Update to Retrenchment Policies in Singapore

The Ministry of Manpower (MoM) Singapore has stated that employers in firms with more than 10 employees are required to notify MoM whenever an employee is retrenched. 

This would come into effect November 1 onwards. 

The policy in place before only required employers to notify MoM if five or more employees are entrenched within a six-month period (a retrenchment exercise) – now an employer is all it takes. 

The employer would be given five days to notify MoM via an online platform from the day in which the notice for retrenchment is given to the employee. Employers are to pay all salaries, including unused annual leave, notice pay, etc., to their employees on their last day of work. 

This is part of COVID-19 support measures pushed out by the government, such that the government and relevant offices would be able to step in to assist the affected employee to provide employment and job search support. 

However, one would have to take note that this is for retrenchment/termination, and not for “forced resignation”. 

As many have pointed out, some employers do resort to unscrupulous means such as making work life miserable for the employee in order to cause the employee to “voluntarily” resign instead of the employer having to terminate the employee. 

In Singapore, while there are no exact requirements in law, employers are generally advised to provide retrenchment benefits for employees, especially for those who served the company for more than two years. The employee may be eligible for two weeks to a month worth of salary per year of service, as per stated in the employment contract. Employees who serve below two years may be entitled to an ex-gratia payment, dependent on the goodwill of the employer. 

Resignations do not incur the same costs, as they are classified differently from retrenchments, hence the push from some employers for employees to “resign” instead. On the other hand, a termination also looks worse on record for the employee, even though it may unfortunately be a more common occurrence within COVID-19 times. 

Overall, it is advised that employers take careful considerations whenever they retrench an employee, or conduct a retrenchment exercise. Notifying the stakeholders early would aid affected employees in searching for employment elsewhere as soon as possible. Retrenching is a difficult topic to manage for both employers and employees, but it is only fair for employers to do their best in reducing the negative effects the employee may face.