Lazada’s layoffs without union notification spark concerns about corporate responsibility. While no legal obligation exists, responsible practices involve engaging with NTUC. Experts stress the importance of transparent communication. Lazada’s benefits, though within scale, face criticism. NTUC is negotiating for additional benefits, emphasizing the need for companies to balance short- and long-term implications.
Lazada’s abrupt layoffs, reportedly affecting around 100 staff members, not only drew the ire of the union but also raised questions about the legal obligations of companies in Singapore to inform unions before such actions. The National Trades Union Congress (NTUC) expressed disappointment, deeming the lack of consultation “unacceptable.” Lazada has since apologized, and negotiations for additional retrenchment benefits are underway between the company and the Food Drinks and Allied Workers Union, representing some of Lazada’s workers.
Legal Landscape and Responsible Practices
While there is no legal requirement for companies in Singapore to inform unions about layoffs, guidelines on “responsible practices” for retrenchment emphasize the importance of reaching agreements with unions on compensation and employee selection. Dr. Chew Soon Beng, an expert in economics and industrial relations, highlights that engaging with NTUC is beneficial, especially for significant layoffs, as it helps minimize the adverse societal effects.
Expert Insights on Corporate Responsibility
Dr. Xu Le from the National University of Singapore Business School points out the potential ripple effect of irresponsible layoffs, leading to increased unemployment and social challenges. Even non-unionized companies are encouraged to engage with tripartite organizations for guidance before making such decisions.
Mr. Aslam Sardar, CEO of the Institute for Human Resource Professionals, emphasizes the consequential impact of layoffs on a company’s reputation and employee value proposition. He suggests that early communication, empathy, and transparency in the retrenchment process can mitigate negative effects.
Retrenchment Benefits: What is the Norm?
Examining the retrenchment benefits offered by Lazada, it becomes apparent that the two weeks’ salary for every year of service falls within the recommended scale. However, the union contends that it is below market standard, considering Lazada’s strong financial performance in the previous year.
Dr. Faizal Yahya from the Institute of Policy Studies clarifies that retrenchment benefits are not mandatory under the Employment Act, and the amount depends on employment contracts and company policies. The prevailing norm is to pay between two weeks’ and a month’s salary for each year of service.
Comparing Lazada’s compensation to industry standards, it appears to be on the lower end. Notable examples include Google’s reported 16 weeks of severance pay and Grab’s offering of half a month’s severance for every six months of service.
Conclusion
The Lazada layoffs have ignited a conversation about corporate responsibility, the importance of engaging with unions, and the need for transparent and empathetic communication during retrenchment. NTUC’s role in finding ways to minimize the number of affected workers adds a crucial layer to this discussion. As companies navigate the delicate process of layoffs, considering both short- and long-term implications becomes crucial in maintaining a positive relationship with the workforce and the broader community.
