The Surbana issue: Were the workers sacked for poor performance or retrenched?

Last week, the employment market in Singapore was taken for a rude shock when it was announced that Surbana Jurong have sacked 54 workers.

"Surbana Jurong?" - A brief history lesson

For those who are not familiar with Surbana Jurong, it's worth a quick history lesson (this will become relevant later). Not many people know that Surbana Jurong is a company that was only recently formed in 2015.

Its name, however, may be familiar to many older folks. Its predecessor company, Surbana International Consultant, is the company behind the planning of the flats built by the Housing Development Board (HDB). Prior to being privatised and called Surbana International Consultant, the company was actually a department within HDB.

In other words, HDB privatised a department and this became known as Surbana International Consultant (owned by CapitaLand and Temasek Holdings). In 2015, Surbana International Consultant merged with Jurong International Holdings to form Surbana Jurong ("Surbana").

It's common for companies to have redundancy after a merger. When two companies combine to form one, there would usually be excess workers in the new company who are no longer required.

Read also: Surbana Jurong explains terminations in e-mail to staff

What constitutes a retrenchment?

According to the Ministry of Manpower (MOM), "Retrenchments are defined as dismissal on the ground of redundancy or by reason of any reorganisation of the employer's profession, business, trade or work."

Redundancy arising from mergers fall under retrenchment, and usual retrenchment benefits apply when layoffs are made under such circumstances. In addition, employers MUST notify MOM within five working days after they have notified the affected employees. Failure to do so is an offence.

Retrenchment, resignations or being sacked?

Due to the loss of major contracts, cashflow difficulties or restructuring due to a merger, companies may need to let some workers go. Instead of retrenching them, a retrenchment can be disguised by the company sacking workers under the reasoning of poor performance, or by pressuring them to voluntarily resign.

These workers may not be the top performers in their companies, but saying they have been sacked due to performance related matters, when it's actually the company they work for which is the one performing poorly, would be a grossly unfair statement. This is in addition to them not being compensated fairly for their retrenchment.

How do we know if it was a disguised retrenchment?

Since the difference between a retrenchment and a forced resignation or employees being sacked can be grey, here are some simple observations that people can rely on instead.

1. Are the workers being replaced?

If workers are being let go because of poor performance, then the company should be actively looking for their replacement.

If a company chooses not to replace the employees, then it's a clear sign that the workers being let go were actually part of a downsizing exercise.

2. Is there any corporate restructuring?

If a company is downsizing because of a corporate restructuring, there would be tangible examples of that restructuring happening. For example, a company may let go of a senior manager and some workers because they intend to merge two departments into one.

If such a corporate restructuring takes place, then it's possible that the company may have let go off workers because of restructuring, rather than poor performance.

3. Did the company lose major contracts?

We understand that the business world can be difficult to navigate through, especially in challenging economic conditions. During such times, businesses may be forced to reduce their headcount, and would generally prefer holding on to their best workers.

At the same time however, it's wrong for companies to claim they are letting go of poor performing workers when it's the company itself that is performing poorly.

4. Is the company relocating work overseas

It's common for big companies to relocate some parts of their business operations overseas in order to cut costs. While nobody can deny them the right to do so, such relocation clearly equates into retrenchment for their workers.

Read also: Unionists speak out against sacking of Surbana Jurong employees

Only time will tell if Surbana were actually retrenching

Mathematically speaking, the reason given that workers being let go by Surbana were the bottom 1 per cent holds no weight. In every company, there is always going to be a bottom 1 per cent. In fact, even after just letting go of their "bottom 1 per cent", Surbana still has a "bottom 1 per cent" in their company.

Were Surbana just downsizing their company in preparation for a challenging economic condition? Or are they really actively looking to hire higher quality staff to replace the workers whom they have sacked?

Only time will tell what's really happening.

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