You will be able to describe what employers must and should do in a retrenchment and where to check your rights.
When Jasmine's company announced a "restructuring", the group chat in her team filled with questions within minutes. Would there be retrenchments? Who decides who goes? Is there a payout, and how much? Does it get taxed? Nobody knew, and several people quoted things they had heard from a cousin whose company did it differently. The real answers sit in your contract, in a piece of tripartite guidance and on the websites of a few public agencies, and almost nobody reads any of them until the day they need them.
This lesson gives you the outline, so you know what employers must do, what they are expected to do, and where to check the details for your own case. The rules and figures change, so treat the Ministry of Manpower website as the source for anything specific.
Singapore law requires employers above a certain size to notify the Ministry of Manpower when they retrench employees, within a set period after telling the affected staff. The thresholds, such as the minimum number of employees and the number of retrenchments that trigger the duty, and the deadline for notifying are on the MOM website. Check the current rules there.
The notification lets MOM and its partner agencies offer help to retrenched workers, such as job matching and training support. It does not stop an employer from retrenching. It means the retrenchment is on record.
Beyond the legal duty, MOM, the National Trades Union Congress and the Singapore National Employers Federation have together set out how a responsible employer should handle excess staff. The current guidance is the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment. It is published on the MOM website.
The advisory covers three things you should know about.
Alternatives first. Employers are expected to consider other ways to cut costs before retrenching, such as reducing other expenses, redeploying or retraining staff, or adjusting work arrangements, in consultation with staff or the union.
Fair selection. If retrenchment is needed, the criteria for choosing who is affected should be fair and objective, based on things such as the needs of the business and the skills and performance of the employee, and should not discriminate on grounds such as age, race, gender or religion.
Notice and benefits. Employers are expected to give as much advance notice as possible, to communicate clearly, and to pay retrenchment benefits in line with the advisory, the employment contract and any collective agreement. The advisory describes a prevailing norm for the amount, linked to length of service. Check the current wording on the MOM website.
The advisory is guidance rather than a statute, though employers who fall short can be called out, and if you believe you were selected unfairly or did not receive what you are owed, the Tripartite Alliance for Dispute Management is where employees can seek advice and file claims.
Jasmine's colleagues all assumed the same payout applied to everyone. In fact, what each person gets depends on three things.
The contract comes first. Some contracts state a retrenchment benefit, while many say nothing about it and only set out a notice period. Then there is any collective agreement, if your workplace is unionised, which may set out benefits better than the norm. Length of service matters too: eligibility for retrenchment benefit and its size both usually depend on how long you have worked for the employer, and the Employment Act and the advisory both refer to minimum periods of service. Check the current thresholds on the MOM website.
Notice is separate from retrenchment benefit. Your contract sets a notice period. Your employer may ask you to work through it, or pay you instead, which is called salary in lieu of notice.
A retrenchment can produce several payments at once: retrenchment benefit, salary in lieu of notice, pay for unused annual leave, and the final month's salary and any prorated bonus. They look like one lump sum in your bank account, but they are not treated the same way.
Whether a payment is taxed depends on how IRAS classifies it: compensation for losing your job is treated one way, and pay for work done or for notice another. Some attract CPF contributions and some do not. Get these wrong and you either overestimate the cash you have, or get a surprise tax bill the following year.
Check each payment against the IRAS pages on retrenchment payments and the CPF Board's guidance on which payments attract contributions, which are written for employees and easy to follow. When Jasmine's company issued letters, she listed each payment separately and checked them one by one.
All of this is general. What applies to you is in a few clauses of your employment contract, your employee handbook and, if you have one, your collective agreement. Most people have never read those clauses. Dig out your contract and find the sections on termination, notice and retrenchment, and notice what they say and what they leave unsaid.
Read the retrenchment and notice clauses in your contract and list what you would be entitled to and what is left unclear.
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