Singapore: Updates on retrenchment benefits during COVID-19

By Seow Hui Goh, Natasha Cheng


Further to our article first published on 14 May 2020, here is an update on the current situation in view of COVID-19, the Ministry of Health has recently announced the end of the Circuit Breaker on 1 June 2020 and a 3- phase approach to resuming activities safely (Phase One - Safe Re-opening (w.e.f 2 June 2020), Phase Two - Safe Transition and Phase Three  - Safe Nation). 

At Phase One, most manufacturing companies can resume full production, subject to the issued guidelines set for the manufacturing sector. Most offices can also re-open, but with tele-commuting adopted to the maximum extent. 

Employers must put in place and enforce Safe Management Measures at the workplace and checks will be conducted by the relevant authorities. The Ministry of Manpower ("MOM") has also issued further guidance on the Safe Management Measures to be adopted at the workplace as updated on 19 May 2020. 

Separately, MOM has also issued an Advisory on retrenchment benefits payable to retrenched employees as a result of business difficulties due to COVID-19 on 20 May 2020. 

The MOM has restated that retrenchment should always be considered as a last resort when managing manpower costs. This is in view of the support measures provided by the government including training grants and wage support such as the Jobs Support Scheme.  

Employers who are in a sound financial position should continue to pay retrenchment benefits in accordance with their existing employment contracts, collective agreements, memoranda of understanding, or the prevailing norm for retrenchment benefit (between 2 weeks and 1 month salary per year of service for employees with 2 years' of service or more),  in accordance to the Tripartite Advisory.  

Employers whose businesses are adversely affected are encouraged to work together with the union (if applicable) or their employees to renegotiate for a fair retrenchment benefit which corresponds with the employees' years of service. 

For unionised employers who are experiencing severe financial difficulties, they are encouraged to negotiate with their unions for a mutually accepted retrenchment package.  For non-unionised Employers, they are encouraged to support the affected employees by providing a lump sum ranging from one and three months of salary instead. 

Lastly, employers are encouraged to support their retrenched employees in gaining new employment through business networks or by utilising the Workforce Singapore Employment and Employability Institute platforms. 

This article is produced by our Singapore office, Bird & Bird ATMD LLP, and does not constitute legal advice. It is intended to provide general information only. Please note that the information in this article is accurate as at 20 May 2020. We will continue to monitor the situation and provide updates on any changes as soon as these are communicated to us. Please contact our lawyers if you have any specific queries.