Most Firms in Singapore Continue to Pay Retrenchment Benefits to Eligible Employees: MOM

January 6, 20173:56 pm538 views

Nine in 10 establishments in Singapore continue to pay retrenchment benefits to eligible employees, even after eligibility service period was shortened from 3 years to 2 years. The proportion of establishments giving retrenchment benefits continues to remain high.

In line with shorter employment tenures, the eligibility service period for retrenchment benefits was shortened from 3 years to 2 years which took effect on 1 April 2015.

These findings are according to the Retrenchment Benefits Survey conducted once every 4 years was brought forward from 2017 to 2016 to cover retrenchments conducted in 2015. Key findings from the “Retrenchment Benefits 2015” report released by the Manpower Research and Statistics Department, Ministry of Manpower highlight that for the first time, the survey was expanded to include small establishments with less than 25 employees (10 to 24 employees).

The proportion of these small establishments which paid retrenchment benefits was as high as those with 25 to 199 employees (both at 88%). Majority of establishments continued to pay 1 month of salary per year of service, although more were giving out lump sum payments.

The proportion of establishments that paid retrenchment benefits to eligible employees remained high in 2015 (91%). Large establishments with at least 200 employees (97%) and unionised establishments (100%) were more likely to pay retrenchment benefits.

Employees who have served less than 2 years are not eligible for retrenchment benefits; however 2 in 3 establishments still paid retrenchment benefits to them.

Amid softer economic conditions and ongoing business restructuring, 15,580 workers were laid off in 2015 compared to 12,930 in 2014.

A vast majority (83%) of establishments paid retrenchment benefits by years of service in 2015, with more than half paying 1 month of salary per year of service. Large and unionised establishments tended to pay higher retrenchment benefits.

The proportion of establishments that paid retrenchment benefits in lump sum increased in 2015 (17% up from 7% in 2012). The lump sum quantum was typically 1 to 2 months of salary.

From 1 January 2017, it will be mandatory for employers to notify MOM of retrenchment exercises within 5 working days. This will enable Workforce Singapore (WSG) and its tripartite partners to better assist retrenched locals in finding alternative employment and relevant training.

Together with SkillsFuture and Adapt and Grow initiatives, it will help retrenched workers enhance their employability and seize new job opportunities.


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