What is a retrenchment?

A retrenchment is the termination of employment due to redundancy of the role or re-organisation of the business.1

Key reasons for retrenchments include:

  • Redundancy
  • Reorganisation
  • Economic downturn

1Source: Retrenchment guide for PMEs  

Are you concerned about retrenchment? NTUC can help you.


What you need to know

You may reach out to the following entities for guidance:


  • For NTUC union members in unionised companies: your union representatives
  • For NTUC union members in non-unionised companies: TADM@NTUC
  • For non-NTUC union members: TADM

You may also refer to the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (TAMEM) for more information.

Under TAMEM, employers should only proceed with retrenchment as a last resort after considering other possibilities such as:

  • Redesigning the job scope
  • Adjusting work arrangements
    For e.g. Shorter work week with pay reduction or redeployment to other roles without wage cuts during a period of economic downturn

If you are served with notice of retrenchment and/or a separation/settlement agreement, you should:

  1. Read the documents carefully.
  2. Verify all entitlements and benefits stated in the letter and seek clarifications as needed.
  3. Verify if all contractual obligations have been fulfilled and paid out
  4. Put up a request for retrenchment benefit if it is not given to you (subject to company’s agreement*). Refer to the appropriate channels that you may reach out to for advice and assistance, listed in the red box below.
  5. Check your pay slip.
  6. Not sign any document stating that the payment is a full and final settlement if you do not agree with the terms. Note that once you do sign it, you will be bound by the stated terms.
  7. Ask whether you will be given outplacement support. You may also refer to the list of resources available here.
  8. Check whether you are bound by a non-compete clause and, if necessary, ask whether the company will agree to waive it.
  9. Contact your union, NTUC or TADM, if further assistance is required.

⚠️ Your employer should give you sufficient time to review any separation/settlement agreement and to seek advice from the appropriate channels:

  • For NTUC union members in unionised companies: your union representatives
  • For NTUC union members in non-unionised companies: TADM@NTUC
  • For non-NTUC union members: TADM

*More details on retrenchment benefits can be found here.

Retrenchment benefit is not mandated by law.


You are entitled to retrenchment benefits if your employment contract, or a collective agreement which applies to you, expressly states the amount of retrenchment benefits payable.


If the amount is stated to be negotiable, for employees who are under union representation, the union could negotiate with the employer, but the outcome would depend on the employer's current circumstances.


Note: employees who are covered under Part 4 of the Employment Act (namely, workmen earning up to $4,500 and non-workmen earning up to $2,600) are not eligible for retrenchment benefits if they have served the employer for less than 2 years.

Source: Tripartite Alliance for Fair & Progressive Employment Practices: Responsible Retrenchment Practices

Pregnancy does not protect an employee from retrenchment.


However, if your employment is terminated without sufficient cause while you are pregnant, or if you are retrenched during your pregnancy, your employer must pay you the maternity benefits you would have been eligible for.


Maternity benefit is eligible for those who have:

  • Worked for their employer for at least 3 months before receiving the notice of dismissal or retrenchment.
  • Been certified pregnant by a medical practitioner before receiving the notice of dismissal or retrenchment.

This payment is in addition to any retrenchment benefits that may be payable to you.


Source:

Resources available

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