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 Manpower ("MOM") has 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 two weeks and one month salary per year of service for employees with two years' of service or more), in accordance the Tripartite Advisory.

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

For unionised Employers 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 Singaporer 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.