Retrenchment in Singapore: Rights, Compensation and How to Handle it

Getting retrenched is a distressing and awful situation that no one should have to face. Even as Singapore faces a relatively low retrenchment rate, instances of retrenchment are still prevalent in all societies, hiring and firing is a part of any business. A recent example is Singapore Press Holdings (SPH) where the media group laid off five percent of the employees at the end of November. 

While layoffs are something that companies strive to avoid, and is only executed when necessary, the way that they get it done matters immensely. Many netizens were very disheartened and angered to hear of the manner in which travel retailer DFS Group conducted their retrenchment exercise. Workers were given the cut right there, and they were removed from the building by security personnel, with compensation being just a week’s worth of pay per year of their service. DFS Group’s actions are evidently not in order with the Ministry of Manpower’s (MOM) guidelines and sought to provide no remuneration to the employees’ sudden anguish.

Here’s a summary of helpful information — everything that you’ll need to know should you face retrenchment, or to help you prepare for the worst. 

Existing Laws Set To Protect Workers

Notice Period

According to the Ministry of Manpower, companies are expected to give notice periods before the termination of employment. MOM specifies the notice period schedule as such:

Length of Service

Minimum Notice Period

Less than 26 weeks

1 day

26 weeks to less than 2 years

1 week

2 years to less than 5 years

2 weeks

5 years and above

4 weeks

The above are the minimum requirements, but responsible companies are encouraged to adopt a longer retrenchment notice period. According to the Employment Act, companies have to inform MOM within five working days of notifying the employees of their retrenchment. Employers should also make sure to pay all salaries due, as well as provide the necessary retrenchment benefits to the affected workers by their last day of employment. 

Retrenchment Benefits

Employees that have worked for a minimum of two years in the same company are entitled to retrenchment benefits. MOM specifies that companies should provide retrenchment compensation amounting between 2 weeks to 1 month’s worth of salary per year of service, but this differs depending on the company’s financial position. For companies that are part of a trade union, retrenchment benefits are usually stated clearly in a collective agreement. Retrenched workers above 61 years of age are also entitled to receive a one-off Employment Assistance Payment (EAP), which should amount to at least $5,500, or 3.5 months’ worth of salary.

It’s important that you familiarize yourself with the existing rules and regulations. Retrenched workers are entitled to get a minimum compensation of two weeks to one month of salary, based on the number of years of service worked in the company. This applies to all employees with at least 2 years of service. Protect yourself from unfair retrenchment exercises by taking the following steps:

1. Join and be part of a trade union

Being part of a trade union means that you will be able to seek help from the union to negotiate for your rights. Employee benefits that the trade union can help to bargain include; increased annual leave and sick leave, medical and insurance coverage, workplace health and safety conditions, and of course retrenchment benefits. The union can also offer you after-retrenchment support with their training and re-employment services, as well as financial assistance in the form of bursaries and study awards.

2. Seek assistance from NTUC job security task force

The National Trades Unions Congress (NTUC) has set up a new work security taskforce to offer older workers increased protection against retrenchment, with hopes that laid-off workers will have less to worry about when it comes to re-employment.

3. Get support from SkillsFuture SG and Workfare Singapore

Take a look at these following platforms which will be of much use for retrenched workers:

  • Career Matching Services

They provide training workshops and networking events that are free of charge.

  • MyCareersFuture

This platform can be used by retrenched workers to source for new jobs for their re-employment.

  • IBF Careers Connect

They provide job matching services and consultations, so as to help retrenched workers find employment that better suits their needs. 

  • SkillsFuture Mid-Career Enhanced Subsidy

Singaporeans above 40 years old are eligible for this subsidy. This will enable them to attend classes in universities and polytechnics in Singapore with more ease.

4. Do your research on financial planning 

Planning ahead helps you to be prepared for the worst-case scenario; retrenchment. For workers that are serving your notice period, this is the opportunity for you to maximize all the company benefits that you’re entitled to, don’t waste them! Clear your annual leaves, and go ahead with your health screenings and appointments. Set yourself a timeline, and put your emergency funds into good use by prioritizing your expenditure. 

Younger workers are by no means immune to retrenchment, so don’t hesitate to start educating yourself no matter what age you are! Get familiar with the steps you can take to minimize the damage of losing your job and be aware of the retrenchment benefits in which you have the right to demand. For those that are facing retrenchment, don’t let yourself wallow in misery. Instead, chin up and grab all the opportunities you have. Take some time off to not only have a good break but to also engage in courses and workshops to increase your employability; such that you can strengthen yourself both mentally and academically. You need to have a strong mental mindset, so as to pull yourself up from your fallen pit. You’ll never know what the future holds for you — you might end up doing something else that is much more fulfilling for you. Retrenchment is only an obstacle, not a final failure, so keep your head high and stay positive! There are plenty of sources you can seek support from in your journey, so don’t ever give up!

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