Termination and Retrenchment: Protecting Your Rights

The Straits Time - Singapore Best Law Firm for 2024, in collaboration with Statisca

Legal Guidance for Termination and Retrenchment in Singapore

Understanding Termination and Retrenchment in Employment Law

Termination and retrenchment must be carried out in accordance with the terms of the employment contract, as well as the relevant legislation (which is mainly the Employment Act) and case law. Additionally, the Ministry of Manpower (“MOM”) and Tripartite Alliance for Dispute Management provide various guidelines on responsible termination and retrenchment, which employers are expected to adhere to.

If your employment contract has been wrongfully terminated or you have been unfairly subjected to a retrenchment exercise, our lawyers at Jacque Law can advise you on the options and/or remedies you are entitled to. Likewise, if you are an employer facing allegations of unfair termination or retrenchment, or your employee has breached their employment contract, we can guide and work with you to solve these issues while protecting your interests.

Does Any of the Following Situations Match Your Circumstance?

Termination

Termination refers to the ceasing of employment based on the terms of the employment contract, and this can be done either by the employer or the employee. Termination can occur in the following circumstances: The employer dismisses the employee; The employee resigns; or The contract has reached its termination date.

Adequate notice must be given prior to termination, and the required notice period will generally be provided for in the employment contract itself. If there is no such clause in the contract, the required notice period will depend on the employee’s length of service under the employer.

Employers may terminate employees based on poor performance or misconduct.

Termination due to the employee’s misconduct is a serious disciplinary action and should only be done after a formal internal inquiry is conducted. Examples of misconduct include theft, dishonesty, harassment, breach of confidentiality and insubordination.

Employers should be mindful not to dismiss employees on grounds that may be considered wrongful dismissal. Examples of wrongful dismissal include:

  • Dismissal on discriminatory grounds such as religion, gender, age or disability;
  • Dismissal to punish the employee for exercising an employment right, such as refusing to work overtime;
  • Dismissal based on false or incorrect reasons; and
  • Dismissal to avoid providing the employee with certain benefits that he/she would have otherwise been entitled to, such as sick leave.

Employees may terminate their employment contract by resigning at any time. It is an offence for employers to reject their employee’s resignation.

Retrenchment is the dismissal of an employee on the basis of redundancy or due to any reorganisation of the employer’s profession, business, trade or work. There are guidelines that employers are expected to follow if they are planning a retrenchment exercise:

  • Employers are encouraged to file a notice of retrenchment to MOM if they are planning a retrenchment exercise. Under the Employment Act, this is mandatory for employers with 10 or more employees.
  • Employers are encouraged to pay a retrenchment benefit to employees who have worked for them for at least 2 years. The retrenchment benefit will depend on the amount stipulated in the employment contract. If the contract contains no such provision, the amount must be discussed between the employer and employee.
  • Employees should be notified about their retrenchment as per the terms of their employment contract. MOM further encourages employers to provide longer notification periods so that employees have more time to find a new job.
  • Employers should not adopt discriminatory retrenchment practices which could be considered wrongful dismissal.

We're Ready To Help

When facing the challenges of termination or retrenchment, Jacque Law LLC is committed to providing you with knowledgeable support and guidance. Our dedicated team of employment lawyers is well-versed in the complexities of employment law, ready to assist you whether you believe you’ve been wrongfully terminated or unfairly retrenched. If you are an employer dealing with claims of unfair practices, we will work alongside you to navigate these challenges and protect your rights. Trust us to help you find clarity and solutions during this difficult time.

Commonly Asked Questions

What is the difference between termination and retrenchment?

Termination refers to the ending of an employee's contract, which can occur for various reasons, including misconduct or performance issues. Retrenchment, on the other hand, is a form of termination where the employee is laid off due to the employer's need to reduce the workforce, often for economic reasons or restructuring.

In Singapore, termination must comply with the terms of the employment contract and relevant legislation, primarily the Employment Act. Employers must provide notice or pay in lieu of notice, and termination must be conducted fairly, especially in cases of misconduct or performance issues.

If you believe you have been wrongfully terminated, you should gather all relevant documentation, such as your employment contract and termination notice. Consulting with a lawyer can help you understand your rights and explore options for seeking remedies, such as reinstatement or compensation.

Yes, employers must follow guidelines set by the Ministry of Manpower (MOM) when conducting retrenchments. This includes notifying affected employees, consulting with them about the retrenchment process, and considering alternatives to layoffs. Employers must also adhere to fair employment practices throughout the process.

Yes, employees who are retrenched may be entitled to severance pay, which typically includes a retrenchment benefit based on their length of service. The exact compensation may vary depending on the terms of the employment contract and the company's policies.

If you believe your retrenchment was unfair, you can seek advice from a lawyer to explore your options. You may file a complaint with the Ministry of Manpower or pursue mediation or legal action to address the issue and seek compensation.