Employees with at least two years of service are eligible for retrenchment benefit.
Contract or collective-agreement terms control; where none applies, the prevailing norm is two weeks to one month salary per year of service and the amount is negotiated.
Establish eligibility
Service length affects statutory eligibility for retrenchment benefit. Record start and termination dates and the method used for partial years. (MOM responsible retrenchment guide)
A collective agreement or employment contract can specify the quantum. Keep the exact clause and any definition of salary.
| Situation | What changes |
|---|---|
| Contract or collective agreement sets benefit | Apply the written term |
| At least two years service and no term | Use the norm as a negotiation range |
| Less than two years service | Consider an ex-gratia payment |
| Salary was cut shortly before retrenchment | Use the pre-cut salary for the benefit basis |
Model a range, not a promise
The published norm spans two weeks to one month per year. Show low, midpoint and high scenarios and label negotiation assumptions. (Tripartite advisory on excess manpower)
MOM says the salary before a recent cut should determine compensation. Separate base salary, fixed allowances and excluded items according to the controlling term.
Example: At S$5,200 monthly salary and six years of service, a two-week-per-year illustration is about S$15,600 using half a month for each year; one month per year is S$31,200. The actual term may differ.
Coordinate other payments
Notice pay, salary, leave encashment and retrenchment benefit are different lines. Build a statement that prevents double counting or omission.
The calculation should be explained privately and consistently. Give the employee the inputs, formula, payment date and contact for questions.
- Confirm service dates
- Read contract or collective agreement
- Choose salary basis
- Model the range
- Separate other final payments
- Record approval
- Issue a transparent statement
