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FAQs on retrenchment benefit

Employers and employees can find out more about retrenchment benefit payable to retrenched employees as a result of business difficulties due to COVID-19.

For employers

Do I need to show proof of my financial position (e.g. to employees or MOM) to determine if the retrenchment benefit provided is reasonable?Show

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.

Is it compulsory for employers to pay retrenchment benefit?Show

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, it is to be negotiated between employees (or their union) and the employers.

While retrenchment benefit is not mandated by law, MOM strongly encourages employers to adhere to the advisories, including to provide retrenchment benefit to help affected employees while they search for employment.

MOM and the tripartite partners expect employers to follow the advisory when conducting retrenchments. Employers who conduct retrenchment irresponsibly (e.g. employer is in a sound financial position but chooses not to provide any retrenchment benefit) may be denied future government support or have their work pass privileges suspended.

For employees

What should I do if my employer is severely affected and unable to even provide a lump sum of 1 to 3 months of salary as retrenchment benefit?Show

There is a wide range of support measures provided by the Government, including training grants and financial support, to help employers manage their manpower cost. The Jobs Support Scheme (JSS) provides wage support to employers, helping them retain local employees during this period of economic uncertainty.

As such, even employers in severe financial difficulties would have some funds to provide retrenchment benefit to the affected employees.

You should approach your employer or HR manager to discuss and mutually agree on retrenchment benefit payable based on the circumstances of the company, and their ability to pay. This will ensure that you and your employer come to an amicable settlement.

If there are disputes, retrenched employees can email mom_lrwd@mom.gov.sg for help.

Can my company terminate my employment contract without paying any retrenchment benefit?Show

The advisory provides guidance on when retrenchment benefit is payable during the COVID-19 situation.

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

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.

What should I do if I want retrenchment benefit from my company?Show

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’s no contract, you (or your union) need to negotiate with your employer.

While retrenchment benefit is not mandated by law, MOM strongly encourages employers to adhere to the tripartite advisory on managing excess manpower and responsible retrenchment and the advisory on retrenchment benefit payable to retrenched employees as a result of business difficulties due to COVID-19, including to provide retrenchment benefit to help affected employees while they search for employment.

You should approach your employer or HR manager to discuss and mutually agree on retrenchment benefit payable based on the circumstances of the company, and its ability to pay. This will ensure that you and your employer come to an amicable settlement.

If there are disputes, retrenched employees can get help from the following:

If you You can By when
  • Are a union member in a unionised company

Get your union to help negotiate an agreement with your employer.

If no agreement is reached, the union can refer the dispute to MOM for conciliation.

ASAP
  • Are a union member in a non-unionised company

Contact NTUC at:

They will assess and help you under the Tripartite Mediation Framework if applicable.

ASAP
  • Are not paid retrenchment benefit according to your employment contract
File a claim at TADM. Within 6 months from last day of work.
  • Don’t have retrenchment benefit in your employment contract.
  • But have other statutory or contractual payments outstanding, e.g. salary, notice pay.
    AND
  • Have worked 2 years or more with your company.
File a claim at TADM. Within 6 months from last day of work.
  • Don’t have retrenchment benefit in your employment contract.
  • Don’t have any statutory or contractual payment.
    AND
  • Have worked 2 years or more with your company.

Email mom_lrwd@mom.gov.sg with the following:

  • Your contact details
  • Company name and company contact details
  • Amount of retrenchment benefit received
  • Number of years with your company
ASAP

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