Describe what employers must do and should do in a retrenchment, and where to check your rights.
Before you go further, take out your employment contract and your employee handbook and keep both open while you read. If there is a union at your workplace, get the collective agreement as well. The clauses on job cuts usually take up only a page or two across these documents. Most employees don't look at them until the day they need them.
Jasmine works at a company that has just announced a "restructuring". Within minutes, her team's group chat is full of questions. Colleagues want to know whether retrenchments are coming, who will decide who leaves, whether anyone gets a payout, how large it would be and whether it is taxed. No one in the chat can answer. A few pass on what a cousin went through at another company, where it was handled differently. Everyone in the chat assumes one payout will apply to all of them. That is wrong, because each person's payout is set by their own terms.
You can find the answers in three places: the employment contract you signed, guidance agreed by the tripartite partners, and the websites of a few public agencies. What follows is only an outline. Rules and figures are revised from time to time, so confirm anything specific on the Ministry of Manpower (MOM) website.
Under Singapore law, employers above a certain size must tell MOM when they retrench staff. This requirement is called retrenchment notification. It has to be done within a set period, counted from when the affected employees are told.
On the MOM website, look up three details: how many employees a company must have before the duty applies, how many retrenchments trigger it, and the deadline for notifying.
Notification lets MOM and its partner agencies reach retrenched workers with support such as job matching and training help. An employer who notifies can still go ahead with the retrenchment. The notification only puts it on record.
MOM, the National Trades Union Congress (NTUC) and the Singapore National Employers Federation (SNEF) have jointly set out how a responsible employer should deal with excess staff. The current version is the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, published on the MOM website, and you should read it there. It covers three areas: alternatives, fair selection, and notice and benefits.
On alternatives, an employer is expected to look for other ways to save costs before cutting jobs. These include reducing other spending, redeploying or retraining staff, and changing work arrangements. The employer should consult staff or the union while doing this.
On fair selection, the criteria for deciding who is retrenched should be fair and objective. They can be based on business needs and on each employee's skills and performance. They must not discriminate on grounds such as age, race, gender or religion.
On notice and benefits, employers are expected to tell staff as early as they can and to explain things clearly. Retrenchment benefits should follow the advisory, the employment contract and any collective agreement. The advisory also describes a prevailing norm for the size of the benefit, linked to length of service. Check its current wording on the MOM website.
The advisory is guidance and does not have the force of a statute. An employer can fall short of it, but can still be called out for doing so. If you believe you were selected unfairly, or you were not paid what you are owed, the Tripartite Alliance for Dispute Management (TADM) gives advice and accepts claims.
Three things set your payout: your contract, any collective agreement that covers you, and your length of service. Go through them in that order.
Start with the contract. Some contracts state a retrenchment benefit. Many don't mention one at all and set out only a notice period. Note which kind you have.
If your workplace is unionised, check the collective agreement next. It may give you benefits above the norm.
Length of service usually decides whether you qualify for a retrenchment benefit and how much it is. The Employment Act and the advisory both refer to minimum periods of service. The current thresholds are on the MOM website.
As you work through this, keep notice and the benefit separate. Your contract sets the notice period. Your employer can either have you work through it or pay you for it instead, which is called salary in lieu of notice. The retrenchment benefit is a different payment, made to compensate you for losing your job.
A single retrenchment can produce several payments at the same time:
the retrenchment benefit salary in lieu of notice pay for annual leave you did not use your final month's salary any prorated bonus
On your bank statement they may look like one lump sum, but each payment is treated differently. Whether a payment is taxed depends on how IRAS classifies it. Compensation for losing your job gets one treatment. Pay for work done, or for notice, gets another. CPF contributions apply to some of these payments and not to others. If you mix them up, you may think you have more cash than you will actually keep, or you may get an unexpected tax bill the following year.
When Jasmine's company sends out the letters, she writes each payment on its own line. Then she checks them one at a time: tax treatment against the IRAS pages on retrenchment payments, and CPF treatment against the CPF Board's guidance on which payments attract contributions. Both sources are written for employees and are easy to follow. If her figures don't match what she is owed, she goes to TADM for advice and to file a claim. When your own letter arrives, check it the same way.
Everything here is general. The terms that apply to you are in a few clauses of your employment contract and your employee handbook, and in your collective agreement if you have one.
Open your contract now and find the sections on termination, notice and retrenchment. Write down what they say and what they leave out.
Read the retrenchment and notice clauses in your contract. List what you would be entitled to and anything that is still unclear.
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