Agoda’s severance saga is a warning for tech employers

Agoda’s recent retrenchment of 50 employees in Singapore became a lightning rod for public and regulatory scrutiny. Not because of the layoffs themselves, but because of a single clause buried in the digital travel firm’s severance agreements.

This clause allowed Agoda to claw back severance payments if employees brought any mediation requests, claims, or proceedings against the company. Reporting any issues to government agencies or statutory bodies would also result in the same.

Image credit: Arsal Ysfin

Singapore’s Ministry of Manpower (MOM) and the National Trades Union Congress (NTUC) slammed the clause, saying it went against fair employment practices and workers’ rights. Agoda ended up apologizing for the “inappropriate” move.

The firm is no stranger to job cuts: It let go of 1,500 staff globally in 2020 after the Covid-19 pandemic halted tourism. The contrast between how it handled that retrenchment and the most recent one is telling.

Agoda’s misstep shows how even well-meaning companies can stumble when conducting a layoff. It’s a reminder for other tech firms that how you axe employees matters just as much as why.

Wrong call

So why did the online travel agency use such a controversial clause?

The NTUC later confirmed that Agoda offered retrenchment benefits consistent with industry guidelines, and MOM clarified that severance agreements are permissible. Still, the public backlash was unprecedented.

See also: Asia layoff tracker: India’s Ola Krutrim and MPL slash jobs

The sweeping restrictions seem designed to protect Agoda from claims by employees. Essentially, the company was seeking to end its relationship with these workers once and for all and to shield itself from future disputes.

Requiring staff to sign waivers in exchange for severance pay is common among tech firms. The goal is to protect the company from ongoing liability for perceived breaches of employment obligations.

Photo credit: Agoda

However, Agoda’s approach was a textbook example of overreaching.

Lessons for tech firms

When silence isn’t golden