In Parliament: Workers Need More Support When Companies File for Insolvency

Labour MP Patrick Tay also calls for the limit of the scope of renegotiation for the COVID-19 (Temporary Measures) Act.
By Ian Tan Hanhonn 03 Nov 2020
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There must be more direct assistance for workers seeking to recover unpaid wages after their companies restructure.

Additionally, although the law will allow small businesses to renegotiate contracts that were agreed upon before the COVID-19 pandemic, a limit must be put in place.

These were some of NTUC Assistant Secretary-General Patrick Tay’s calls in Parliament on 3 November 2020.

He was debating the Insolvency, Restructuring and Dissolution (Amendment) Bill and the COVID-19 (Temporary Measures) (Amendment No. 3) Bill.

Mr Tay also urged the House to consider the additional help that could be rendered to both employees and employers.

On the Insolvency, Restructuring and Dissolution (Amendment) Bill

While the amendments to the Insolvency, Restructuring and Dissolution (Amendment) Bill focuses on assisting eligible companies by providing more straightforward, faster and lower-cost proceedings, it does not significantly improve the position of workers with owed salaries or retrenchment benefits, according to Mr Tay.

He explained: “In the event that a company has to wind up, even though there is a priority of debts provided in the Act, workers’ outstanding wages and salaries remain unsecured debts, which may result in a situation where there are little assets left to pay these workers’ salaries after all the company’s secured debts have been satisfied.”

And if the company does survive, an unpaid worker may still need to go through a long-drawn enforcement process against the company to recover unpaid salaries or retrenchment benefits, believes Mr Tay.

Mr Tay hoped that there would be more direct assistance provided to support workers seeking to recover their unpaid wages by simplifying and expediting enforcement of recovery proceedings.

On the COVID-19 (Temporary Measures) Act Amendment

Small businesses affected by COVID-19 may renegotiate their contracts under the third set of proposed amendments to the COVID-19 (Temporary Measures) Act.

Mr Tay commended the changes in the Bill as it allowed for contracts that are already in force to be renegotiated.

“This is something novel amidst these unprecedented and uncertain times. Renegotiation would aid businesses to survive the brunt of this downturn, as many of them had entered into contracts when the outlook was very different,” he said

However, he cautioned that the scope of renegotiation needs to be limited to ensure that the fundamental principle of the contract is upheld and not undermined.

He also raised an issue on the decisions of assessors.

Mr Tay called for clarity and wanted to know if there is any recourse which can be taken in the event the decisions are found to be prejudicial against the non-offending party.