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End of Employment

General Guidelines

Singapore has been moving away from at-will employment. Employers must have a just cause for termination, present the employee with a termination letter and act responsibly and fairly. Usually, the employee serves the notice period agreed on the employment contract, but the employer may also choose to pay in lieu or waive the notice by mutual consent.

Valid reasons for dismissal include:

  • Probation period
  • Breach of contract - no notice period is served
  • Misconduct - no notice period is served
  • Poor performance - requires documented proof
  • Redundancy

If the employee termination is due to misconduct, there needs to be an inquiry before taking any action. Misconduct includes employment contract breaches, gross misconduct and absence from work for more than two working days without approval. As a general guide, the following should happen:

  • The employer should inform the employee about the alleged misconduct
  • The employee should be allowed to respond
  • The person to whom the inquiry is presented should be in an unbiased position

Following the Employment Act, the employer cannot suspend an employee from work for longer than a week during an inquiry. Otherwise, they will need approval from the Commissioner for Labour. The employer should pay the employee at least half of their salary during the suspension.

Note: if employment terms are breached by either the employer or the employee, the party at fault must pay compensation instead of notice.

Upon employment termination, employees are entitled to their payslip along with accrued annual leave payments, salary up until their last day, payment in lieu (if applicable) and any other contractual benefits. Employees must be paid on the last day of employment or within three working days (7 days in case of resignation) from the termination date.

Foreign employee

Termination of a foreign employee will result in cancellation of their Employment Pass/S Pass within seven days of the employment coming to an end. The cancellation of the primary Pass voids all other passes connected with it and a 30-day short term visit pass will is issued. Unless the foreign employee has received an alternate valid visa, they should not remain in Singapore once their employment has terminated.

Tax clearance

An employer must notify the Inland Revenue Authority of Singapore (IRAS) via Form IR21 about the employment termination of a foreign national (on a working pass) at least one month before their employment ceases. The employer must withhold any payment due to the foreign national until they obtain tax clearance from the IRAS. The Form IR21 is required to facilitate tax clearance by IRAS before the foreign employee leaves Singapore. It is also applicable for a permanent resident employee who intends to leave Singapore for more than three months or permanently after employment ends.

For Singapore and Permanent Residents, employers have to notify the CPF Board via CPF contributions indicating the date of resignation.

Procedure guidelines

In the case of poor performance, the employer must document the employee's shortcomings and raise matters with the employee in performance reviews. Employers must begin by carrying out a formal inquiry, then consider issuing the employee with one or more formal warnings or disciplinary action before proceeding with the termination. Only if the employee's conduct does not improve can the employer terminate them. The employer must keep accurate and detailed records of the employee's performance reviews as proof of a just reason for dismissal.

The Tripartite Guidelines On Fair Employment Practices require companies to implement a grievance handling mechanism for discrimination complaints. The Tripartite Standard on Grievance Handling sets out the minimum requirements for companies, including:

  • Encouraging employees to set up a grievance handling procedure, carry out a proper investigation, and respond to affected employees
  • Communicating and documenting processes to all employees
  • Specify in the process which the appropriate authority to hear the appeal is and outline a reasonable period taking action
  • Allow employees to take an unresolved grievance to the next level
  • Document discussions and observe information confidentiality
  • Train supervisors and appointed staff to manage employee feedback and grievances and work with the union, if any

According to the Grievance Handling Handbook, companies should have at least two appeal levels and must respond to any complaints within three working days.

Suspension

If an employee is suspended for investigation of alleged misconduct, their garden leave's maximum duration is one week, unless the Ministry of Manpower approves a more extended period.

If the suspension is disciplinary, following the discovery of a misconduct, its maximum duration is one week. Employers are recommended to reserve a contractual right to require an employee not to attend work (with full pay) to give employers more flexibility in such situations.

 

Unfair Dismissal

If an employee believes they have been wrongfully dismissed, they may make claims against their employer with Tripartite Alliance for Dispute Management (TADM) within one month of last day of employment. Managers and executives can only file a wrongful dismissal claim if they have served their employer for at least six months. If the employer is found guilty, the court might impose the employee's reinstatement, including a payment equivalent to their lost wages or compensation, between SGD 20,000-30,000.

Employee protection

Employers are prohibited from issuing a notice of dismissal to a female employee during her maternity leave, or a notice of dismissal which expires during her maternity leave. Employers are also prohibited from dismissing an employee below the prescribed minimum retirement age of 62 on the grounds of age. Certain exemptions do apply (for example, a person working in Singapore under a work pass would not be protected).

Moreover, employees are protected from being wrongfully dismissed for the following reasons:

  • Due to discrimination against the employee's age, race, gender, religion, marital status and family responsibilities or disability
  • For depriving them of benefits or entitlements they would otherwise have earned
  • As punishment for exercising an employment right

 

Redundancy Procedure

Companies employing at least ten people must notify the Ministry of Manpower if five or more employees are made redundant within any six months. There is no statutory process for implementing individual redundancies. However, the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment states that the process should be fair and employers should treat affected employees with respect and dignity. They should further inform employees early when considering redundancy. The Advisory also recommends employers to examine alternatives to retrenchment, including:

  • Shorter working weeks
  • Temporary layoffs
  • Flexible working arrangements
  • Redeployment.

Employers should give a longer notice period than their contractual obligations to enable employees to adjust to their redundancy and look for other work, but no specific timescale is imposed. Employees who have served the company for at least two years are eligible for retrenchment benefits. Those with less than two years' service could be granted a goodwill ex-gratia payment.

The amount depends on what is provided for in the employment contract. If there is no provision, the employer and employee need to negotiate it (usually two weeks to one month salary per year of service) depending on its financial position and the industry).

 

Resignation Procedure

Employees resigning from their job must present their employer with a termination letter, including any notice. Employees can quit at any point, and employers cannot reject a resignation letter. Employees have to serve their required notice or pay compensation to their employer instead of notice.

Singapore recognises constructive dismissal, which entails the employee's forced resignation due to the employer's conduct or omission. If the employee can prove their allegations, they are regarded as dismissed or terminated by the employer.

 

Other End of Employment Guidelines

Notice period

The notice period is usually agreed in the employment contract and is typically one month. However, if the notice period is not specified, 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

The notice period includes the day on which notice is given, and public holidays, rest days and non-working days. Employees can use accrued holiday days within the notice period.

Severance

Although not mandatory, it is standard practice for employers to pay employees between two weeks' to one month's salary per year of service, if the employee has been with the company for at least two years.

This page was last updated on 27th January, 2021. If you have questions about this page, send us an email.