SINGAPORE: The new severance terms for retrenched DFS employees are “still off the mark”, said Mr David Yeo, secretary-general of the Singapore Manual and Mercantile Workers Union (SMMWU), speaking to media at its office on Thursday (Oct 3).
Mr Yeo added that he intends to revisit the terms of the package if the LVMH-owned company recognises the SMMWU as a union to represent its workers. He explained that retrenchment package calculations will usually recognise up to 25 years of service, rather than the cap of 13 years detailed in DFS’ revised offering.
Retrenched DFS Group employees were offered the improved severance packages on Wednesday. They would receive two weeks' salary for each year of service, capped at 13 years. This would be the equivalent of 26 weeks' pay, and they could either serve out their notice period or be paid in lieu of notice.
When the retrenchment exercise was first officially announced to employees a week ago, they were offered a severance package capped at 13 weeks of pay, which included payment in lieu of a one-month notice period, said Mr Yeo, which he described as “peanuts”.
According to tripartite guidelines on managing excess manpower and responsible retrenchment, the “prevailing norm” is to pay a retrenchment benefit varying between two weeks to one month salary per year of service, depending on the financial position of the company and taking into consideration the industry norm.
When asked about the lack of minimum compensation and if he thinks there is a need for stronger regulation, NTUC assistant secretary-general Patrick Tay said that retrenchment benefits in unionised environments are always one month per year of service.
"In some instances no cap, and in some instances a cap of 25 years.
"However, in a non-unionised environment, it will very much depend on the employment contract, and of course, industry norms as well."
According to a DFS company memo in 2001 about a retrenchment exercise, affected staff who had been employed for five years or more were offered a month's salary for each year of service, with a maximum payout of 20 months' salary.
Severance packages paid by companies are also typically adjusted based on whether a company is financially viable, Mr Yeo explained, and this also becomes a factor in union negotiations.
“Usually we will ask what’s the profitability of your company? What is the trend of your profitability? What is your liquidity? Will you go bankrupt if you pay your workers?” he added.
CHANGI AIRPORT BUSINESS "IMPACTING OUR PROFITABILITY"
In an e-mail sent to employees in Singapore today seen by reporters, DFS CEO Ed Brennan wrote that rebalancing the company’s workforce was a “hard step”.
“As you know from my past communications to you, the Changi liquor and tobacco business has been impacting our profitability for some time now and to be very transparent, we have been losing money there.”
He added that DFS Group has also observed “a significant change” in customer spending patterns at its Scottswalk and Changi outlets, and this contributed to “an even sharper decline in overall profitability”.
He continued: “We also reduced our workforce in Hawaii and North America, in the context of a tougher global environment, exacerbated by specific local market forces including a decline in visitor spend and changing traveler patterns.
“As a business that depends on travelers, and particularly Asian travelers, all of these changes have a direct impact on our ability to sustain our operations.
“And, although we had taken many steps to manage costs where we could, it was not enough.”
Affected employees that reporters spoke to said that they have been invited to an employment facilitation workshop next Monday and a career fair next Wednesday, held in partnership with Workforce Singapore. DFS HR personnel also told several affected staff to send their resumes to them, offering to forward them to parent company LVMH Group.
In determining the value of severance packages, Mr Yeo said the age of affected employees are also taken into account. For example, older employees may receive more than one month per year of service due to their age, as they may need more time to find another job.
“For older employees, it’s usually an ex gratia payment. This ex gratia payment is to help them to go upgrade their skills or do some job switch training,” said Mr Elvin Lee, deputy secretary-general of SMMWU.
Mr Yeo added: “A union isn’t just about money, but also helping them to find alternative jobs. And that also means, for older workers, they have to be retrained and reskilled.
“But more importantly, before you get a new job. What do they live on in the meantime?”
Mr Yeo shared that the union has received an invitation from DFS Group to a meeting, but a decision has not been taken when to schedule this. A union can only negotiate for better severance terms on behalf of employees when it has been recognised.
Mr Lim said he is currently in contact with 66 of the affected DFS staff, although he is unsure how many in total are affected. Of the 66, about 10 per cent were already union members before they were retrenched.
He added that the SMMWU has 274 members who are currently DFS employees, and saw a 20 per cent increase in membership from DFS employees since Sep 16, when they reached out to current members by mail to inform members that the union will be there to help if they need any support or guidance.
DFS Group did not respond to questions from reporters about whether they have plans to further adjust the packages and whether they have plans to recognise SMMWU.