Guide to Employee Termination in Singapore
A clear guide to employee termination in Singapore covering fair reasons, notice, misconduct, and retrenchment procedures for 2025.
Ending an employment relationship in Singapore is a process governed by both statutory rules and contractual obligations. Employers are required to follow the Employment Act, Tripartite Guidelines, and any company-specific policies to ensure that termination is fair, transparent, and legally compliant.
While Singapore maintains a flexible employment framework, this flexibility is balanced by safeguards that protect employees from wrongful dismissal, discrimination, and unfair retrenchment. Understanding these rules is critical to comply with the law as well as to preserve workplace trust and minimise dispute risks.
This guide provides a detailed overview of termination laws and procedures in Singapore including the legal grounds for dismissal, notice requirements, retrenchment obligations, and employee entitlements upon exit.
It also outlines how businesses can manage exits respectfully and avoid common pitfalls that lead to MOM investigations or employment tribunal claims.
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Legal Grounds For Termination In Singapore
Singapore’s employment law recognises several lawful ways an employment relationship may come to an end. The rules differ slightly depending on whether termination is initiated by the employer or employee, or if it occurs through mutual agreement.
However, dismissals must always be fair, reasonable, and non-discriminatory, as required by the Tripartite Guidelines on Fair Employment Practices and the Tripartite Guidelines on Wrongful Dismissal (administered by TAL).
1. Termination with Notice
No specific reason is required for this type of termination, as long as it’s not motivated by discriminatory or retaliatory intent.
The employer must pay all wages and benefits owed up to the last day of employment, and provide notice or salary in lieu of notice if the employee is not required to serve the period.
Employers should still document reasons for the decision, particularly if the employee has worked for the company long-term, to avoid disputes or claims of wrongful dismissal.
2. Termination without Notice
An employer may terminate employment immediately (without notice) if there is gross misconduct.
Misconduct can take many forms depending on the role and context, but common examples include:
Theft, fraud, or dishonesty
Physical assault, harassment, or threats
Serious insubordination or refusal to follow lawful instructions
Negligence causing significant loss or damage
Breach of confidentiality or company policies
The company’s staff handbook or employment contract should clearly list examples of misconduct to help ensure transparency.
Similarly, an employee may resign without notice if the employer has failed to meet key contractual or legal obligations, such as non-payment of salary or unsafe working conditions.
All summary dismissals must follow a due inquiry process under Section 14(1) of the Employment Act.
Before dismissing an employee for misconduct, the employer must:
Investigate the allegations – gather all relevant facts, documents, or witness statements.
Notify the employee – of the alleged misconduct and allow them to respond.
Conduct a fair inquiry – this may involve a disciplinary hearing or written explanation.
Decide on disciplinary action – based on evidence and proportionality.
If the inquiry confirms misconduct, the employer may terminate without notice or payment in lieu.
If the allegations are unsubstantiated, the employee should be reinstated or allowed to resign voluntarily.
To ensure fairness, employers should document the reason, follow due process, and confirm the employee’s right to appeal.
Employers are however encouraged to consider other disciplinary measures when appropriate, such as written warnings, suspension without pay (for up to one week), or reassignment.
Dismissal should only be used when trust has irreparably broken down or when continued employment would seriously harm the business.
3. Termination by Mutual Agreement
Employers and employees may also mutually agree to end the employment contract.
This typically happens when both sides find it beneficial to part ways, for instance, through a settlement or separation agreement. Such agreements should clearly outline the termination date, final payments, and any waiver of future claims to avoid future disputes.
4. Wrongful and Unfair Dismissal
A dismissal is considered wrongful if it breaches contractual terms or contravenes the Tripartite Guidelines on Wrongful Dismissal. Examples include:
- Termination on discriminatory grounds (e.g. age, gender, nationality, religion, marital status)
- Dismissal due to pregnancy or maternity leave
- Retaliation for whistleblowing, reporting misconduct, or exercising employment rights
Employees who believe they have been wrongfully dismissed for misconduct can file a claim with the Tripartite Alliance for Dispute Management (TADM) within one month of termination.
If mediation fails, the case may proceed to the Employment Claims Tribunal (ECT) for a binding decision, which may order reinstatement or compensation.
In many cases, disputes arise because employers fail to give the correct notice period or notice pay, breaching the terms of the employment contract.
Singapore’s framework allows flexibility for employers while maintaining fairness for employees.
As a rule of thumb, termination is lawful when it’s justified, documented, and procedurally fair.
Notice Periods and Final Salary Obligations
In Singapore, the length of notice required to terminate employment depends on the employment contract or, if none is stated, the minimum periods set out in the Employment Act.
Employers must also ensure that all outstanding salary, leave pay, and benefits are properly settled within the timelines prescribed by law.
Singapore law places strong emphasis on prompt and accurate payment of all dues at the point of termination.
Failure to comply can expose the employer to financial penalties and reputational risk, even if the dismissal itself was lawful.
Notice Period Requirements
Notice periods can be set by mutual agreement between employer and employee, typically in the employment contract.
If no period is specified, the Employment Act provides the following minimum statutory notice periods:
The notice period begins the day after notice is given.
Employers or employees may also choose to terminate employment immediately by paying salary in lieu of notice (known as “notice pay”).
Employers should confirm that termination dates, handovers, and salary calculations align with the notice period to avoid disputes later.
Salary in Lieu of Notice
Instead of requiring an employee to serve their notice, employers may pay the full salary equivalent to that period.
This includes the basic monthly wage and any fixed allowances. Variable bonuses or discretionary payments are typically excluded unless contractually guaranteed.
If an employee leaves without giving due notice, the employer may deduct the equivalent amount from their final salary, but only if this right is stated in the contract and consistent with the Employment Act’s limits on lawful deductions.
Final Salary Payment
The timing of final salary payment depends on who initiated the termination:
- If the employee resigns: all salary and entitlements must be paid by the next regular payday.
- If the employer terminates employment: all final payments must be made within three working days of the last day of work.
These payments must include:
All earned salary up to the termination date,
Unused annual leave converted to cash,
Overtime pay (if applicable), and
Any contractual benefits due.
Delays in salary settlement can result in MOM penalties and possible claims under the Employment Claims Act.
Deductions and Set-Offs
Employers may only make deductions permitted under the Employment Act. For example, recovery of unreturned company property, advance salary, or notice period shortfall.
Any deduction must be reasonable, documented, and consented to in writing, except where specifically authorised by law.
Retrenchment and Redundancy
Retrenchment, commonly referred to as redundancy, occurs when an employee’s role becomes unnecessary due to business restructuring, cost-cutting, or changes in technology or operations.
Retrenchment should always be conducted fairly, transparently, and with compassion, as improper handling can lead to reputational damage or claims of unfair treatment.
The key is clear documentation, timely communication, and compliance with MOM’s reporting and advisory frameworks.
What Qualifies as Retrenchment
A retrenchment is recognised when an employer terminates permanent employees due to business needs, such as:
- Economic downturns or financial losses
- Business closure or relocation
- Mergers, acquisitions, or restructuring that eliminate roles
- Adoption of automation or outsourcing reducing manpower
It does not include dismissal for poor performance or misconduct. Those follow different legal procedures.
Notification and Consultation Requirements
Employers must notify MOM of retrenchments using the mandatory retrenchment notification form.
As stated on MOM’s retrenchment page, employers are required to submit the notification within five working days after affected employees are informed. Employers with 10 or more employees must notify MOM of retrenchments. Smaller employers are strongly encouraged to notify as good practice.
Early consultation, objective selection criteria, and consideration of redeployment or training remain essential.
Additionally, employers are strongly encouraged to:
- Consult employees early, explaining business reasons and selection criteria.
- Use objective criteria for selection, such as performance, skills, and experience, rather than age, nationality, or family status.
- Consider redeployment or training before resorting to retrenchment.
Employers with unionised workforces must also consult the relevant union at least one month in advance of the planned retrenchment.
Failure to notify MOM may result in administrative penalties or affect future work pass privileges.
Notice and Payments
Employees affected by retrenchment are entitled to their contractual or statutory notice period, or salary in lieu of notice, as stated under the Employment Act.
They must also receive all final payments, including salary, unused annual leave, and other contractual benefits, within three working days of their final day.
While severance pay is not legally mandated for all employees, the Tripartite Guidelines recommend that employers provide retrenchment benefits as a gesture of goodwill, especially for employees with at least two years of service.
The common market practice is to offer between two weeks to one month of salary per completed year of service, depending on company policy and financial position.
Responsible Retrenchment Practices
The Tripartite Partners (MOM, NTUC, and SNEF) urge employers to:
- Communicate decisions face-to-face and with empathy;
- Offer career transition support or job-matching assistance; and
- Treat foreign and local employees fairly and consistently.
Re-Employment and Redeployment Options
Before finalising retrenchment, employers should consider redeployment to alternative positions or re-employment of mature workers where possible.
Under the Retirement and Re-Employment Act, employees aged 63 and above who meet performance and health standards are eligible for re-employment up to age 68, unless there are valid business reasons not to offer it.
Severance Pay and Final Entitlements
While Singapore’s Employment Act does not legally require severance or retrenchment pay in every case, the Tripartite Guidelines strongly recommend fair compensation for employees affected by redundancy or large-scale restructuring.
Providing reasonable severance payments helps maintain goodwill, demonstrate corporate responsibility, and reduce the risk of disputes or reputational harm.
When Severance Pay Applies
Employees are generally entitled to severance pay only in retrenchment or redundancy situations, not for termination due to misconduct, poor performance, or voluntary resignation.
Under the Tripartite Advisory on Managing Excess Manpower, employees who have served at least two years are recommended to receive a retrenchment benefit, the amount of which may depend on the organisation’s financial position and employment terms.
For employees with less than two years of service, companies are encouraged, though not required, to offer an ex gratia payment out of goodwill.
Typical Severance Formulas
While not fixed by law, the market norm in Singapore is:
- Between two weeks and one month’s salary per completed year of service.
Unionised companies must adhere to the collective agreement negotiated with the union, which typically specifies the exact calculation method and payout range.
Employers facing financial difficulty may offer lower amounts, provided they are transparent with employees and the union (if applicable) about the business rationale.
Final Salary and Other Payments
All employees, regardless of reason for termination, must receive:
Outstanding salary up to the last working day,
Payment for unused annual leave,
Any overtime pay or variable allowances due, and
Reimbursement for approved business expenses.
Under Section 22A of the Employment Act, employers must make these payments within:
3 working days from the date of termination if the employer ends the contract, or
By the next payday if the employee resigns voluntarily.
Failure to comply may lead to penalties, including MOM investigations and Employment Claims Tribunal (ECT) proceedings.
Tax and CPF Obligations
Employers must ensure all final payments are properly reported and statutory deductions are made before releasing funds. This includes:
- Central Provident Fund (CPF) contributions up to the final day of employment,
- Tax clearance (Form IR21) for foreign employees, to be filed at least one month before termination, and
- Withholding of final salary for foreign workers until the Inland Revenue Authority of Singapore (IRAS) issues tax clearance.
Failure to complete CPF or tax clearance obligations can result in fines and affect the company’s work pass privileges.
Record-Keeping and Documentation
Employers must retain written documentation of all termination and payment details, including payslips, notice letters, and severance calculations, for at least two years under MOM requirements.
This helps safeguard the organisation during audits or tribunal proceedings.
While severance pay in Singapore is largely guided by practice rather than statute, following Tripartite and MOM recommendations ensures that the process remains fair, compliant, and aligned with Singapore’s emphasis on responsible employment practices.
Wrongful and Unfair Dismissal Claims
Singapore law protects employees from being unfairly dismissed, particularly in cases where the termination lacks just cause or was carried out in bad faith.
Under the Employment Act and the Tripartite Guidelines on Wrongful Dismissal, all employees, regardless of salary level, are covered if they are dismissed unfairly.
What Constitutes Wrongful Dismissal
A dismissal may be considered wrongful if the employer ends the contract for reasons unrelated to the employee’s conduct or performance, or without following fair procedures.
Common examples include:
Discriminatory or retaliatory reasons, such as dismissal based on gender, race, age, religion, marital status, or union membership.
Pregnancy-related dismissals, where an employer terminates a pregnant employee without sufficient cause or prior approval from the Ministry of Manpower (MOM).
Retaliation for exercising employment rights, such as filing a salary claim or whistleblowing.
Constructive dismissal, where the employer’s actions (e.g. unfair treatment, pay cuts, or demotion) force the employee to resign.
MOM specifically notes that dismissing an employee “without just or sufficient cause.” For example, due to personality clashes or preference for a replacement, qualifies as wrongful dismissal.
Fair Dismissal and Due Process
To defend a dismissal as fair, employers must demonstrate that:
- There was a valid reason for termination (e.g. poor performance, redundancy, or misconduct), and
- The employee was given a chance to respond to any allegations or performance concerns before a final decision was made.
For dismissals related to misconduct, the employer must first conduct a due inquiry, an internal investigation allowing the employee to explain their side, before termination.
Skipping this step can lead to a finding of wrongful dismissal, even if the underlying reason was valid.
Remedies for Wrongful Dismissal
Employees who believe they’ve been wrongfully dismissed can file a claim with MOM within one month of termination. MOM may refer the case to the Employment Claims Tribunal (ECT) for resolution if mediation fails.
If the tribunal finds that the dismissal was wrongful, the employer may be ordered to:
Reinstate the employee to their former position, or
Pay compensation, which typically includes lost wages and other damages as deemed appropriate.
Employers who are repeat offenders or found to have acted in bad faith can face additional sanctions or reputational harm under MOM oversight.
Preventing Wrongful Dismissal Claims
To minimise legal risk, employers should:
- Keep written records of performance discussions, warnings, and termination reasons.
- Ensure consistent application of policies across all employees.
- Provide clear notice periods and settlement documentation.
- Treat employees with respect and transparency throughout the dismissal process.
Following Tripartite and MOM guidelines not only reduces legal exposure but also upholds the company’s reputation as a responsible employer.
How Beyond Borders HR Can Help
Managing employee terminations in Singapore involves balancing compliance with empathy, ensuring that legal obligations are met while maintaining fairness and transparency.
From due inquiry procedures to severance calculations and MOM reporting, even small oversights can lead to costly disputes or reputational risk.
At Beyond Borders HR, we help international companies handle these challenges with confidence.
Our team provides end-to-end support across:
Compliance reviews to ensure your dismissal procedures meet MOM and Tripartite standards.
Case-specific guidance on lawful grounds for termination, redundancy, or contract expiry.
Documentation and process support, including drafting notices, inquiry reports, and settlement letters.
Cross-border coordination for multinational workforces, ensuring local labour laws are consistently applied across jurisdictions.
Our goal is to simplify complex employment laws so your organisation can make informed, compliant, and fair decisions, wherever your people are based.
If you need tailored support with employee termination in Singapore or across Asia, get in touch with Beyond Borders HR for expert guidance.
Need help handling Singapore dismissals with confidence? Chat to Beyond Borders HR for expert guidance.
