2.1 Legal requirements
Generally, under the common law, an employer may terminate an employment contract at any time by giving to the employee the required period of notice in writing (see below, point 2.2).
An employer may also terminate the contract without notice, by way of ‘summary dismissal’ on the grounds of an employee’s misconduct. Whether the summary dismissal is justified depends on the gravity of the misconduct of the employee. In general, it has been held that the dismissal is justified in the following instances: disobedience of instructions, habitual neglect, conduct incompatible with duty or prejudicial to the employer’s business.
Employees covered by the Employment Act whose employment is terminated (whether with or without notice) can lodge an application with the Minister for Manpower on the basis that their dismissal is ‘without just cause or excuse’ (see point 2.4 below). Though this is not further defined in the legislation, the Minister of Manpower would usually have regard to whether or not the employer complied with various MOM guidelines in terminating the employment. It is unclear whether employers are required to provide a reason for the termination of an Employment Act employee upon notice.
2.2 Notice periods
The Employment Act (which only applies to covered employees) provides that the following minimum notice periods apply:
- one day if the length of service is less than 26 weeks;
- one week if the length of service is between 26 weeks and 2 years;
- two weeks if the length of service is between 2 years and 5 years;
- four weeks if the length of service is 5 years or more.
The parties may provide in the contract of employment for a notice period longer than the minimum periods prescribed, provided that the length of notice is the same for both employer and employee. Payment in lieu of notice (or part thereof) is allowed.
For employees not covered by the Employment Act, the length of the notice periods for termination and for resignation can be fixed in the contract by agreement between the parties. If no period of notice is fixed, a term of ‘reasonable notice’ will be implied.
2.3 Restrictions on the ability to terminate employment
Dismissal for the following reasons is prohibited:
* age, if the employee is younger than the prescribed retirement age at the time of the dismissal;
* maternity leave;
* national service; or
* trade union activity.
2.4 Remedies
Different remedies are provided in case of wrongful dismissal.
Remedies under statutory law – Employees covered by the Employment Act or trade union members (subject to specific exceptions for executive employees) can lodge an application to the Minister of Manpower within one month of the dismissal alleging that their dismissal is “without just cause or excuse”. If the Minister finds the dismissal without just cause or excuse, he may order the employer to:
* reinstate the employee and pay him/her the wages he/she would have earned had he/she not been dismissed; or
* pay the employee an amount of wages as compensation.
The Minister’s decision is final and cannot be challenged in any court.
Remedies under common law – Employees not covered by the Employment Act (such as, for example, executives) can only claim for breach of contract before the common law courts. The question will be whether the employer terminated in accordance with the contract and common law, not whether the termination was ‘fair’, as such. Damages are limited to the actual loss in wages which the employee could have expected to earn had employment continued until the end of the contract or to the expiration of the designated notice period or what would be regarded as reasonable notice. In this case there is no right to reinstatement.
2.5 Severance payments
There is no statutory entitlement to severance pay upon termination in Singapore (although the Employment Act provides for payment of retrenchment benefits, it is not made compulsory), although there may be an entitlement under the employment contract or a collective agreement. Some larger companies pay severance pay on a policy basis in a redundancy situation, even where there is no legal obligation to do so. There are also tripartite guidelines on the payment of retrenchment benefits.
2.6 Specific requirements applicable to redundancy
There are no specific statutory requirements of note applicable to redundancy in Singapore. However, the MOM has issued non-binding guidelines on the implementation of redundancies, which it strongly encourages employers to follow.