Understanding retrenchment in Singapore

Managing a retrenchment, or being retrenched yourself, can be a daunting and stressful process. Luckily, you’re not on your own. In this article, we’re looking into how retrenchment in Singapore works, and where your business can turn for support at this challenging time. 

Retrenchment in Singapore is defined by the Ministry of Manpower as “a dismissal on the ground of redundancy or by reason of any reorganisation of the employer’s professional, business, trade, or work.” In short, it’s a process that involves reducing the size of the workforce. 

Unlike being fired, a retrenchment is not caused by an employee action, such as misconduct, it is simply a business decision. The key driver for retrenchment is usually financial. Retrenchment can affect both permanent and contract employees. 

Employers are expected to act responsibly and fairly towards retrenched staff and must treat them with dignity and respect. Discrimination against employees, or groups of employees, is not allowed – selection must be based solely on the employee’s ability to contribute to future business needs.

As an alternative to retrenchment, businesses may consider reskilling or redeploying employees to other areas of the company. Government support is available to employers who invest in local staff and develop their capabilities.

The Ministry of Manpower recommends that businesses help impacted staff look for alternative jobs as well as promoting the principles of close consultation and transparency. By treating employees fairly and considerately, companies can reduce the risk of legal action and minimise staff dissatisfaction that could lead to brand damage.

As job losses can be a highly emotive subject, businesses need to work to protect their employer brand throughout the process. Supporting retrenched employees into new roles is one way of achieving this. Outplacement services such as Careerminds can work alongside your business to help your staff navigate this transition. 

While retrenchment benefit is not legally mandated, the Ministry of Manpower strongly advises that it is paid to support affected employees. As a rule, employees with at least two years’ service are eligible for retrenchment benefits. Employees who don’t meet this threshold could receive a goodwill payment at the discretion of the business as part of their severance package. 

Retrenchment benefits in Singapore are based on the contract of employment. If no provision for retrenchment is made within the contract, a negotiation process will be necessary. In this case, the employer and the employee (or union) will need to agree on the amount payable. 

As a rule, retrenchment benefits in Singapore are generally calculated at between two weeks’ to one month’s salary per year of service. In unionised companies, one month’s salary is standard. No CPF contributions are payable on retrenchment benefits. 

The Ministry of Manpower advises early communication of potential retrenchments, explaining the business rationale and anticipated retrenchment process. At this stage, it is also recommended that employers outline the help that they are offering to impacted employees. 

Good practice in Singapore retrenchment in 2025 includes: 

• Extending the notice period beyond the statutory requirement
• Training managers to deliver the news sensitively
• Ensuring that HR staff are available to answer questions and take feedback
• Avoiding employees leaving abruptly or having to be escorted off the premises
• Offering counselling where necessary

For businesses employing 10 or more staff, a key step in the retrenchment process is to submit a mandatory retrenchment notification to the Ministry of Manpower. This must be done within five days of the employee being informed. Employees must be informed in line with the terms in their contract of service. The business will also need to consult with the union, if the company is unionised. 

If you’re tasked with managing a retrenchment in Singapore in 2025, there is help available. After all, breaking the news to colleagues that their role is at risk, ensuring the business remains legally compliant, and supporting employee welfare can be stressful for even the most experienced of HR teams.

Careerminds will be by your side throughout the process, reducing any stress, risk, and reputational damage. Your affected employees will be supported throughout the transition to secure meaningful new roles, leaving you to manage the day-to-day running of the business. 

Employees can often be left reeling at the news that their job is being retrenched. To help them adjust and take practical steps towards reemployment, outplacement services can offer: 

• Career coaching: helping employees to identify their strengths, skills, and ideal next steps
• CV writing: enabling impacted staff to tell their career story and present themselves in a way that attracts interest from employers
• LinkedIn profile optimisation: ensuring that the employee’s online presence aligns with their goals
• Interview coaching: preparing individuals to answer interview questions confidently and persuasively
• Online resources: enabling job seekers to access advice, support, and guidance at any time, from anywhere

The Careerminds service matches retrenched employees with their own careers coach, who will provide support until placement – that is, until the individual lands a new role elsewhere. 

Careerminds specialises in providing businesses and individuals with support throughout the retrenchment process. We will work with your HR team to guide your employees through their career transitions, protecting your employer brand and enabling individuals to land new, fulfilling roles. 

If you’re facing a retrenchment in Singapore in 2025, talk to one of our experts today to find out whether we’re the right partner for your business. We’re sure that, with our people-centred approach, cutting-edge technology, and global experience we can ease the load for your HR team. 

Our results speak for themselves – participants land a new role within 11.5 weeks, on average. We have a 95% placement rate and a 99% participant satisfaction rate, and our team looks forward to working with you in 2025.

Jen David

Jen is a careers writer and CV specialist, with many years’ experience writing for leading careers platforms and her own business, CV Shed. She loves to support job seekers in progressing their careers, whether they’re looking to step up the ladder, take a sideways move, or change career entirely. She writes attention-grabbing CVs that show off her clients’ expertise and their value to a business, helping them to secure new roles quickly.

Jen also writes SEO blog content on a wide range of careers topics, for clients in the UK, US, Singapore and Australia. She has produced over 300 articles to date and also edits the work of other writers. She maintains her own blog to support job-seekers with up-to-date, best practice information on CVs, LinkedIn profiles and other related topics, and has a book available on Amazon Kindle, How to write a CV for the modern job market.