Readers posted many questions online after The Edge Singapore broke the news of shock layoffs at Lazada’s Singapore office on Jan 3.
Most questions directed to the well-known e-commerce platform remain unanswered: How many workers have been laid off in Singapore? Why did Lazada not consult its workers’ union before the retrenchment exercise? Why was Lazada not responding to media queries?
As The Edge Singapore reported on Jan 3, Lazada Singapore has operated without an in-house communications department since last year. Our team has contacted the company’s regional communications team, but the questions above remain unanswered.
Oo Gin Lee, a former journalist who now runs his own PR agency, mused on LinkedIn: “Lazada should quickly come up with a response. If there is no message [or] response, then the media will create their message and narrative from whatever sources they can find.”
China’s Alibaba Group Holding acquired Lazada in 2016, and the e-commerce company is also active in Malaysia, Indonesia, Thailand, Vietnam and the Philippines.
Speaking to affected employees, The Edge Singapore pieced together last week’s events across Lazada’s six markets. Sources close to the matter say Lazada has let go of Singapore-based chief customer care officer Brigitte Daubry and its chief marketing officers in various countries.
See also: Alibaba's regional online shopping unit Lazada marks new year with layoffs in Singapore
In addition, a fifth of Lazada’s Malaysia staff have been let go, including the country’s CEO and its chief logistics officer.
The Edge Singapore understands that the LazMall team in Vietnam was also affected by the layoffs. Despite the staff cuts, however, Lazada clarified on Jan 11 that LazMall Vietnam is not shutting down.
Here, the biggest grievance among Lazada’s Singapore staff is the small severance package they were offered. Ex-staff were offered two weeks’ pay for each year they were employed when the norm is one month’s salary for each year of service.
See also: Lazada lets go of C-suites; ex-staff in five of Lazada's six markets sharing CVs online
After meeting with human resources, the affected staff said they could not bring the offer document out of the meeting room. Instead, they were offered writing materials to copy sections for their reference.
In an email to The Edge Singapore, a reader who claims to be an affected employee says this meant staff could not “practically” consult any legal or labour advice on the offer document.
Lazada Singapore has only issued one statement via an external agency: “We respect local labour laws and our employees’ well-being. With regard to our recent business transformation exercise, we are proactively cooperating and consulting the Singapore government, the National Trades Union Congress (NTUC), the Food Drinks and Allied Workers Union (FDAWU) and other relevant agencies, and we will continue to do so.”
What can the authorities do?
Lazada disregarded certain norms during its retrenchment exercise. The amount offered to retrenched staff was half the expected sum, staff were offered payment in exchange for a shorter notice period and Lazada did not inform FDAWU — its recognised union — before proceeding with layoffs.
In turn, FDAWU called the move “unacceptable” and escalated the matter to the Ministry of Manpower (MOM).
See also: MOM notes 'good progress' in Jan 5 talks between Lazada Singapore and union
NTUC, too, said it was “extremely disappointed in this move by Lazada”.
Formed in 1964, FDAWU is an affiliate of NTUC. It merged with the Food and Beverage Industrial Workers’ Union (FBIWU) in 2000 and represents accommodation, food manufacturing, retail and food services employees.
Ironically, Lazada is featured on the homepage of the union’s website. Lazada Singapore’s former CEO signed a memorandum of understanding in July 2022 to form a committee and tap a $70 million grant from NTUC to help “upskill and redesign jobs for workers”.
Lazada has since apologised to FDAWU, and the union released a statement on Jan 6 saying it has accepted the apology. Lazada has also promised to consult the union for “any future exercises”.
MOM facilitated discussions between Lazada Singapore and FDAWU on Jan 5. The ministry says it “saw good progress” in the talks and is working to ensure that the restructuring exercise is held in a “fair and responsible manner”. FDAWU says it is “negotiating for additional benefits for affected eligible workers”.
The outcome for affected employees — whether or not they have signed the offer document — remains to be seen. But the chain of events raises other questions directed at MOM and Singapore’s unions.
Will Lazada face any penalties from this fiasco? How enforceable are MOM’s rules for errant employers? How can the authorities ensure other employers — especially large international names — do not follow suit?
After Grab laid off 360 regional employees in June 2020, NTUC proposed a “fair retrenchment framework” in July. That October, MOM, NTUC and the Singapore National Employers Federation (SNEF) incorporated key elements from the proposal into the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment.
The advisory states that “retrenchment should always be the last resort after other feasible options have been considered and exhausted”. These options include moving employees to other departments or companies and introducing flexible work schedules, shorter work weeks, wage cuts and no-pay leave.
NTUC’s latest statement echoes these guidelines: “Companies must exhaust all other options before making the call to retrench employees. It also appeals to companies to be considerate about the timing of such exercises and to avoid doing such exercises during festive periods, as far as possible.”
Employers who plan to retrench workers should also notify their respective unions early. According to the advisory, the norm is a month before affected employees are informed.
In addition, Singapore’s main labour legislation — the Employment Act — spells out a range of minimum notice periods for retrenched employees. These range from one day for those working for the employer for less than 26 weeks to four weeks for those who have served at least five years.
Employees with two years of service or more are eligible for retrenchment benefits. But only employees with such benefits spelt out in their contract, or a union’s collective agreement, are entitled to these benefits.
Meanwhile, workers who have served for less than two years may receive a sum “out of goodwill”, according to MOM.
“The prevailing norm is to pay a retrenchment benefit varying between two weeks to one month’s salary per year of service, depending on the financial position of the company and taking into consideration the industry norm,” reads the advisory. “However, in unionised companies where the quantum of retrenchment benefit is stipulated in the collective agreement, the norm is one month’s salary for each year of service.”
Following any retrenchment, Singapore-registered employers with at least 10 employees must notify MOM within five working days. Employers who fail to do this face a $2,000 fine for each breach.
The other points in the advisory outline the norms in Singapore’s labour market. While Lazada’s actions are not illegal, MOM advises employers to follow the advisory’s guidelines.
The ministry declined to comment on whether it will enact penalties on Lazada as negotiations are ongoing.
Where possible, employers should be transparent about undertaking a retrenchment exercise from the outset, and best efforts should be made to redesignate employees internally in the first instance, says Amarjit Kaur, a partner in litigation and arbitration at law firm Withers KhattarWong.
“If that isn’t possible, then employees should be given longer than usual notice periods to give them time to look for alternative employment.”
What can employees do?
The advisory does not arm employees with any rights to make claims against employers and employers enjoy some leeway in interpreting their own financial health and industry practices.
Disgruntled employees may report an Employment Act violation to MOM via an online form. They may also file a claim online with the Tripartite Alliance for Dispute Management (TADM), which offers “mediation and advice for managing employment or payment-related disputes”.
Should mediation fail, the matter may be escalated to the Employment Claims Tribunals (ECT), which offer employees and employers a “speedy and low-cost forum” to resolve their salary-related and wrongful dismissal claims.
But neither MOM nor the ECT can force an employer to pay retrenchment benefits that are not required by law.
In this regard, Singapore’s law may offer more concessions to employers than affected employees, emphasising mediation instead.
In comparison, employees in Malaysia, Indonesia, Thailand, the Philippines, China, Taiwan, Hong Kong and South Korea are entitled to statutory severance payments.
Singapore has a unique tripartite employment landscape, says Kaur. “The consensus-based legislative drafting has led to a scenario where Singapore does not have statutory retrenchment pay or mandate the amount of retrenchment benefits, which would place an unduly heavy burden on companies that might have financial constraints.”
Kaur, who specialises in employment and crisis management, points to another problem seen during retrenchments: long-serving employees who face a cap on the years of service they are rewarded for. “In a recent matter, a client had served a financial institution for 30 years but was only given recognition for 15 years when her role was made redundant. While this may align with the employer’s internal policies, it leaves long-serving employees in an unenviable position, particularly in their silver years.”
Workers can expect broader protections against workplace discrimination this year. MOM announced in August 2023 that the government has accepted 22 recommendations from the Tripartite Committee on Workplace Fairness — composed of the same three entities above — which will be included in a legislation framework set to be introduced in Parliament this year.
The workplace fairness legislation, as it is currently known, will prohibit discrimination in the workplace over the following characteristics: age, nationality, sex, marital and pregnancy status, caregiving responsibilities, race, religion, language, disability and mental health conditions.
The possible punitive measures attached to this coming law are worth watching.
Currently, the authorities’ only enforcement option for workplace discrimination cases is to suspend an employer’s foreign work pass privileges.
According to the accepted recommendations, new penalties could include corrective work orders, financial penalties and work pass curtailment that can be imposed “against firms and/or culpable persons, depending on the severity of breach”.
Photos: FDAWU, Samuel Isaac Chua/The Edge Singapore
