Employment in Singapore: Advocating Equal Treatment, Ensure Legal Compliance

ADCO Law

Overall, the fundamental principles currently shaping employment law in Singapore are commercial considerations to create a business-friendly environment whilst balancing employee protections to foster equal opportunities for all workers.  

Singapore has traditionally been known as an “employer-friendly” jurisdiction, originating from the need to create a stable workforce and attract foreign investment in the early years of the country’s independence. At its core, Singapore is and remains an “at-will” employment jurisdiction providing employers with flexibility in managing their manpower needs. In recent years, however, the government has sought to introduce more employee protections, generally introduced as “soft measures” in the form of guidelines issued by the Ministry of Manpower with which employers are expected to comply. These include guidelines on fair employment practices, managing workplace grievances and most recently, flexible work arrangements.  

In April 2024, the government announced that it would introduce guidelines on flexible work arrangements, citing the need to provide flexibility to employees to accommodate caregiving roles amidst an aging population. Such flexible work arrangements would allow more caregivers (such as parents or people taking care of young children) to continue working if they wish. Under these guidelines, employers will be required to have a process for employees to submit requests for flexible work arrangements (e.g., flexible hours, remote working, etc) and evaluate such requests. These guidelines, whilst not statutory, have been described as “mandatory guidelines”; the Ministry of Manpower has indicated that they may issue warnings to employers who refuse to comply with the guidelines.

Singapore has legislated, under the Employment Act 1968, various key employment terms, which must be included in all employment contracts. These include the description of the employee’s main duties and responsibilities, salary period, duration of employment as well as other statutory entitlements such as annual leave and medical benefits.

In addition to the statutory requirements, we also recommend that employers consider including confidentiality obligations (especially if employees routinely handle confidential information) and garden leave provisions (depending on the employee’s seniority and access to trade connections).

Employers should be careful when terminating employment in Singapore. Employer must understand and comply with the termination provisions of employment contracts, which typically provide for termination with notice unless the employee commits misconduct entitling summary dismissal (i.e., termination without notice). Apart from that, the employee must consider the employee’s profile. For example, it is an offense for an employer to issue a termination notice during an employee’s maternity leave. The employer must also ensure that the termination is not discriminatory, for example, due to the employee’s gender or age. Employers are not required to provide reasons for termination with notice, but if any reason is cited (e.g., poor performance), then the reason must be substantiated; otherwise, it may amount to wrongful dismissal. We therefore recommend that employers obtain legal advice before initiating any termination exercise, thereby reducing the risk of complaints.

Severance packages for normal terminations of employment (i.e., non-retrenchment) in Singapore are entirely contractual in nature. It typically comprises payment of salary during the notice period, and in some cases, ex gratia payments in recognition of prior years of service. Retrenchment packages, however, are slightly different. Consistent with their approach towards the employment law framework, the Singapore government regulates retrenchment exercises through guidelines instead of legislation. The retrenchment guidelines require employers to consider alternatives to retrenchment (e.g., redeployment within the company, salary reduction) before embarking on a retrenchment exercise.

If retrenchment is necessary, employers are expected to offer 2 weeks to 1 month’s salary per prior year of service (unless the employer is financially incapable), and to offer support in finding alternative employment. It is also important for employers to refer to company policies (if any), prior retrenchment exercises and industry norms when putting together a retrenchment package. For example, in early 2024, a large e-commerce company exercised a retrenchment, attracting public scrutiny when the media reported that the retrenchment benefits offered had a lower monetary value compared to those offered by other large e-commerce companies that had exercised similar retrenchment the year before. 

Severance packages for normal terminations of employment (i.e., non-retrenchment) in Singapore are entirely contractual in nature. It typically comprises payment of salary during the notice period, and in some cases, ex gratia payments in recognition of prior years of service. Retrenchment packages, however, are slightly different. Consistent with their approach towards the employment law framework, the Singapore government regulates retrenchment exercises through guidelines instead of legislation. The retrenchment guidelines require employers to consider alternatives to retrenchment (e.g., redeployment within the company, salary reduction) before embarking on a retrenchment exercise.

If retrenchment is necessary, employers are expected to offer 2 weeks to 1 month’s salary per prior year of service (unless the employer is financially incapable), and to offer support in finding alternative employment. It is also important for employers to refer to company policies (if any), prior retrenchment exercises and industry norms when putting together a retrenchment package. For example, in early 2024, a large e-commerce company exercised a retrenchment, attracting public scrutiny when the media reported that the retrenchment benefits offered had a lower monetary value compared to those offered by other large e-commerce companies that had exercised similar retrenchment the year before. 

The employment law framework in Singapore comprises both “hard law” in the form of the Employment Act 1968 including other ancillary statutes, and “soft law” in the form of guidelines issued by the Ministry of Manpower or tripartite advisory bodies. It is therefore important for businesses to ensure that their Human Resources Department are kept up to date through regular updates from law firms and to monitor the Ministry of Manpower’s website and resources for changes in the law. We generally recommend that employers obtain legal advice to review and update their employment contract templates every 2 to 3 years given the fast pace of legal developments.