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07. Termination of Employment Contracts
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07. Termination of Employment Contracts

Grounds for Termination

Singapore is an at-will employment jurisdiction and employers and employees may terminate the employment relationship in accordance with the employment contract and applicable notice period (and payment in lieu of such notice). In addition to the above, valid grounds for dismissal include misconduct, poor performance and redundancy.

Collective Dismissals

Employers who go through a retrenchment exercise are required to notify the Ministry of Manpower of the retrenchment, if they have at least 10 employees and have retrenched 5 or more employees within any 6-month period.

Employers should also abide by the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment issued by the TAFEP. Each employee should be terminated in accordance with the termination provisions in their respective employment agreements (including the termination notice period or payment in lieu of such notice).

Individual Dismissals

Employees should be terminated in accordance with the termination provisions in their respective employment agreements (including the termination notice period or payment in lieu of such notice).

Is Severance Pay Required?

Employees who have served the company for at least 2 years are eligible for retrenchment benefits.

Those with less than 2 years’ service may be granted an ex-gratia payment out of goodwill.

The MOM generally recommends that employees be paid a retrenchment benefit of 2 weeks’ to 1 month’s salary per year of service, subject the prevailing norm of the industry and financial position of the company.

Separation Agreements

Is a Separation Agreement required or considered best practice?

A separation agreement is not generally required for terminations under Singapore law, but would be considered best practice. Such practice would be more common for senior employees.

What are the standard provisions of a Separation Agreement?

Separation Agreements typically include payments to be made to the employee, waiver of restrictive covenants, confirmation of final settlement of all claims and confidentiality obligations of the parties.

Does the age of the employee make a difference?

Employers are not allowed to dismiss any employee based on an employee’s age.

Employers must offer re-employment to eligible employees who turn 62, up to age 67, to continue their employment.

Are there additional provisions to consider?

Female employees who have been employed by the employer for at least 3 months and are pregnant, may not be dismissed without sufficient cause unless the employer pays them the maternity benefits which they are eligible for.

Remedies for Employee Seeking to Challenge Wrongful Termination

If the dismissal is deemed to be wrongful, the employer may be ordered to reinstate the employee to the employee’s former job and pay the employee for any loss of income due to the wrongful dismissal or pay the employee monetary compensation.

Whistleblower Laws

Singapore law does not expressly provide for specific statutory protection for whistleblowers in the context of employment. However, certain laws of general application may apply to protect whistleblowers. For instance, under the Prevention of Corruption Act of Singapore, witnesses in civil or criminal proceedings are generally not obliged or permitted to reveal an informer’s identity.

Any questions

Ask our member firm Clyde & Co Clasis in Singapore