Notice of retrenchment
If you have decided and will be going through a retrenchment exercise, you are strongly encouraged to submit a notice of retrenchment. It is mandatory for employers with at least 10 employees who have retrenched 5 or more employees within any 6-month period to notify MOM of the retrenchment exercise.
You should give a longer notice period for your employees if possible as they will need time to prepare and look for new jobs.
The notice period depends on what is stipulated in the contract of service. If the notice period is not stated, as a minimum requirement, the following applies:
| Length of service |
Notice period |
| Less than 26 weeks |
1 day |
| 26 weeks to less than 2 years |
1 week |
| 2 years to less than 5 years |
2 weeks |
| 5 years and above |
4 weeks |
Retrenchment benefits
Retrenchment benefits are payments given to employees to compensate them for the loss of employment.
Who is eligible
Employees who have served the company for at least 2 years are eligible for retrenchment benefits. Those with less than 2 years’ service could be granted an ex-gratia payment out of goodwill.
Amount of compensation
The amount of retrenchment benefit depends on what is provided for in the employment contract or collective agreement (for unionised companies). If there is no provision, it will have to be negotiated between the employees (or their union) and the employer.
The prevailing norm is to pay a retrenchment benefit of between 2 weeks to 1 month salary per year of service, depending on the company’s financial position and the industry.
In unionised companies where the amount of retrenchment benefit is stated in the collective agreement, the norm is 1 month’s salary for each year of service.
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