Termination of employment guide for employers in Singapore
Navigating the intricacies of terminating an employee in Singapore requires a comprehensive understanding of the legal landscape. The Minister of Manpower (MOM) in Singapore provides a framework that employers must adhere to, ensuring fair treatment for all parties involved. This guide aims to provide a detailed overview of the termination process, the types of termination, and best practices to ensure compliance and minimise potential disputes.
What is termination of employment?
Termination of employment occurs when the employer or employee ends the employment relationship. This can happen for various reasons and can be initiated by either party. Understanding the nuances of termination is crucial for employers to handle the process lawfully and ethically.
What are the types of employee terminations?
Employee termination can be broadly categorised into four types: termination with notice, termination without notice, termination due to employee misconduct, and wrongful dismissal. Each type has specific legal implications and requirements under Singaporean law.
Termination with notice
Termination with notice is a standard practice in Singapore. It involves one party notifying the other of the intention to end the employment relationship, followed by a notice period as stipulated in the employment contract or as per the Employment Act. The notice period can vary depending on the length of service and the terms agreed upon. Usually, it is based on this table below:
Length of service
Notice period
Less than 26 weeks
1 day
26 weeks to less than 2 years
1 week
2 years to less than 5 years
2 weeks
5 years or more
4 weeks
Employers must ensure they provide the correct notice period or pay in lieu of notice if immediate termination is required. This approach allows both parties to prepare for the transition and manage their obligations. Detailed information on termination with notice can be found on the MOM official website for termination with notice.
Tip: One of the most critical aspects of job terminations is severance pay. The reason is to ensure a smooth and amicable transition. Learn more about the key aspects of severance pay in Singapore, from calculation methods to tax and CPF implications, in our “Severance pay guide”.
Termination without notice
Termination without notice, often referred to as summary dismissal, occurs when an employer or employee ends the employment relationship immediately without any notice period. This type of termination is typically invoked in cases of serious misconduct or other grave situations where it is unreasonable to continue the employment relationship.
Employers must exercise caution and ensure they have substantial grounds for such termination to avoid legal repercussions. In the absence of just cause, employees may claim wrongful dismissal, leading to potential disputes and compensation claims. More insights on termination without notice can be found on the MOM official website of termination without notice.
Tip: To ensure a fair termination process within your organisation, you may consider giving salary in lieu of notice (notice pay) as a replacement for the notice period. Take our “Salary in lieu of notice guide” to learn the concept, understand the mechanics, and key considerations.
Termination due to employee misconduct
When an employee engages in misconduct, employers may have grounds for termination. Misconduct can include a range of actions such as theft, fraud, insubordination, or breach of company policies. It is imperative for employers to conduct a thorough investigation and provide the employee with an opportunity to respond to the allegations before proceeding with termination.
In accordance with the Employment Act, the employer may suspend the employee from work during an inquiry:
You must not suspend your employee for more than 1 week without the Commissioner for Labour’s approval.
You must pay your employee at least half their salary during suspension.
Documentation of the misconduct and the investigative process is crucial to defending against potential claims of wrongful dismissal. Employers must adhere to the principles of natural justice and ensure a fair process. Detailed guidelines on termination due to misconduct are available on the MOM official website for termination due to employee misconduct.
Wrongful dismissal
Wrongful dismissal occurs when an employer terminates an employee without just cause or fails to follow the proper legal procedures. Employees who believe they have been wrongfully dismissed can file a claim with the Ministry of Manpower (MOM).
More information on wrongful dismissals can be found on the MOM official website for wrongful dismissal.
Common reasons for termination of employment
Several common reasons can lead to the termination of an employment relationship. Understanding these reasons can help employers manage the process more effectively and ensure they comply with legal requirements.
Poor Performance
Terminating an employee for poor performance requires documented evidence of the employee's inability to meet job expectations despite receiving adequate support and opportunities for improvement. Employers should conduct regular performance reviews and provide feedback before considering termination.
Employee Misconduct
As discussed earlier, serious misconduct can warrant immediate termination. Employers must ensure they follow a fair process and document all actions taken.
Employee Retrenchment
Economic downturns, restructuring, or other business needs may necessitate retrenching employees. Employers must provide adequate notice and compensation as required by law. Retrenchment should be conducted transparently and ethically to minimise the impact on employees.
Medical Reasons
When an employee is unable to return to work after an extended medical absence, employers may find that terminating employment is necessary.
Fraud
An employee is terminated for reasons associated with fraud, specifically fraudulent concealment.
Drug or alcohol possessions at work
Being intoxicated or taking drugs in the workplace will interfere with your on-the-job performance
Sexual harassment
Employees who sexually harass or otherwise discriminate against a fellow employee.
Policy violation
Any action or behaviour that contravenes established norms, rules, standards, or laws is considered a violation in the workplace. Violation of safety regulations, immoral behaviour, harassment, discrimination, and non-compliance with employment laws are a few examples of this action.
There are still many other reasons for termination, which can include redundancy, bullying, falsifying records, or a mutual agreement between the employer and employee. Each situation requires careful handling to ensure compliance with legal standards and fair treatment of employees.
How to handle employee termination for foreign employees?
Terminating foreign employees involves additional considerations due to their work permit/pass status. Employers must notify the Ministry of Manpower (MOM) when terminating a foreign employee, cancel their work pass, and ensure the employee has arrangements to leave Singapore if necessary.
Employers should also be aware of the repatriation obligations and any outstanding salary or income tax that must be settled. It is essential to handle the termination process with sensitivity and adherence to immigration regulations to avoid penalties.
Tip: Looking for a guide for your foreign worker's tax clearance? Learn all the information you need to know about “Form IR21 and tax clearance guide” to stay compliant with Singapore’s regulations!
Termination of employment letter template
A termination of employment letter is a formal document that outlines the terms and conditions of an employee's termination. It should include the reason for termination, the notice period (if applicable), the final date of employment, and details about final salary payments, benefits, and any other relevant information.
Here is a sample termination of employment letter template:
[Company Letterhead]
[Date]
[Employee's Name] [Employee's Address]
Dear [Employee's Name],
Subject: Termination of Employment
We regret to inform you that your employment with [Company Name] will be terminated, effective [Date]. This decision has been made due to [reason for termination, e.g., poor performance, misconduct, retrenchment].
As per your employment contract, you will receive [notice period/pay in lieu of notice]. Your final working day will be [Date].
Please arrange to return any company property in your possession by your last working day. You will receive your final salary, including any outstanding leave pay, on [Date].
We appreciate your contributions to the company and wish you all the best in your future endeavours.
Sincerely,
[Your Name] [Your Position] [Company Name]
Other FAQs related to termination of employment
Are employers able to terminate the employee during maternity leave?
Employers are generally prohibited from terminating an employee on maternity leave unless the company ceases operations. Any termination must not be due to the employee's pregnancy or maternity leave.
A pregnant employee is entitled to maternity protection if she has been employed for at least 3 months. This protection ensures that if a pregnant employee is dismissed without sufficient cause or is retrenched, the employer is still obligated to provide her with maternity benefits.
Are employers able to terminate the employee before commencement?
Once an employment contract has been signed, both employers and employees should be prepared to fulfil their contractual obligations. In cases, when they are not able to do so, they should inform the other party as soon as possible. They should try to resolve the matter amicably and explain the reason where possible.
If the employer terminates the contract before the employee started work, the Employment Claims Act does not apply as the employee has not started work.
An employee will not be able to claim notice pay or any compensation under the Employment Claims Act. The employee can consider filing a civil claim in court.
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