As an employer, if you plan to retrench workers, you should:
- Inform MOM before carrying out any retrenchment exercise
- Be responsible in carrying out a retrenchment exercise
- Consult with the union if your company is unionised
- Pay all salaries (including unconsumed annual leave, notice pay, etc.) to your employees on their last day of work
- Inform your affected employees of impending retrenchment before giving the formal notice of retrenchment
Note: Retrenchment is not the only way to reduce excess manpower; there are alternatives you can consider.
Notice of retrenchment
You can submit a notice of retrenchment online.
The notice period depends on what is stipulated in the contract of service. If the notice period is not stated, the following applies:
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
Retrenchment benefits are payments given to employees to compensate them for the loss of employment.
Who is eligible
Under the Employment Act, employees who have served the company
for at least 2 years are eligible for retrenchment benefits.
Amount of compensation
The amount of compensation is not fixed by law. It will have to be negotiated between employee and employer.
Both employee and employer don't have to pay CPF contributions for retrenchment benefits.
Alternatives to retrenchment
As an employer, you have these alternatives to retrenchment, as recommended by the
Tripartite Guidelines on Managing Excess Manpower.
You can ask employees to stop coming to work for a short period. However, you still have obligations towards them:
- You must pay no less than half their gross salary during the days that they are laid off.
- If they take annual leave on their laid off days, then you must pay them half-day pay for each day of annual leave taken. In such an arrangement:
- Employees will get a full day's pay (half-day laid off pay + half-day annual leave pay).
- Employees should not be asked to take more than 50% of their earned annual leave.
Implementing a shorter work week
You can ask employees to work only a few days a week for a short time. This reduced duration should not:
- Exceed 2 days in a week.
- Last more than 2 months.
Read MOM's study on
Managing Excess Manpower - how some companies have successfully managed their excess manpower.
You can visit the following centres for employment assistance:
- Singapore Workforce Development Agency's (WDA) Career Centres at the Community Development Councils.
- Employment and Employability Institute.
- CaliberLink (a one-stop training and employment service centre for PMEs).