Termination
Singapore
Grounds
There is no legal requirement to state the reason for termination, so long as termination is effected in accordance with the express termination provisions of the employment contract. However, if an EA Employee is dismissed without “just cause or excuse,” they may lodge a wrongful dismissal claim with the Tripartite Alliance for Dispute Management (TADM), and thereafter with the Employment Claims Tribunal (ECT) if it cannot be successfully resolved at TADM. EA Employees in a managerial or executive position who have been dismissed with notice (or payment in lieu) must also have worked for their employer for at least 6 months in order to be eligible to bring a claim. The Tripartite Guidelines on Wrongful Dismissal provide examples of dismissals that will be considered to be wrongful, including discrimination, depriving an employee of benefits or entitlements they would otherwise have earned, punishing an employee for exercising their employment rights and providing a false reason for termination, among others.
In addition, an employer has a right to summarily dismiss an employee in exceptional circumstances, including misconduct, provided the employer has first conducted a "due inquiry". It is prudent to set out in the employment contract the circumstances and grounds on which the employee may be summarily dismissed. Suspension is also only possible for EA Employees for the purposes of a due inquiry for a maximum period of 1 week, unless otherwise agreed by the Commissioner, and provided the employee is given at least half pay with the unpaid half being restored if the due inquiry does not find any misconduct on the employee’s part.
Employees subject to termination laws
The EA is the main piece of legislation governing termination of employment of EA Employees. For those employees not covered by the EA (which is rare), termination is governed by the employment contract between the employer and the employee.
Restricted or prohibited terminations
There are restrictions against terminating the employment of female employees on maternity leave, and employees who attain the minimum retirement age but remain eligible for re-employment under the conditions stated in the RRA or on the grounds purely of old age. There is also legislation governing the termination of employees in respect of their trade union activities under the IRA, employees in respect of their national service duties under the Enlistment Act 1970 and employees in respect of health and safety reporting or investigations under the Workplace Safety and Health Act 2006.
Third-party approval for termination/termination documents
None required.
Mass layoff rules
There are no laws prohibiting mass layoffs, but these are subject to any restrictions under the individual contracts of employment and collective agreements, if any. The Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (Advisory) issued by the MOM provides guidance on redundancy situations and, while not legally binding, is commonly followed by employers. In October 2020, the Advisory was updated to encourage employers who are contemplating retrenchments to first take a long-term view of their manpower needs and the need to maintain a “strong Singaporean core.” Following this, retrenchments should generally not result in a reduced proportion of local employees.
Any redundancy exercise should be implemented in consultation with a trade union (if the company is unionized, including if a union has been statutorily recognized).
When undertaking a redundancy exercise, employers who employ at least 10 employees must make mandatory notifications in the prescribed form to the MOM. While there is no legal definition of redundancy in Singapore, in this context, retrenchments are taken to mean dismissal on grounds of redundancy or by reason of any reorganization of the employer's profession, business, trade or work. This requirement to make mandatory notification applies to permanent employees, as well as contract workers with full contract terms of at least 6 months. The MOM must also be notified if employers implement cost-saving measures that affect employees’ salaries.
Employers are obliged to provide information to the Commissioner of Labor in relation to the retrenchment of an employee, if so requested. There will be penalties for non-compliance.
Notice
Employment contracts typically specify a required notice period for termination. For an EA Employee, the length of such notice must be the same for both employer and employee and is determined by the notice provision specified in the terms of the employment contract. In the absence of a specified term, where the employee is an EA Employee, the required notice of termination is dependent upon the employee's length of employment (from 1 day for those employed for less than 26 weeks to 4 weeks for those employed for 5 years or more). A non-EA Employee is not subject to the statutory minimum notice period, and instead is entitled to reasonable notice (usually not less than the statutory minimum notice period) if their employment contract does not set out an express notice period.
Statutory right to pay in lieu of notice or garden leave
Even if not made express in the employment contract, it is possible for either the employer or the employee to make a payment in lieu of notice for EA Employees — a sum equal to the amount of salary which would have been earned by the employee during the required period of notice. For non-EA Employees, the employer or the non-EA Employee may only terminate the employment contracts by paying salary in lieu of notice if there is an express contractual right to do so, or unless there is mutual consent between the parties.
Employees serving their notice period before termination may be placed on garden leave if expressly set out in their employment contract and, if not, only if they provide their express consent. During this time, they should continue to be treated as an employee and receive their full contractual benefits up to their last day with the employer.
Severance
Unless the employment terms expressly provide that severance, retrenchment or redundancy benefits are payable, there is no obligation on the part of the employer to pay non-Part IV EA Employees such benefits, and any retrenchment benefits are to be agreed between the employer and the employee. This is a matter of contract, company policy, subsequent negotiations and financial position, or what has been agreed collectively. When dealing with unionized employees, employers are obliged to negotiate in good faith with the union and may not have absolute discretion to determine the terms of the retrenchment benefits.
Part IV EA Employees are, however, entitled to request for retrenchment benefits if they have worked for their employer for at least 2 years. The amount is subject to agreement between the employer and the Part IV EA Employee where there are no applicable contract, policy or other employment terms.
Pursuant to the Advisory, the MOM strongly encourages payment of retrenchment benefits to employees with at least 2 years’ service ranging from 2 weeks’ to 1 month’s salary per year of service depending on the financial position of the employer and taking into account industry norm. Employers who conduct retrenchment irresponsibly, such as an employer who is in a sound financial position but chooses not to provide any retrenchment benefit, may be denied future government support or have their work pass privileges suspended.
Employees who are eligible for re-employment under the RRA may also have a right to receive an employment assistance payment of 3.5 months’ salary at the gross rate of pay (subject to a minimum of SGD6,250 and a maximum of SGD14,750, which decreases progressively as the employee approaches the maximum re-employment age).