Singapore Budget 2020
www.bsl.sg
220 Orchard Rd, Singapore 238852
1 Adjustments to Work Arrangements without
MANAGING PAYROLL
Wage Cuts
A. Training and skills upgrading of employees
COSTS FOR BUSINESS
B. Redeployment of employees to alternative CONTINUITY
areas of work within the company
C. Flexible Work Schedule (FWS)
2 Adjustments to Work Arrangements with
Wage Cuts
A. Part-time work, sharing of jobs or other
work arrangements
B. Shorter work week
C. Temporary layoff
Saving Jobs,
3 Direct Adjustments to Wages
Supporting Wages
A. Annual Wage Increment
B. Variable Bonus Payment The Singapore Budget 2020 was announced
C. Annual Wage Supplement (AWS) in February. Given the fast changing nature
D. Monthly Variable Component of the global economy, employers are
(MVC) and/or other allowances looking to cut costs in the daily operations.
E. No-pay Leave Payroll takes 30% to 50% of every dollar
earned. Naturally employers will be looking
at cutting staff costs. We detail out options
that most businesses can embark on when
4 Responsible Retrenchment
considering alternatives to retrenchment.
A. Communication to Employees Taking on a long-term business view to
B. Retrenchment Notice Period keeping your staff is important to business
C. Retrenchment Benefit Quantum continuity, especially when times are tough.
5 Supplementary Budget 2020
A. Jobs Support Scheme (JSS)
B. Enhanced Wage Credit Scheme
(WCS)
C. Foreign Worker Levy
Reproduced by BSL Business Resources Pte Ltd
Guidelines Managing Excess Manpower¹
Together We Are Stronger
“ Employers will be required to notify the Ministry of Manpower (MOM) if they
introduce any cost-saving measures that affect employees’ monthly salaries
…..applies to employers with 10 or more workers.”
Channel News Asia, 11 March 2020
Singapore Stabilisation and Support Package
Mandatory
Mandatory Notifications
Notifications on Cost-Saving
Singapore will spend S$4 billion on a slew of new on Cost-Saving Measures ²
Measures.
measures and enhancements to existing schemes to
stabilise its economy amid the near-term
During the period from 7 April to 4 May
uncertainties caused by COVID-19, announced
2020 (“Circuit Breaker” period),
Deputy Prime Minister Heng Swee Keat on Feb 18,
2020. Sectors that have taken a direct hit from the employers MUST notify MOM Online via
coronavirus outbreak, such as tourism, aviation, a Form within 1 week of implementing
retail, and food services, will receive additional help. measures if they:
Enhancements were announced again in Reduce employees’ salaries to:
Supplementary Budget 2020 as released in March ● 75% of gross monthly salary for
2020, to help both workers stay employed and to local employees.
help businesses with cash flow.
OR
● 75% of basic monthly salary for
In relation to payroll and human resource
management, Job Support Scheme (JSS) and Wage foreign employees.
Credit Scheme (WCS) have both been enhanced to ● Are registered in Singapore and
each business concerns over short-term cash flow. have at least 10 employees.
You DO NOT need to seek Controller’s
approval for salary reduction of FOREIGN
employees during this period.
¹Tripartite Advisory on Managing Excess Manpower & Responsible Retrenchment:
² Mandatory Notifications on Cost-Saving Measures
Adjustments to Work
Arrangements
WITHOUT Wage Cuts
A. Training and skills upgrading of
employees
B. Redeployment of employees to
alternative areas of work within
Time-Banking as a FWS Option
the company
To preserve employment while helping
you reduce future manpower costs due
C. Flexible Work Schedule (FWS) to overtime ramp-up in the business
recovery phase.
TRAINING & SKILLS REDEPLOYMENT FLEXIBLE WORK SCHEME
UPGRADE (FWS)
Paid now for reduced working
Increase in productivity by Job Rotation hours.
equipping employees with
better skills and knowledge. Enlarge employees' job scope Reduced working hours
with training. "saved" to offset increase in
Tap on SkillsFuture movement future working hours.
training support schemes. Redeploy excess manpower to
vacancies in different areas. Seek union and employees
Absentee payroll subsidies for support.
employees undergoing Out-placing affected
Outplacing to other companies Seek the support of
Retain skilled employees employees to suitable jobs in
training. Apply to the
theunions andCommissioner
employees for
to enable company to other companies. Labour.
meet business
Retain demand to
skilled employees
when
enable companygrowth
economic to meet Apply to the Commissioner
recovers
business demand when for Labour
economic growth recovers.
Good Work Practices
Keeping Workers Employed with
Work-Life harmony Adjustments to Work
Arrangements WITH
Wage Cuts
A. Part-time work, sharing of jobs
or other work arrangements
B. Shorter work week
To encourage better Work-Life Balance for workers,
companies can apply for grants and incentives to
C. Temporary layoff
implement flexible work arrangements (FWAs) such
as flexi-load, flexi-place and flexi-time.
Part-Time or Job Shorter Work Temporary
Sharing or Weeks Lay-off
Flexible Work
Arrangements
Enhanced Work-Life Reduction of Work Hours Reduction of Work Hours
Grant
● FWA Incentives for ● Request employees to ● Request employees to
companies to sustain take UP TO 50% of take UP TO 50% of
implementation of local their earned annual their earned annual
employees leave leave
● Job Sharing Incentives ● Layoff period such that
for companies to ● Reduction of work it does not exceed one
implement job sharing week MUST not exceed month at any one
for PMET-level 3 days in a week instance subject to
employees (Should not last for review
more than 3 months) ● Pay not less than 50%
of an employees’ wage
● Pay not LESS than 50% during layoff period
of an employees’ wage
on the day(s) that they
are not working Can be a result of facility
Employees using the
shutdowns where a work
FWAs must be
site is closed for a
working on a regular
designated period, while
basis, i.e. not ad-hoc
some administrative
or casual employees.
functions are still
performed
Reproduced by BSL Business Resources Pte Ltd
Direct Adjustments
to Wages
A. Annual Wage Increment
B. Variable Bonus Payment
C. Annual Wage Supplement
(AWS)
D. Monthly Variable Component
(MVC) and/or other allowances
E. No-pay Leave
Employers should engage and seek the consent of
unions and employees before implementing these
measures. Companies with a flexible wage system in
place may consider adjusting the following wage
components to further reduce manpower costs.
Annual Wage Increment
Reduced annual increment or wage freeze
Variable Bonus Payment
Directly linked to company profitability which
can be reduced or not given.
Annual Wage Supplement (AWS)
Reduced AWS, usually one month’s wage paid
at the end of the year.
Monthly Variable Component (MVC)
For a company who has yet to implement MVC, monthly
wages can be adjusted downwards by treating any cut in
basic wages of up to 10% as MVC cut.
No Pay Leave
Senior management should lead by example, recognising
the impact on rank-and-file employees in the extent and
duration of measure.
Reproduced by BSL Business Resources Pte Ltd
Abide by the Tripartite
Guidelines on Fair
Responsible
Employment Practices
Retrenchment
A. Communication to Employees
B. Retrenchment Notice Period
C. Retrenchment Benefit Quantum
Employers are reminded to abide by the Tripartite
Guidelines on Fair Employment Practices. Employers
must comply with the Mandatory Retrenchment
Notifications
Notify Government and Unions of Retrenchment
Where it is provided in the collective agreement, the norm is ONE MONTH
before notifying the employee
Communicate to Employees’
• Explain how the retrenchment exercise will be carried out
• Elaborate on the factors that will be considered
• Specify the assistance being offered to those affected
Minimum Retrenchment Notice Period
Length of Service Notice Period
Less than 26 weeks 1 day
26 weeks to less than 2 years 1 week
2 years to less than 5 years 2 weeks
5 years and above 4 weeks
Notify Government and Unions of Retrenchment
Where it is provided in the collective agreement, the norm is one month
before notifying the employee
Employees with 2 Unless provided for in The prevailing norm is
years’ service or more contract, the quantum to pay a retrenchment
are eligible for is to be negotiated benefit varying
retrenchment between employees between 2 weeks to
benefit. and employers. one month salary per
year of service.
Reproduced by BSL Business Resources Pte Ltd
Cost Savings in Managing
Excess Manpower
A. Jobs Support Scheme (JSS)
B. Enhanced Wage Credit Scheme
(WCS)
C. Foreign Worker Levy (FWL)
The Jobs Support Scheme (JSS) was launched in
Budget 2020 and enhanced in the Resilience and
Solidarity Budget. The JSS will provide wage support to
employers to help them to retain their local employees
(Singapore Citizens and Permanent Residents) during
this period of economic uncertainty.
Wages paid to BUSINESS OWNERS or JSS Eligibility & Sectors
employers trading in their own
PERSONAL CAPACITY will not be All employers who have made CPF contributions for their resident
eligible for the payout. They will receive (Singapore Citizen and Permanent Resident) employees will qualify for the
the JSS payout for wages paid to their payout. This is with the exception of employers in the employer exclusion
local employees. list.
Business owners are defined as follows:
Funding By Sectors JSS will provide support of:
1. Sole proprietor of a sole
proprietorship Tier 1 75% of the first $4,600 of gross monthly wages per
2. Partners of a partnership (including Aviation & Tourism local employee
general partnerships, limited liability
partnerships and limited Tier 2 50% of the first $4,600 of gross monthly wages per
partnerships) Food Services local employee
3. Employees who are both
shareholders and directors (as Tier 3 25% * of the first $4,600 of gross monthly wages
defined in Section 4(1) of the All other sectors per local employee
Companies Act) of the company, or
employees who are both members
and Directors in the case of a
Company Limited by Guarantee * ONLY FOR APRIL 2020 FOR ALL SECTORS announced in Solidarity Budget
(CLG)
● Top-up of JSS funding of 75% capped at $4,600 equivalent to a
Employers trading in their own personal maximum of $3,450 per local employee.
capacity include but are not limited to ● All other months remain the same as per Resilience Budget
hawkers who do not have UEN,
employers hiring local personal drivers
or local domestic helpers, etc.
Reproduced by BSL Business Resources Pte Ltd
Cost Savings in Managing
Excess Manpower
A. Jobs Support Scheme (JSS)
B. Enhanced Wage Credit Scheme
(WCS)
C. Foreign Worker Levy (FWL)
To receive JSS Payouts faster, employers are
encouraged to be using GIRO or PayNow Corporate.
Applications are to be made directly their banks.
Payouts are credited by these means (in
When & How is JSS paid out? order of priority)
Application is NOT required. IRAS will notify eligible employers by post of
the tier of support and the amount of JSS payout payable to them. JSS 1. Credited to the employers' GIRO
bank account used for Income
computations are automatically done based on wages (capped at $4,600 Tax/GST
per month) paid to a local employee. 2. For those without GIRO accounts,
the JSS payout will be credited to
When will my JSS will cover CPF Contributions their bank account registered with
Payout company receive wages paid in must be made by: PayNow Corporate
the payout? these 9 months: 3. Otherwise, the JSS payout will be
made by cheque.
1st Payout¹ April 2020 Oct - Dec 2019 14 Feb 2020
2nd Payout2 July 2020 Feb - Apr 2020 15 May 2020
3rd Payout2 Oct 2020 May - Jul 2020 14 Aug 2020
Organisations can sign up for
1
This includes the top-up to 75% wage support for April 2020, computed based on
October 2019 wages.
PayNow Corporate
by linking their organisation’s UEN
2
The 2nd and 3rd payouts will be adjusted to account for the difference between wages (without suffix) to their bank account
paid in April 2020 and those paid in October 2019. For more details of the adjustment,
via internet banking.
please see April 2020 top-up to JSS.
The nine banks participating in
PayNow Corporate are United
Overseas Bank, DBS Bank/POSB,
Cash Flow and Credit Support for Employers OCBC Bank, Citibank, HSBC,
1. Waiver of March 2020 Foreign Worker Levy (FWL) due in April Maybank, Standard Chartered Bank,
2020 to help firms with cash flow Bank of China and Industrial and
2. In April 2020, a one-off FWL rebate of $750 for each Work Commercial Bank of China Limited.
Permit or S Pass holder based on levies paid this year.
3. FWL rebate payable on 21 April 2020 via PayNow Corporate For assistance, please approach
account (provided Bank approves PayNow Corporate account by these banks directly.
20 April 2020), otherwise cheque issued by 15 May 2020.
Reproduced by BSL Business Resources Pte LtdCost Savings in Managing
Excess Manpower
A. Jobs Support Scheme (JSS)
B. Enhanced Wage Credit Scheme
(WCS)
C. Foreign Worker Levy (FWL)
The Wage Credit Scheme (WCS) supports
businesses embarking on transformation efforts
and encourages employers to share productivity
gains with workers by co-funding wage increases.
It was introduced in Budget 2013 and now
enhanced in Budget 2020.
The government co-funding ratios for wage increases in 2019 and 2020 will be raised from the current 15% and
10%, to 20% and 15% respectively. The qualifying gross wage ceiling will also be raised to $5,000 for 2019 and
2020, up from the current $4,000.
Scheme Current WCS as announced in Budget 2018 Enhanced WCS as announced in Budget 2020
Qualifying years ● 2018, 2019, 2020 ● 2019, 2020
Level of co-funding ● 20% of qualifying wage increases in 2018 ● 20% of qualifying wage increases in 2019
● 15% of qualifying wage increases in 2019 ● 15% of qualifying wage increases in 2020
● 10% of qualifying wage increases in 2020
Gross monthly wage ceiling ● $4,000 ● $5,000
Qualifying wage increases ● Increase in gross monthly wage of at least ● Increase in gross monthly wage of at least
$50 given to Singaporean employees in $50 given to Singaporean employees in
the qualifying year, up to a gross monthly the qualifying year, up to a gross monthly
wage level of $4,000, will be co-funded. wage level of $5,000, will be co-funded.
● In addition, increases in gross monthly ● In addition, increases in gross monthly
wage of at least $50 given in 2017, 2018 wage of at least $50 given in 2017, 2018
and 2019 up to a gross monthly wage and 2019 up to a gross monthly wage
level of $4,000, and sustained in level of $5,000, and sustained in
subsequent years of the scheme, will be subsequent years of the scheme, will be
co-funded. co-funded.
Reproduced by BSL Business Resources Pte LtdFor assistance in
calculating cost savings
or clarifications on
regulations, contact us
today.
CONTACT
6235 3388
enquiries@bsl.sg
Ng Li Ling
ng.liling@bsl.sg
DID: +65 6833 6323
Ngim Jason
ngim.jason@bsl.sg
DID: +65 6833 6366
Lim Peggy
lim.peggy@bsl.sg
DID: +65 6833 6308
Writer's Caveat
These articles have merely
attempted to provide a broad
overview on the subject
matters. They are not in any
way intended to be
comprehensive and no specific
action should be taken on the
basis of the above without
consulting your professional
advisors.You can also read
