Responsible Retrenchment Practices

Retrenchment benefit is not mandated by law. Nonetheless, the tripartite partners  strongly encourages all unionised and non-unionised employers to adhere to the advisories, including to provide retrenchment benefit to help affected employees while they search for employment. 

The amount of retrenchment benefit depends on what is provided for in the employment contract, memoranda of understanding or collective agreement (for unionised companies). If there is no contractual provision, the quantum is to be negotiated between employees (or their union) and the employers. 

The prevailing norm under the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (TAMEM) is to pay between 2 weeks to one month’s salary per year of service, depending on the company’s financial position and industry norm. In unionised companies where the quantum is stipulated in the collective agreement, the norm is one month’s salary per year of service.

TAMEM does not explicitly prohibit a cap on years of service or salary when computing retrenchment benefit.

Employees can choose to negotiate with their employers for higher amounts. However, TAMEM serves as an advisory and the provision of non-contractual retrenchment benefit is not provided by law. 

There may also be circumstances that see lower quantum payouts than recommended, due to factors such as financial difficulties faced by employers.

When employees reach the retirement age of 63, employers are required to offer them re-employment until the age of 68. If you are retrenching these employees who are aged 63 or above, you can follow the EAP recommendations in the Tripartite Guidelines for Re-employment of Older Workers, unless retrenchment benefits are stated in the collective agreement or individual employment contract.

Employees who have worked for less than 2 years at a company are not eligible for retrenchment benefits.

Employers should refer to the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment  for other options to manage excess manpower. If retrenchment is inevitable, employers should implement retrenchment responsibly and fairly in line with the advisory.

If there are disputes, you should be prepared to provide relevant information, as appropriate, to show that your retrenchment practices adhere to the tripartite advisories.

If an employer terminates an employment contract with no plan to fill the vacancy soon, the employee is considered retrenched.

However, if your employer is undergoing a cost cutting exercise and the majority of the employees have agreed to fair wage reductions to preserve their jobs, but you disagree, then your employer can terminate your employment contract. This is not considered retrenchment. In this case, your employer must give due notice or pay in lieu of notice, and fulfil all other contractual obligations, before ending the employment relationship.

Yes. The pregnant employee is entitled to maternity leave benefits if she meets the eligibility under the Employment Act or Child Development Co-Savings Act.

This payment is in addition to her retrenchment benefits.

Retrenchment is the termination of employees because of redundancy or reorganisation of the employer’s profession, business, trade or work. This includes situations where companies undergo liquidation, receivership, or judicial management. An employee is presumed to have been retrenched if the employer cannot show a plan to fill the vacancy any time soon.  This could be cases where redeployment did not materialise and the original position was made redundant.

Termination is the termination of an employment relationship which includes retrenchment but also on other grounds such as poor performance or misconduct. It can also be done with or without notice.

Whether a situation constitutes a retrenchment depends on the specific facts of the case. The consideration is whether the employee’s job in Singapore has become redundant and the employee has lost that job.

For employees who lose their jobs in Singapore because the role no longer exists here or has become redundant, this would generally constitute a retrenchment, even if other roles are available within their organisations locally or overseas which they successfully apply for.

After a retrenchment exercise, it is understandable that morale may be lower for those who remain. HR can address this by engaging this group further, be it through anonymous feedback channels or one-to-one counselling sessions where necessary. This will help to address any concerns with regard to employee’s career path or job/ personal expectations. 

It is also important to manage retrenchment sensitively as the manner and frequency to which the notice of retrenchment is communicated will not only affect the retrenchees but also the morale of those that remain in the organisation. 

When carrying out a retrenchment exercise, the selection of employees for retrenchment should be conducted fairly, based on objective criteria such as the ability of the employee to contribute to the company’s future business needs. Employers should not discriminate against any particular group on grounds of age, race, gender, religion, marital status and family responsibility, or disability. For instance, older, re-employed as well as pregnant employees should not be unfairly targeted. Although the selection of employees to be retrenched should be based on objective criteria with primary considerations given to employee merit and preserving skills to ensure business sustainability, employers should also take a long-term view of their manpower needs, including the need to maintain a strong Singaporean core. Retrenchments should generally not result in a reduced proportion of local employees. This can be achieved by retaining proportionately more locals during a retrenchment exercise.

In addition, employers should give longer notice to the affected employees where possible and conduct the retrenchment exercise in adherence to the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment. In carrying out the retrenchment, employers should continue to show respect to the affected employees and ensure that they are treated in a dignified manner, e.g. there is no need to have security escorting retrenched employees out of the workplace on the presumption that they will sabotage the business. 

Employers with businesses registered in Singapore who employ at least 10 employees are required to notify MOM if  any employee is retrenched.

Please go to http://www.mom.gov.sg/notify-retrenchment to submit the notification.

To avoid placing too much administrative burden on small companies (i.e. those with fewer than 10 employees), we have exempted employers that employ fewer than 10 employees from submitting mandatory retrenchment notifications.

However, we encourage all employers to notify MOM of any retrenchment exercise. This will enable Workforce Singapore (WSG), the tripartite partners and other relevant agencies to help affected employees find alternative employment or identify relevant training to enhance employability.

Yes, your company must notify MOM if you meet the requirements to submit mandatory retrenchment notifications.

Employers are strongly encouraged to notify MOM early using the early alert form. Employers can provide an early indication of their planned retrenchment exercise and indicate their interest for Workforce Singapore (WSG), the tripartite partners and other relevant agencies to provide employment facilitation assistance for affected employees.

Yes, your company must notify MOM if your employee is terminated on the ground of redundancy, or by reason of any reorganisation of the employer's profession, business, trade or work, and has met the mandatory retrenchment notification requirements.

The notification must be submitted within 5 working days after your employee is notified about their retrenchment.

Failure to comply with the requirements on the mandatory retrenchment notifications under the Employment Act will be a civil contravention, for which administrative penalties can be imposed.

If the contract is a fixed term contract, it would terminate automatically upon the expiry of the contract. Hence, it’s not regarded as a retrenchment. 

The Advisory applies to all retrenchments made during this pandemic crisis. 

The tripartite partners strongly encourage employers to take a long-term view of their manpower needs and implement the cost-saving measures outlined in the National Wages Council (NWC) Guidelines for 2020/2021 and the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (“TAMEM”) responsibly. Retrenchment should always be the last resort to manage manpower costs. When carrying out a retrenchment exercise, the selection of employees for retrenchment should be conducted fairly, based on objective criteria such as the ability of the employee to contribute to the company’s future business needs.

Employers may choose to contractually terminate an employment relationship with a local or foreign employee by giving notice or pay salary in lieu of notice according to the employment contract or the Employment Act, and fulfil all other contractual obligations.  

However, if the employer has no plans to fill the job vacancies any time soon, then the termination can be considered as a case of retrenchment and the employer should be prepared to explain the reasons for the termination if there are disputes raised by the employees. 

Employers should take reference from the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, where applicable. 

No. Cancelling work passes of your migrant workers does not necessarily mean you are retrenching them.

Find out what constitutes a retrenchment.

Employees that are retrenched will need time to prepare for and look for alternative arrangements. Employers should communicate the intentions of retrenchment to their employees/unions early and before the public notice of retrenchment is given. Early notice or a longer notice period, to the extent practicable, will be helpful. Employers must ensure that they give due notice or pay in lieu of notice, and fulfil all contractual obligations which include retrenchment benefit if contractually provided for, before ending the employment relationship.

If the terms and conditions of an employment contract need to be changed, both employers and employees should negotiate and try to reach an acceptable agreement, taking into consideration business needs and the employee’s concerns. 

In the event that no agreement can be reached, the initial contractual terms and conditions must remain unchanged but either party can serve notice and end the employment relationship. 

Employers cannot make changes to the employment terms and conditions without the employee’s consent. To prevent misunderstandings or disputes, a written agreement with the new terms and conditions clearly stated, whether temporary or permanent, should be signed.

Beyond e2i, employers can also work with unions, SNEF and agencies such as WSG, NTUC’s U PME Centre to help affected employees find alternative employment. 

As reflected in our Body of Competencies, IHRP has always advocated that the separation and retrenchment process must be conducted in a professional manner. Employees need to be provided with timely and transparent communications, and treated with utmost respect and compassion during these difficult times. IHRP collaborates with our tripartite partners to offer guidance and a curated set of resources to help our IHRP certified professionals balance the mutual perspectives of their organisation and employees. All our IHRP certified professionals must commit to a Code of Professional Conduct, that upholds the core principles of ethical conduct, objectivity, empathy and compassion at the heart of all that they do. 

The profile of our jobseeker clients mirrors the profile of the workforce, comprising Professionals, Managers, Executives and Technicians (PMETs) and Rank and file, across all sectors.

If you feel you have been wrongfully dismissed by your employer, you can file a wrongful dismissal claim with TADM within one month from the last day of your employment.

For dismissals without notice, your employer must substantiate that the dismissal was not wrongful.

For dismissals with notice or salary in lieu of notice, you must show proof that your dismissal was wrongful.

You are required to support your claims with the following information or documents:

• Company name, mailing address and contact number.
• Contact details, including email address.
• Employment dates, occupation, and monthly salary.
• Credit or debit card details or internet banking user ID and PIN for payment.
• Employment contract or key employment terms
• Salary payment records and CPF statements (where available)
• Termination or resignation letter
• Other documents relevant to your claim, e.g. time sheet, certification of pregnancy/estimated delivery date by a Singapore medical practitioner.

For managers and executives: If you were dismissed with notice or salary in lieu of notice, you can only file a wrongful dismissal claim if you have served your employer for at least 6 months.

Retrenchment is the termination of employees because of redundancy or reorganisation of the employer’s profession, business, trade or work. An employee is presumed to have been retrenched if the employer cannot show a plan to fill the vacancy any time soon. If the employees think that they have been retrenched as the company does not have plans to fill the job roles, they may write in to MOM at mom_lrwd@mom.gov.sg  to have their case assessed.

If you are not paid retrenchment benefit according to your employment contract or collective agreement (for unionised companies), you may file a claim at TADM within 6 months from the last date of employment.

If you believe that the circumstances of your termination amount to a retrenchment, you may wish to first seek clarification from your employer on the reasons for the termination. If the retrenchment exercise did not align with TAMEM, you can also clarify if retrenchment benefits were considered taking reference with TAMEM and the advisory on MOM’s website. Employers are expected to make reasonable efforts to comply with the guidelines.

Supporting information and documents such as the below may help:

• Your retrenchment or termination letter, including the stated reason for termination
• Your employment contract and any relevant addenda
• Company communications (e.g. emails or notices) relating to the termination, restructuring, or manpower reduction
• Information on whether your role was made redundant or whether similar roles continue to exist
• Any details on retrenchment benefits discussed or paid, if applicable. 
  
  

Retrenchment benefit is not mandated by law, and if it is not provided for in the contract or collective agreement, it is subject to negotiation between the employee (or union) and employer. 

TAFEP cannot compel employers to make retrenchment benefit payments, or determine the quantum of retrenchment benefit to be made, or provide legal advice. 

Retrenchment benefits are not mandated by law. The amount payable is generally determined based on what is provided for in the employment contract, collective agreement (for unionised companies), or the company’s policies. Where there is no contractual provision, the retrenchment benefit is typically determined through discussions between the employer and the affected employee(s). Employees who require clarification on how their retrenchment benefits were determined may wish to raise this with their employer.