What Are The MOM Retrenchment Benefits in Singapore? Read If You Think You Might Be Retrenched Soon

mom retrenchment singapore

In the life cycle of a typical Singapore employee, a youth spent hustling and climbing the career ladder often ends in retrenchment in middle age, and ends in driving a taxi until retirement.

Just kidding (or are we?). In any case, retrenchment is up this year. In case it happens to you, you should know about MOM retrenchment benefits in Singapore.


Retrenchments are on the rise yet again

Retrenchment is a risk any private sector employee faces. While waves of retrenchment ebb and flow, a recent news report indicates that retrenchments are back on the rise, with a higher number of retrenchments in the first quarter of 2019. The workers most badly affected included those from production, electronics and service industries like wholesale trade, transportation and storage.

3,230 workers were retrenched in the first quarter of 2019, compared with 2,510 in the last quarter of 2018. That’s a big spike.

There’s also been a spate of high-profile retrenchments that just won’t fade from our memory, including the SPH retrenchment exercise in 2018 that saw their headcount reduced by about 10%.

Then there was the StarHub retrenchment exercise during the same period which saw about 300 full-time employees losing their jobs.

Just a few days ago, Deutsche Bank announced that they’re going to undertake a huge retrenchment exercise affecting their offices in Asia, so the Singapore office is holding its breath.

Singapore tends to be overwhelmingly pro-business, which translates to weak employee rights. There are actually some rules pertaining to retrenchment as set out by MOM, but how much protection do they really offer?

Well, guess what, employers are actually obliged to pay retrenchment benefits to employees who have served the company for at least two years.

The catch is that MOM fails to define what is an acceptable retrenchment benefit, and leaves it up to the company to decide, whether in their contract or by negotiations with the employee.


Typical retrenchment packages in Singapore

According to the MOM, the prevailing norm is to offer retrenchment packages worth 2 weeks to 1 month’s salary per year of services.

That means the market rate for someone who’s worked for a company for 5 years is 2.5 to 5 months’ salary worth of retrenchment benefits.

In practice, a month’s salary for every year of service is considered market rate. This is what people working for unionised companies receive. It is also what StarHub’s recently retrenched staff received, along with additional perks like pro-rated bonuses or an extension of medical insurance and healthcare benefits.

Of course, we all know that how much you actually receive really depends on how big and rich your employer is. People working for big banks can sometimes receive more than one month’s worth of salary per year of service, while those at SMEs must often be content with just a token “see ya” sum.

Workers aged 62 and above are also entitled to a one-off Employment Assistance Payment to keep them afloat as they search for another job. Again, there is no compulsory minimum sum, but the Tripartite Guidelines for Re-employment of Older Workers recommends that they be paid at least $5,500 or 3.5 months’ worth of salary. Note, however, that having worked at a company for less than 30 months could lower the amount of Employment Assistance Payment you receive.


What can you do if you think that you have been unfairly retrenched?

There are a few arguments you can make to the MOM if you think you have been unfairly retrenched.

The first is that you believe you have been deprived of employee benefits you think you should have received. If you worked for the company for less than two years, you are not even entitled to retrenchment benefits so you’re out of luck. However, if you’ve served at least two years and did not receive a retrenchment package or believe you’re being shortchanged, you can lodge a complaint with the MOM.

You can also complain that you were not given adequate notice, although to be honest the required notice period isn’t very onerous in the first place.

If you have worked there for at least 5 years, your employer must give you at least 4 weeks’ notice of your retrenchment. Those who’ve worked there for at least 2 years but less than 5 years get a measly 2 weeks’ notice. If you’ve worked there for less than 2 years but more than 26 weeks, your employer can legally retrench you with a pathetic 2 weeks’ notice. And for those who’ve been employed for under 26 weeks, you can be sent packing with just one days’ notice.

Years worked Recommended notice period
At least 5 years 4 weeks 
2 to 5 years  2 weeks
Between 26 weeks and 2 years  2 weeks 
Under 26 weeks  A day (or less)

Another possible complaint you can make is that you were dismissed on invalid grounds. Retrenchment is considered a valid reason for dismissal; however, if you believe that the real reason you were retrenched was discrimination based on grounds like age, race, gender or religion, you can try lodging a complaint. However, in the event of a mass retrenchment exercise, it’s pretty unlikely you can claim that you were being singled out.

In reality, not many people complain to MOM about unfair retrenchment, at least according to local news reports.

But that does not mean that retrenched workers are being treated fairly. There is evidence that some companies carry out disguised retrenchment exercises, which lets them lay off workers without having to pay them a fair package.


Next steps after retrenchment

Getting older does not mean life gets any easier, at least on the employment front. According to many news reports, middle aged workers aged 40 and above are the most vulnerable to retrenchment.

If you find yourself retrenched, your next steps will depend to a large extent on your financial situation and your household’s other sources of income. Older workers who have adequately planned for retirement might be able opt for an early retirement, especially if their retrenchment packages are generous enough.

But if the lost income is something your household cannot do without, your first step will be to buffer against income loss by taking up part-time work, such as Grab driving or tuition.

Your next step should be to make yourself more employable, such as by taking up WSG certification courses that can facilitate a mid-career switch to an industry relevant to the times.

Now is also the time to give yourself the best possible chance at being considered for new job openings, so make sure you update your resumé, get in touch with recruiters and network like your life depends on it.

Have you ever been retrenched? Share your survival tips in the comments.


Photo by Matthew Henry on Unsplash