In Singapore, the Employment Act outlines the legal requirements for notice periods during employment termination. The notice period for termination should ideally be as per the contractual terms agreed upon between the employer and employee at the time of employment. This could range from one week to several months.

Notice Period Based on Length of Service

If the employment contract does not specify the notice period, the Employment Act dictates a statutory minimum notice period based on the employee's length of service:

• Less than 26 weeks of service: 1 day notice period
• 26 weeks to less than 2 years of service: 1 week notice period
• 2 years to less than 5 years of service: 2 weeks notice period
• 5 years or more: 4 weeks notice period

Notice in Writing

Notice of termination, by either the employer or the employee, must be given in writing. This helps maintain a record and avoid misunderstandings or disputes.

Salary in Lieu of Notice

An employee who resigns without serving the required notice period may be required to pay their employer compensation equivalent to the salary they would have earned during the notice period. Similarly, if an employer terminates an employee without notice, they must provide compensation equal to the amount the employee would have earned during the notice period.

Probation Period

Probation periods are common in Singaporean employment contracts. During this period, either party can terminate the employment with shorter notice periods, typically 1-2 weeks, or as stipulated in the contract.

Fixed-Term Contracts

Fixed-term contracts automatically terminate upon expiry. In such cases, no notice period or payment in lieu of notice is required by either party.

Severance pay, often referred to as a retrenchment benefit in Singapore, is not a legal requirement under the Employment Act. However, it is a common practice for companies to provide severance packages as financial aid to employees who have been retrenched.

Eligibility for Severance Pay

Employees generally become eligible for severance pay after a minimum of two years of service. Severance pay is primarily applicable in cases of retrenchment, where the job is eliminated due to reasons such as business restructuring or economic downturns.

Calculating Severance Pay

There is no standard formula for calculating severance pay in Singapore. However, a common guideline used by many companies suggests a range between two weeks and one month of salary per year of service. The amount can be influenced by factors such as the employee's length of service, the company's financial position, industry norms, and provisions in the employment contract or collective agreement.

Employment Contract and Collective Agreements

The employment contract may explicitly outline the terms and amount of severance pay an employee is entitled to. In unionized companies, the collective agreement, a negotiated agreement between the union and employer, often specifies the retrenchment benefit amount.

Important Considerations

Employees dismissed due to misconduct or poor performance may forfeit their right to severance pay.

In Singapore, employment can be terminated in several ways. These include Resignation, where the employee voluntarily ends the employment relationship, Dismissal, where the employer terminates the employment contract, usually due to reasons like poor performance or misconduct, Retrenchment, which is termination due to business reasons, such as redundancy, Expiry of Contract, where a fixed-term employment contract ends on the agreed date, and Mutual Agreement, where both the employer and employee agree to terminate the employment contract.

Termination with Notice

Both employers and employees must adhere to the notice period stipulated in the employment contract. If no notice period exists, statutory minimum notice periods apply. Instead of serving the notice period, either party can choose to pay a salary equivalent to the notice period.

Termination Without Notice (For Misconduct)

An employer may dismiss an employee without notice due to gross misconduct. Some examples of misconduct include dishonesty, insubordination, or serious negligence of duties. Before dismissal, the employer must conduct a fair inquiry into the alleged misconduct and give the employee an opportunity to defend their actions.

Retrenchment

Employers may retrench employees to reduce costs or restructure the business. Employees eligible for retrenchment benefits according to the Employment Act are entitled to compensation based on their length of service. Employers must notify the Ministry of Manpower (MOM) if they plan to retrench five or more employees within six months.

Constructive Dismissal

An employee may claim constructive dismissal if the employer creates an intolerable work environment, forcing the employee to resign. The employee needs to prove the employer substantially breached the employment contract.

Procedural Guidelines for Termination

A written termination letter clearly stating the date of termination, reason for termination (if applicable), and details of notice period or salary in lieu should be provided. Ensure the employee has handed over duties, returned company property, and received any outstanding salary or benefits.

Important Considerations

Always refer to the specific terms in the employment contract, as they may provide for longer notice periods or additional severance benefits. Singapore adheres to the principle of fairness. Terminations, especially dismissals, must be justified and carried out in a procedurally fair manner. It's recommended to refer to the Ministry of Manpower's website for the most up-to-date guidelines on employment termination.