SINGAPORE Law and Practice Contributed by: Kelvin Tan, Benjamin Gaw and Lim Chong Kin, Drew & Napier LLC
Advisory on Managing Excess Manpower and Responsible Retrenchment The TAFEP’s Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment strongly encourages employers to take a long-term view of their manpower needs, including the need to maintain a strong Singaporean core, and preserve jobs as far as possible. Retrenchment should be the last resort and, if all other feasible options have been exhausted, should be con - ducted in a responsible and sensitive manner. This includes providing a longer notice period beyond the contractual or statutory requirements, where possible. Employers who have businesses registered in Singa - pore and have at least ten employees must notify the MOM if any employee is notified of their retrenchment, within five working days after such notification. 7.2 Notice Periods Notice Period The Employment Act provides that either party to an employment contract may, at any time, give the other party notice of their intention to terminate the employ - ment. The length of the notice must be the same for both the employer and employee and is determined by the employment contract or, if there is no such pro - vision, the statutory notice period will follow Section 10 (3) of the Employment Act and is up to four weeks, depending on the length of service. The employment may also be terminated by either party without notice by paying a sum to the other party equal to the salary which would have accrued to the employee in lieu of notice. The Tripartite Guidelines on Wrongful Dismissal pro - vide that where the employment contract provides for termination with notice, the employer is entitled to terminate the employment with notice without provid - ing a reason. Formalities The Employment Act requires that notice of termina - tion must be in writing. Even where the Employment Act does not apply, it is usually prudent to give notice in writing.
The notice should generally contain the date of ter - mination, or make it ascertainable by computation. In addition, where an employer is giving notice, it is generally useful to state the employer’s expectations of the employee’s work and conduct up to the last day of work. Severance Payments Generally, there is no statutory requirement for an employer to pay retrenchment benefits/severance payments. However, an entitlement to retrenchment payments/severance payments may be provided in the terms of employment contracts. Employees who fall under Part 4 of the Employment Act will not be entitled to any retrenchment benefit if they have not been in continuous service with their employer for two years or more. Non-Part 4 employ - ees are not statutorily entitled to any retrenchment benefit. The quantum of severance benefits will often depend on the terms of the employment contract or, where the employee is unionised, the collective agreement. Where there is no contractual provision for the quan - tum of severance benefits, the TAFEP’s Tripartite Advi - sory on Managing Excess Manpower and Responsi - ble Retrenchment recommends that employers pay severance benefits of between two weeks’ and one month’s salary per year of service, depending on the financial position of the company and taking into con - sideration the industry norm. The TAFEP’s recommen - dation represents the prevailing norm for the quantum of severance benefits. 7.3 Dismissal for (Serious) Cause An employee may be summarily dismissed for cause, without notice or salary in lieu of notice, if the employ - ee commits a fundamental breach of the employment contract, such as where there is disobedience, negli - gence, incompetence or disloyalty. An employee may also be summarily dismissed if the employment contract provides for the immediate ter - mination of the contract on the occurrence of certain events and such an event occurs. For example, an employment contract may provide that an employer
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