The Ministry of Manpower advises employers to carry out any retrenchment exercise responsibly, in consultation with the union (if the company is unionised).
The company should pay all salaries (including unconsumed annual leave, notice pay, etc.) to the employees on their last day of work.
Notice of Retrenchment
As far as possible, affected employees should be informed of the impending retrenchment before notice of retrenchment is given. The duration of notice will depend on what is stipulated in the contract of service. If the notice period is not stipulated, the following will apply:
|Length of service
|Less than 26 weeks
|26 weeks to less than 2 years
|2 years to less than 5 years
|5 years and above
The company is also advised to notify MOM of any retrenchments. To do so, please complete the following online service.
Under the Employment Act, an employee who has been employed in a company for at least two years can request for retrenchment benefits if he/she is retrenched.
As the law does not stipulate the quantum to be paid, the amount is subject to negotiation between the employee and employer. The quantum will also depend on the company's financial position.
An employee who has worked less than three years in a company is not entitled to retrenchment benefits under the Employment Act. However, the company may pay an ex-gratia payment at its discretion.
Both retrenchment benefits and ex-gratia payments do not attract CPF contributions.
- From 1 April 2015, an employee who has been employed in a company for at least two years (previously three years) can request for retrenchment benefits if he/she is retrenched.
Alternatives to Retrenchment
Alternatives to retrenchment for a company with excess manpower include:
- Temporarily laying off employees for a short period of time; or
- Implementing a shorter workweek.
The reduction in workweek should not:
- Exceed two days in a week; and
- Last more than two months.
Based on the Tripartite guidelines agreed between the unions, employers and the Ministry of Manpower, the affected workers should receive no less than half of their gross salary during the days that they are laid off.
A company that is paying its employees half of their salaries during the days that they are laid off could also arrange for them to take half-day paid annual leave on those days.
In doing so, the employees will be able to continue receiving their full-day earnings, including the half-day salary the employer is paying. However, the employees should not be made to consume more than 50% of their earned annual leave for this purpose.
The Ministry of Manpower has published a study on how some companies have successfully managed their excess manpower. These companies have benefited, in terms of preserving a favourable corporate image, and improving staff relations and morale.
Retrenched employees who need help looking for jobs can visit the Singapore Workforce Development Agency's (WDA) Career Centres at the Community Development Councils, Employment and Employability Institute and CaliberLink. The latter is a one-stop service centre to provide training advisory and employment assistance services for PMEs. Visit the WDA website for more information on the Career Centres.