Introduction
Singapore does not have statutory severance pay legislation. However, employees covered by the Employment Act with 2+ years of service who are retrenched are entitled to retrenchment benefits as specified in their employment contract or collective agreement. In the absence of contractual provisions, the Tripartite Advisory recommends a benchmark of 2 weeks to 1 month's salary per year of service. Employers retrenching 5+ employees within 6 months must notify MOM.
Retrenchment Benefits and Notice
The market norm for retrenchment benefits in Singapore is 2 weeks to 1 month's salary per year of service. Multinational companies and larger firms typically offer at the higher end. For senior employees, enhanced packages of 1.5-2 months per year are not uncommon. Contractual notice periods typically range from 1-3 months. Payment in lieu of notice (PILON) is standard practice.
CPF contributions must be maintained through the last day of employment. Accrued but unused annual leave must be encashed at the employee's last drawn salary rate.
Common Additional Benefits
Singapore employers commonly offer health insurance continuation (SGD 500-1,500/month for 3-6 months), outplacement services (SGD 3,000-10,000), garden leave (full salary for 1-3 months), and EAP/counseling access. For tech companies, accelerated stock vesting is sometimes offered. Reference letter guarantees are standard.
Summary of Termination Costs
For a Singapore employee with 5 years of service earning SGD 8,000/month: retrenchment benefit at 1 month/year = SGD 40,000. Adding 1-3 months' notice (SGD 8,000-24,000), accrued leave, and supplementary benefits (SGD 5,000-15,000), total costs range from SGD 55,000-80,000.
The Msure Layoff Calculator helps model these costs accurately for Singapore-based employees, including CPF implications and common market benefit packages.
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