What Are My Retrenchment Rights?

What Are My Retrenchment Rights?

Since 2023, we’ve been flooded with news about retrenchment and layoffs from multiple companies, and there seem to be no signs of this stopping anytime soon. Whether you’re an employer or an employee, having a basic understanding of how retrenchment should be carried out and the benefits retrenched workers are entitled to under Singapore’s Employment Act will help you ensure both parties are treated fairly.

So, who’s covered under the Employment Act?
All local and foreign employees who work full-time, part-time, temporary or contract workers will be covered. As long as you are an employee working under a contract of service with an employer in Singapore, you are covered under the Employment Act. The only exceptions are employed seafarers, domestic workers and statutory board employees or civil servants. If the Employment Act does not cover you, you are bound to the terms and conditions of your employment contract.

Under the Employment Act, an employer who terminates any employment contract on the grounds of redundancy or reorganisation of the employer’s business, trade or work with no plan to fill the vacancy any time soon is presumed to have retrenched the employee.

As the employer, you have to notify the Ministry of Manpower (MOM) if the retrenched employee has a contract term of at least six months prior to retrenchment.

How do I submit Retrenchment Notifications?
The retrenchment notification must be submitted to MOM within five working days after the employee has been notified about their retrenchment.

You’ll need to provide MOM with the following information when submitting the notification:
• Company name and UEN
• Company contact person’s details
• Name of union & whether the union was consulted (where applicable)
• No. of current employees on the date you are submitting the notification
• Details of employees to be retrenched (including job title, date of effective
   retrenchment, date of notification to employee)
• Payment of retrenchment benefit and quantum
• Provision of employment facilitation assistance

Make sure you have access to the EmPOWER eService on your CorpPass account before attempting the notification. After that, you can submit a retrenchment notification to MOM by logging into their website with your SingPass. Should you fail to submit a retrenchment notification on time, you will be considered to have committed a civil contravention under the Employment Act, and administrative penalties will be imposed. So make sure to submit your retrenchment notifications as soon as your employees are notified! Read the official guide for submitting retrenchment notifications by MOM here.

How are retrenched employees compensated under the Employment Act?
Employees who have served the company for at least two years are eligible for retrenchment benefits. Those with less than two years of service are not entitled to any benefit but may be granted an ex-gratia payment out of goodwill. Depending on the retrenchment benefit mentioned in your employment contract or collective agreement (for unionised companies), your employer may pay you a retrenchment benefit of 2 weeks to 1 month’s salary per year of the retrenched employee’s service.

However, note that these benefits are recommended under the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment and have no legal force. This means your employer may compensate for retrenchment in other ways, although most employers in Singapore abide by these recommendations.

How can I get help if I think I’ve been unfairly retrenched?
Try speaking to your employer first before filing a claim with the Tripartite Alliance for Dispute Management or the Employment Claims Tribunals. You can also raise issues about your retrenchment benefits with MOM through their Labour Relations Department.

Do note that neither MOM nor the Employment Claims Tribunals can compel your employer to pay you retrenchment benefits, which are not required by the law. But, they can speak to your employer and convince them of the benefits of providing appropriate compensation to their employees. If you have been unfairly retrenched—without cause or if you’ve been deprived of contractually entitled benefits—you can make a claim on the basis of a wrongful dismissal regime under Section 14 of the Employment Act or on the basis of a breach of contract. If you are part of a union, you can notify your union of your unfair retrenchment and involve them when discussing compensation with your employer for more leverage.

Ultimately, most of your retrenchment rights are determined by your employment contract before starting work at any company. So, if you have yet to sign such an employment contract, ensure your discussed retrenchment benefits are written in black and white before signing. Some companies may assist retrenched employees in their search for a new job. If that isn’t available, you can seek help from agencies such as the Employment and Employability Institute (E2I) or submit your resume to our experienced consultants at People Profilers to secure your next job—one that will be a perfect fit for your experience and skills!

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