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Redundancy benefits paid by 90% of retrenching businesses in 2017, Ministry of Manpower finds

The Manpower Research & Statistics Department released the “Retrenchment Benefits 2017”. This report examines the extent and quantum of retrenchment benefits paid to local employees who were retrenched in 2017. The study is based on a survey covering 1,550 establishments which retrenched local employees in 2017. The survey took place between 23rd January to 29th March 2018, with a response rate of 90%. has just released the "Retrenchment Benefits 2017".

The proportion of establishments that paid retrenchment benefits to eligible local employees remained high in 2017. The majority of establishments continued to pay retrenchment benefits based on employee’s service period with the establishment and this proportion has also increased, with better economic conditions. This meant most retrenched locals were paid retrenchment benefits based on tenure, with the common pay-out rate being one month of salary per year of service.

90% of retrenching establishments paid retrenchment benefits in 2017, higher than in 2016 (88%) and broadly similar to 2015 (91%). This meant that 94% of eligible local employees received retrenchment benefits in 2017. Among the minority of establishments which did not pay retrenchment benefits, the common reasons were the workers’ employment agreements did not have provision for payment of retrenchment benefits and financial constraints.

Large establishments with at least 200 employees (95%), and unionised establishments (99%) were more likely to provide retrenchment benefits.

Over the year, the provision of retrenchment benefits rose for small establishments with 10 to 24 employees (82% in 2017 compared to 78% in 2016) and those with 25 to 199 employees (91% compared to 89%). However, the proportion among small establishments remained lower than 2015 (88%), when data was first collected. For large establishments, the provision of retrenchment benefits continued to decline slightly in 2017, due to nonunionised establishments from construction.  

76% of retrenching establishments paid retrenchment benefits according to their employees’ years of service with the establishment in 2017, higher than 2016 (65%) and similar to 2015 (75%). This meant 85% of retrenched locals in 2017 were given retrenchment benefits based on their tenure. The common rate of pay-out was one month of salary per year of service. On the other hand, the proportion of establishments which gave lump sum pay-outs declined in 2017 (19%), from 2016 (29%). In 2017, lump sum pay-outs were applicable to just 10% of retrenched locals. The lump sum pay-out was typically equivalent to two months’ salary.

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