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MOM on the recourse if employers fail to pay retrenchment benefits according to the prevailing norm or employment contract

MOM on the recourse if employers fail to pay retrenchment benefits according to the prevailing norm or employment contract

In the case of unionised companies – if a retrenched employee is not paid benefits according to their collective agreement, the union can bring the dispute to the Ministry of Manpower for conciliation, Dr. Tan See Leng shared.

Employees who are not paid retrenchment benefits according to what was stated in their employment contracts would be able to file contractual claims with the Tripartite Alliance for Dispute Management (TADM).

In the event of unsuccessful mediation at TADM, the claim will be brought to and heard at the Employment Claims Tribunals, Singapore's Minister for Manpower Dr. Tan See Leng has shared.

Minister Tan was responding to Member of Parliament (MP) Louis Chua's Parliamentary query on Friday (21 April 2023), in which the MP had asked about the recourse for retrenched unionised and non-unionised employees who are eligible for retrenchment benefits, but are paid less than the prevailing norm.

As further shared in Minister Tan's response, in the event an employee is not paid the retrenchment benefits according to their collective agreement, their union can bring the dispute to the Ministry of Manpower (MOM) for conciliation, failing which the dispute can be arbitrated at the Industrial Arbitration Court.

If there is no provision of retrenchment benefits in the employment contract or the collective agreement, the quantum is to be negotiated between employees – or the union in the case of a unionised company, and the employer concerned.

In such cases, Minister Tan added, if the employer is unwilling to pay the prevailing norm stated in the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, i.e., two weeks to one month's salary per year of service, the following can be done:

  • Affected employees in non-unionised companies will be able to seek assistance from the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP). Upon this, TAFEP will engage and urge the employer to adhere to the Advisory.
  • In a unionised company, the union or the employer may also seek MOM’s conciliation if the parties are unable to resolve the dispute at the bilateral level.

Median and average retrenchment benefit per year of service

In a separate Parliamentary query, MP Chua requested a breakdown of the median and average retrenchment benefit per year of service for each retrenched worker over the last five years, by industry and unionised & non-unionised companies.

In response, Minister Tan highlighted that employees must have worked at least two or more years with their employer, in order to be eligible for retrenchment benefits.

As stated in the Advisory, the above-mentioned prevailing norm would depend on the financial position of the company, and the industry norm.

On the numbers, Minister Tan shared: "Based on retrenchment notifications received between April 2020 and March 2023, about 90% of eligible employees received retrenchment benefits. Of these employees, about 90% received at least two weeks' salary per year of service."

He added that the quantum of retrenchment benefit varies significantly across industries, but the overall median paid is one month's worth of salary per year of service.

"For employees in unionised companies, the median retrenchment benefit paid is one month's salary per year of service, while that for employees in non-unionised companies is 0.8," he elaborated.


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