FAQs on retrenchment benefit

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.

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.

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.

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.

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: