Retrenched? Here’s what you need to know about your rights in Singapore

• In Singapore, a company may retrench workers if there is genuine redundancy.

• Affected workers should receive written notice of the termination / retrenchment or salary in lieu of notice, final salary, and unused annual leave where applicable.

• Retrenchment benefits are not mandated by law in Singapore; your entitlement depends on whether they are provided for in your employment contract, collective agreement, company policy, or union negotiations.

• For NTUC union members, especially those in unionised companies, the union can provide added support by representing members in negotiations and connecting affected workers to job transition support through NTUC’s ecosystem, including NTUC’s e2i (Employment and Employability Institute).

While there’s no law in Singapore that can prevent retrenchment, Singapore guidelines encourage companies to make retrenchment a last resort.

Therefore, knowing your legal rights during a retrenchment can help prevent you from being shortchanged on retrenchment benefits, final salary, and other legal obligations.

NTUC union members will receive additional protection through their union, including representation in negotiations with employers and essential transition support.

Is the retrenchment legal?

Retrenchment generally means a termination of employment due to redundancy or surplus manpower.

The Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (TAMEM) states that an employer who terminates an employment contract with no plans to fill the vacancy in the near future is presumed to have retrenched the employee.

This raises the million-dollar question: Can companies in Singapore legally retrench workers due to the adoption of artificial intelligence (AI)? Yes — provided the AI adoption genuinely results in certain roles becoming redundant.

NTUC Legal Department Director Patrick Tay explained: “The law does not draw a distinction between retrenching workers due to AI and reasons apart from AI. Instead, we need to consider whether the roles were made redundant in determining whether the termination was a retrenchment; and, consequently, whether retrenchment benefits may be payable.

“In other words, if companies have exhausted all other feasible options, they are permitted to, as a last resort, retrench workers due to AI adoption. However, they must comply with the applicable legal requirements in their retrenchment exercises.”

Citing TAMEM, the NTUC Assistant Secretary-General emphasised that companies must first try to redeploy workers or adjust work arrangements before retrenching them.

NTUC Legal Department Director Patrick Tay (right) at a LawWorks Legal Primer in January 2026, where he shared what workers should look out for when a company restructures or closes.

Are you affected by the retrenchment?

According to the Ministry of Manpower, retrenchment can affect permanent staff and contract workers with terms of at least six months.

Mr Tay said the company must also inform the ministry of the retrenchment exercise if it employs at least 10 workers. This should be done five days after notifying affected employees.

This way, employees can be assisted by relevant agencies, such as NTUC, to find new jobs or boost their employability through upskilling.

How should a retrenchment be carried out?

TAMEM states that if retrenchment is inevitable, it should be carried out in a responsible and sensitive manner.

Your employer should provide a written retrenchment notice stating that you have been retrenched, highlighting your legal entitlements following the retrenchment.

You should also be given a notice period; otherwise the statutory default notice periods under the Employment Act apply.

Alternatively, the employer can choose to end the employment immediately but must pay the salary the worker would have earned during the required notice period.

This means that if your contract requires four weeks’ notice, you should receive an amount equivalent to four weeks’ salary.

Singapore law is very clear that CPF contributions must be paid on wages earned during the notice period, but not on salary in lieu of notice.

Mr Tay added that your employer may also provide you with a separation agreement (including a one-off ex gratia or goodwill payment) for the full and final settlement of all claims.

He also suggests obtaining independent legal advice before deciding whether to accept the terms, as you will be legally bound to the terms once you sign the agreement.

What legal payments are due to you upon retrenchment?

Mr Tay shared that there are two types of payments you could receive upon retrenchment, depending on your employment contract and eligibility for retrenchment benefits.

First, you must be paid your final salary (including the amount earned during the notice period) and any amounts for unutilised benefits or unconsumed annual leave by the last day of employment.

Second, you may be eligible for retrenchment benefits, which are payments to tide you through the period of unemployment.

Are you eligible for retrenchment benefits?

To be clear, retrenchment benefits are not mandatory under Singapore law.

Your eligibility for retrenchment benefits mainly depends on:

• your length of service;
• whether retrenchment benefits are provided for in your employment contract;
• whether your company is unionised;
• whether a collective agreement (CA) between the union and your company covers retrenchment benefits;
• your union membership status.

For a start, employees with two years of service or more may be eligible for retrenchment benefits, while those with less than two years of service may be granted an ex gratia payment.

Mr Tay added: “Where the company is unionised and there is a CA in force, which specifies the quantum of retrenchment benefit, that sum should be paid to retrenched workers/members.”

As the CA is a legally binding document, Mr Tay said companies must pay retrenchment benefits in accordance with it. Otherwise, unions may seek the Industrial Arbitration Court’s help to compel employers to pay up.

In the case where the company is unionised but there is no CA or the retrenchment benefit in the CA is to be negotiated, Mr Tay said that unions will help negotiate the payment based on the prevailing norm of between two weeks and one month per year of service.

Where the company is not unionised, the union has no legal right to represent workers in relation to retrenchment benefits or any other related terms.

Other NTUC union member benefits

As an NTUC union member, you will also receive other union-negotiated job transition support, such as access to NTUC’s e2i (Employment and Employability Institute) for career coaching and job placement assistance (including curated job fairs) and a training allowance to boost your employability.

Are you being retrenched or fired?

Retrenchment is one of the reasons for termination of an employment contract, but it’s not the only one you should be aware of.

Singapore law also allows employers to terminate employees for reasons such as poor performance or misconduct. This is different from retrenchment.

Poor performance is generally handled as termination with notice and must be substantiated. Misconduct is more serious and may justify termination without notice only after an inquiry is conducted and misconduct has been established.

But why should the type of termination matter? Either way, you still have no job at the end of the day.

Here’s why: Knowing the difference between being retrenched and being terminated for other reasons determines whether you may be eligible to receive retrenchment benefits to tide you over to the next job (i.e. provided retrenchment benefits are payable) or leave with just the final salary.

If having the retrenchment payout is important to you, an NTUC union membership may help you negotiate a better retrenchment benefit.

Worried about getting retrenched? Become an NTUC union member today to get the representation, protection and support you need.