Navigating Employee Termination and Notice Periods in Singapore

Singapore's Employment Act provides clear guidelines for employment termination, requiring both employers and employees to follow proper notification procedures. Employers must demonstrate valid grounds for dismissal, issue formal termination letters, and act responsibly throughout the process. Crucially, obtaining appropriate tax clearance from Singapore's Inland Revenue Authority (IRAS) is mandatory before final payments can be processed.

Valid Grounds for Employment Termination

Legitimate reasons for termination include probationary periods, contract breaches (without notice requirement), misconduct (immediate termination), documented poor performance, and redundancy. Misconduct encompasses contract violations, serious behavioral issues, and unauthorized absences exceeding two working days. Employers should follow due process by informing employees of allegations, allowing responses, and ensuring impartial investigations.

For foreign employees, employment passes become invalid seven days after termination. All dependent passes linked to the main pass automatically expire, with a 30-day short-term visit pass issued instead. Foreign workers must not remain in Singapore without valid alternative visas. Employers must notify IRAS at least one month before termination using Form IR21 and withhold final payments until tax clearance is obtained.

Notice Period Requirements Under Singapore Law

Singapore employment law mandates reasonable notice periods based on employment duration:

Probationary period: 5 days' notice from either party
Less than 26 weeks of service: Minimum 1 day's notice
26 weeks to 2 years of service: Minimum 1 week's notice
2 to 5 years of service: Minimum 2 weeks' notice
Over 5 years of service: Minimum 4 weeks' notice

Employers may opt for payment in lieu of notice, providing equivalent salary instead of requiring the employee to work through the notice period.

Redundancy Benefits and Severance Payments

Severance payments, commonly called retrenchment benefits, apply to employees with at least two years of service during company restructuring or closure. Calculation bases include service duration and basic salary, typically ranging from two weeks to one month's salary per year of service. Companies with collective bargaining agreements often specify one month's salary per service year. For employees with less than two years' service, ex-gratia payments may be offered as goodwill gestures.

Proper Termination Procedures

Employers must provide written termination notices containing reasons and effective dates. Verbal notifications lack legal validity. Mutual negotiations may occur regarding termination terms or additional compensation. Compliance with notice periods and severance requirements is essential to avoid labor disputes.

Support Systems for Terminated Employees

Singapore lacks unemployment insurance but provides support through programs like the Workfare Income Supplement for low-wage workers. Professional HR services like SailGlobal offer legal guidance to help employers navigate termination processes effectively while minimizing contractual disputes.

Singapore Employment Termination Guide: Notice Periods & Legal Requirements