Unionised employees who were let go by regional e-commerce player Lazada, a brand owned by Alibaba, can look forward to an “enhanced support package” after nearly a month of negotiations between their former employer and the Food, Drinks and Allied Workers Union (FDAWU).
Lazada Singapore has reached an “amicable settlement” with FDAWU, an affiliate of the National Trades Union Congress (NTUC), according to a joint statement released on Feb 4 by all three parties.
“The discussions resulted in an enhanced support package that FDAWU will use to help eligible affected union members.”
In response to questions by The Edge Singapore, NTUC says the support package consists of a financial payout and training support. However, NTUC declined to provide further details on the quantum, citing a confidentiality clause in the agreement.
That said, NTUC secretary-general Ng Chee Meng wrote in a Facebook on Feb 4 that “unionised workers will have an enhanced package mirroring unionised norms”. According to the Ministry of Manpower’s (MOM) website, the “prevailing norm” is to pay a retrenchment benefit of between two weeks to one month’s salary per year of service.
Former employees from Lazada Singapore who were retrenched from Jan 3 to 5 and are also FDAWU members are “encouraged” to email the union at [email protected] by 5pm on Feb 20 for further instructions.
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Lazada Singapore recognised FDAWU as its union in October 2020, opening the door for potential negotiations on behalf of its unionised workers.
FDAWU also recognises that there are affected “general branch members” from other Lazada Singapore entities that are non-unionised. “Although these are non-unionised entities, FDAWU hopes to support eligible general branch members.”
According to an NTUC spokesperson, general branch members are those who have signed up with NTUC and FDAWU but work in a company where there is no formal or legal recognition of the union.
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“A unionised company can comprise ordinary branch members and general branch members. Ordinary branch members are covered by the Collective Agreement. General branch members can be represented by the union for limited areas and/or [the] Tripartite Alliance for Dispute Management (TADM) on a case-by-case basis.”
Accoding to NTUC, general branch members in non-unionised entities “can expect to receive something” but “it will not be the same as those in the unionised entity”, which is Lazada Singapore.
Aside, Lazada Singapore has also established a dedicated training fund for FAWU to provide employment and support for affected members, in collaboration with NTUC’s Employment and Employability Institute (e2i).
At this point of time, NTUC and Lazada are unable to disclose the number of people affected by the layoffs and the proportion of those that are union members. In an email to The Edge Singapore, an NTUC spokesperson says: "FDAWU requires its members to register with FDAWU and provide certain documentation. FDAWU will then have to work out their final payout to its eligible affected union members. Only then will FDAWU have the final number as to how many members can benefit."
The move follows complaints of unfair severance payouts after a shock retrenchment exercise that began on Jan 3. Affected employees were offered two weeks’ pay for each year that they were employed, when the norm is one month’s salary for each year of service, reported The Edge Singapore.
The Edge Singapore also understands that staff were offered more than that, such as 50% target bonus; accelerated vesting restricted stock unit (RSU), as the company’s financial year ends in March; and two months’ notice with pay.
Lazada Singapore did not notify and consult FDAWU prior to the layoffs, according to a Jan 5 statement by NTUC. The company later apologised to the union.
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MOM said on Jan 6 that it facilitated discussions between the two parties and “saw good progress”, without disclosing further details.
Speaking to The Edge Singapore, sources within Lazada have insisted that the layoffs were not a retrenchment exercise, but part of ongoing business transformation efforts. They tell The Edge Singapore that the company’s cash flow is healthy, and management aims to “streamline operations, update processes and be able to make faster decisions”.
Parliament to discuss Lazada layoffs
Parliament is set to discuss the impact of the Lazada layoffs on Feb 5, with six questions filed on related issues.
According to the order paper, Members of Parliament will raise questions to Manpower Minister Tan See Leng about the number of companies that have failed to notify MOM about layoffs, and the actions that were taken against them.
Tan will also be asked about the Ministry's overall view of the job market in the next few months.
NTUC proposed a “fair retrenchment framework” in July 2020. 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.
Employers who plan to retrench workers should notify their respective unions a month before affected employees are informed, according to the advisory.
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.
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Read more about how The Edge Singapore broke the news of layoffs at Lazada:
- The good old e-commerce days are gone
- What's gone wrong with e-commerce? A look at Alibaba's Lazada, TikTok Shop and PDD's Temu
- Layoffs at US tech firms hit Singapore
- Lessons from Lazada for Singapore's employers and employees
- MOM notes 'good progress' in Jan 5 talks between Lazada Singapore and union
- Lazada lets go of C-suites; ex-staff in five of Lazada's six markets sharing CVs online
- Alibaba's regional online shopping unit Lazada marks new year with layoffs in Singapore
