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What Happens If: You Just Got Retrenched in Singapore

Emma Lam

Emma Lam

Last updated 23 May, 2023

Under volatile market conditions, tensions are high and uncertainty is rife. More specifically, mass corporate retrenchment by tech firms in Singapore has been occurring left and right.

As a risk taker, Singapore’s economy and labour market are largely exposed to changes in external demand and supply in the global market. Moreover, as a robust trading, entrepreneurial and tech hub, our workplace environments are accustomed to high productivity and achieving corresponding results.

And as the study of economics suggests, most firms seek to be profit-maximising as an indicator of success and growth. Making losses or even just breaking even is not considered an acceptable benchmark by many.

You know what comes next. Companies begin cutting costs by reducing teams across departments at the expense of employee morale.

Indeed, in the past year, some of the biggest companies in the world like Meta (Facebook), Microsoft, Amazon, Alphabet (Google), and Tesla have reduced several thousand jobs amid the challenging macroeconomic environment and cost-reduction efforts.  

Closer to home, retrenchments in Singapore continue to inch upward. It's estimated that 4,000 workers have lost their jobs in Q1 2023, up from 2,990 in Q4 2022. 

This retrenchment news was understandably met with tons of backlash. After all, it wasn’t the first time.

So what happens if you find yourself in this predicament? What does it mean to be retrenched in Singapore and how do you cope from there? Are there ways to predict losing your job?

See also: I was Retrenched at 26 Years Old and I Have No Savings

Table of contents


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Overview: What happens when you get retrenched in Singapore?

According to the Ministry of Manpower (MOM), retrenchment refers to the “termination of permanent employees due to redundancy” and “early termination of term contract employees (of at least 6 months) due to redundancy” or “reorganisation of the employer’s profession, business, trade or work”. Ouch.

Since the initial onset of COVID-19, Singapore’s economy and workforce were not excused from its repercussions. In 2020, the total number of retrenchments was 26,110 (12.8 per 1,000 employees) a year

Though the figure dropped to 8,020 and 6,400 in 2021 and 2022, respectively, as mentioned, the number of layoffs in Singapore has reached 4,000 thus far in Q1 2023. With more downturns expected, coupled with the uncertainty of the global economy, this figure may exceed those recorded in the past two years. 

Unfortunately, in the eyes of an incumbent firm, you are dispensable as an employee.

6 potential signs you might be getting retrenched

#1 You’re experiencing a form of quiet firing

With quiet quitting making waves across social media lately, quiet firing has also risen to prominence. Instead of employees refusing to do above and beyond at work for the benefit of work-life balance, employers turn the tables on them. 

Employers begin neglecting and undermining an employee’s contributions through passive-aggressive tactics. In a way, employees may be gaslighted and convinced to leave the company on their own accord because of the poor treatment --- when they didn't necessarily want to leave in the first place.

See also: 6 Crucial Things to Do During Job Loss or Unemployment

#2 Your company has just been acquired or merged 

In simpler terms, your company probably just underwent some major restructuring. Although this sounds promising from a business standpoint, there are underlying implications of a potential layoff.

This could happen for multiple reasons like a regional office closing quarters or a company attempting to cut costs — and employees form some of the most costly “resources”. In other words, “streamlining” or “restructuring” may be synonymous with retrenchment here.

#3 Constant mention of profitability as key concern

While every business aims to earn profits, constant mentions of profitability issues should warrant a few warning bells. This typically signals upcoming attempts to cut costs, which could manifest in actions like pay cuts and retrenchment.

#4 Your company puts a freeze on spending

Implementing a freeze on a company’s movements could entail withholding from new staff hires, training courses, marketing and advertising campaigns and others. Even small actions like reducing budget for staff lunches, meal treats and drinks could be cost-cutting measures.

#5 Sudden budget revision/reductions

Although firms conduct budget reviews several times a year, an unscheduled budget review could be a cause for concern. I mean, why else would a budget review be necessary or urgent unless a company is incurring significant losses or not meeting its profit margin? 

In these cases, retrenching employees to save costs might happen sooner than you think.

#6 Industry competitors are going out of business

At first, this might sound like good news since competitors are leaving the market — giving your firm more market share to dominate the space. However, there’s probably a good reason why these (incumbent) firms are closing.

It could be an indication that your entire industry is struggling, and that won’t be positive news for your company either unless the sector improves.

#7 Premature departures from high-level executives and peers

While individuals quitting the company isn’t inherently alarming, multiple of them coincidentally leaving all at the same time might be. 

If you’re observing somewhat of a mass exodus of high-level executives and fellow peers from the company, it could be a foreshadowing of what’s to come. These individual departures might be a precursor to a retrenchment across departments.

What legal rights and retrenchments benefits are you entitled to as an employee?

No one can deny that getting retrenched is challenging and stressful. Your whole livelihood is suddenly uprooted and disrupted, especially if your occupation was your main source of income — which is why we always encourage establishing multiple streams of income either through side hustles or a robust investment portfolio, but we digress.

Feeling overwhelmed by a mix of emotions like anger, hurt, confusion, sadness and fear are perfectly normal during this difficult period. Retrenched workers are put at a disadvantage and are, therefore, entitled to a corresponding or appropriate level of compensation.

💡 Pro-tip: Where possible, employers are supposed to give employees a longer notice period to prepare and provide support to help transition them into a new job.

Under the Employment Act, here’s a guideline of the minimum notice period schedule according to an employee’s length of service:

Length of service Notice period
Less than 26 weeks 1 day
26 weeks to less than 2 years 1 week
2 years to less than 5 years 2 weeks
5 years and more 4 weeks

Disclaimer: Unless explicitly stated, retrenchment benefits are unfortunately not mandated by law, but only highly encouraged by MOM through their advisories. Firms that are irresponsible in conducting retrenchment may be denied future government support or have work pass privileges suspended.

FAQs about employee rights and severance pay when getting retrenched

Q: Who is eligible?

Retrenchment benefit is available for employees who have served the company for at least two years. Those who served less than two years will be granted an ex-gratia payment out of goodwill.

Q: What is the amount of compensation I can get?

The amount of compensation is also known as the quantum of retrenchment benefit. 

It’s dependent on what is provided for in the employment contract or collective agreement (for unionised companies). If it was not clearly stated, the compensation will be negotiated between the employees (or the union) and employer.

In general, the stipulated compensation for an employee ranges between two weeks to one month of their salary per year of service. This amount is determined by the company’s financial status and industry type.

For unionised companies, this amount is typically one month’s salary as stated in the collective agreement.

If the retrenchment exercise follows shortly after a salary cut, the salary prior to the cut should be used to compute the severance pay. This is to protect employees from being unfairly subjected to a reduced compensation amount.

💡 Pro-tip: Neither employer nor employee has to pay CPF contributions for retrenchment benefits.

Q: What if retrenchment benefits are not paid out?

If your company fails to pay out your severance, you may opt to file a claim or undergo mediation at the Tripartite Alliance for Dispute Management (TADM) to resolve employment disputes.

If it still remains unresolved, escalate it further to the Employment Claims Tribunals. The tribunal holds the authority to make orders against the employer to pay the deserved retrenchment benefits (including costs).

Employees undergoing a winding-up process are not permitted to file a claim with the TADM. Alternatively, a claim may be filed directly with the Insolvency Office or the appointed judicial manager or liquidator of said company.

Q: What about retrenched senior employees aged 63 and above?

Despite being retrenched at the retirement age of 63, employers are obligated to offer these workers re-employment until the age of 68

For example, if you turn 63 on 1 August 2022, your re-employment contract’s initial start date will be 1 August 2022. Each re-employment contract is valid for at least one year, and is renewable thereafter up until you turn 68 years old.

However, if your employer cannot find a suitable job for you, they can offer you an Employment Assistance Payment (EAP) as per the Tripartite Guidelines for Re-employment of Older Workers.

The EAP is a one-off payment equivalent to 3.5 months’ salary, subject to a minimum of S$6,250 to a maximum of S$14,750.

For senior employees who have been re-employed for at least 30 months since turning 63, a lower EAP amount of 2 months’ salary might come into effect. This is subject to a minimum of S$4,000 and a maximum of S$8,500.

Q: What happens to my medical benefit after retrenchment?

Your employer should restructure existing medical benefits and provide additional MediSave contributions or other flexible benefits. These payouts will go towards employees’ MediShield Life or Integrated Shield Plan premiums (if applicable).

These contributions support employees manage ongoing healthcare costs post-retrenchment by continually accumulating their MediSave Accounts.

Q: What retrenchment and maternity benefits are pregnant women entitled to?

If an employee is pregnant during the retrenchment, they are entitled to maternity leave benefits if she qualifies for the Employment Act or Child Development Co-Savings Act. This payment will be on top of her retrenchment benefits.

The maximum maternity benefit to be received is up to 16 weeks of paid maternity leave in which your usual monthly salary will be accrued to you during the leave period. The reimbursement is broken down into the following:

Births Paid by employer Reimbursed by government
First and second First 8 weeks Last 8 weeks
Third and subsequent - All 16 weeks

Leave applications and reimbursement claims can be applied through the Government-Paid Leave Portal.

💡 Pro-tip: Pregnant soon-to-be mothers are allowed to share one week of their maternity leaves with their husbands according to the shared parental leave.

Q: Does the
Tripartite Advisory apply to migrant/foreign workers too?

Yes, the Advisory (and its revisions) is applicable to all retrenchments made since the pandemic started.

Q: What to do if I felt wrongfully dismissed?

In the event that an employee feels wrongfully dismissed by the employer, a wrongful dismissal claim can be filed with TADM within one month starting from the last day of employment. Necessary documents for filing the claim include:

  • Company name, mailing address, and contact number
  • Contact details (including email address)
  • Employment dates, occupation, and monthly salary
  • Credit or debit card details or internet banking user ID and PIN for payment
  • Employment contract or key employment terms
  • Salary payment records and CPF statements (where applicable)
  • Termination or resignation letter
  • Other documents relevant to your claim like timesheet, certification of pregnancy/estimated delivery date by a Singapore medical practitioner

For dismissals without notice, the employer must justify and explain why the dismissal wasn’t wrongful.

For dismissals with notice or salary in lieu of notice, employees are required to show proof of wrongful dismissal. 

What to do after being retrenched?

Okay, so you’ve just been retrenched? What next? We’re sure your head must be swirling with thousands of questions about what’s the right move. 

This troubling time is filled with uncertainty and doubt but there are concrete, actionable steps to take to not just survive — but thrive — through this season.

#1 Build an emergency budget


Building an emergency budget is one of the top priorities everyone should have the moment they start earning money. Ideally, the emergency fund should consist of three to six months of your salary (or at least, monthly expenditure). 

In fact, suddenly becoming unemployed rightfully qualifies as an emergency. Thus, rather than purely relying on savings, an emergency fund would act as leverage to help finance you through your income-less months.

Allocating a portion of your salary every month (about 15% to 20%) to a dedicated account is sufficient to build the fund. The account could either be another high-yield savings account or a cash management account.

The rationale is that you’d want these funds to be highly liquid to withdraw at any time. The added interest rates help to slightly mitigate the impacts of inflation erosion too.

See also: Fixed Deposits vs. Endowment Plans vs. Cash Management Accounts: Which Should You Choose?

Read more:
7 Money Moves Singaporean Can Make to Manage Inflation
8 Lifestyle Changes You Can Make to Better Cope With Inflation
1990s vs 2020s: Inflation and Price Changes in Singapore
How to Prevent Travel Inflation From Ruining Your Trip

#2 Growing passive wealth through multiple channels

In this day’s economy, many are skeptical about how feasible it is to be financially free without investing.

It seems as though investing has become the bread and butter for many, asides from their day job to growing wealth. Working hard to earn from one channel alone seems to be not enough anymore.

See also: Investment Guide: SingSaver’s One-Stop Solution

Whether it’s investing with robo-advisors, stock-picking, ETFs or unit trusts, your investment strategy will look different from others depending on your risk appetite and tolerance. But at least with a solid (and well-diversified) portfolio, the passive income provided will weather you through the jobless months for a while.

On top of that, it feels as if everyone has some form of side hustle or another as a supplementary income source. It could even be as straightforward as monetising your hobby!


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#3 Focus on clearing any debt by consolidating it (if applicable)

If you were in the midst of clearing your debt, continue to do so even when unemployed. Having outstanding debt is a compromising position to be in, especially if interest rolls.

Paying on time minimises loan repayments and allows you to focus better on securing a new job. Take this time to properly analyse your debt obligations and target high-interest loans first.

The trickiest of high-interest rate loans usually refer to credit card debts (around 25% p.a.). An initial debt of S$5,000 could easily snowball into S$13,500 in debt if not paid off in full.

If you somehow accumulate too many overdue credit card bills, a debt consolidation plan would be your saving grace. It basically combines all your existing debt into a single low-interest or 0% interest loan via a balance transfer.

The HSBC Personal Line of Credit Balance Transfer is a popular option given its 0% interest rate and free processing fee depending on loan tenure. Moreover, when its tenure expires, the prevailing interest rate of 18.5% is comparably less than that of a regular credit card. 

For a more detailed rundown, we have an article on how to pay off your credit card debt fast.

#4 Prioritise paying off important debts and check if you have retrenchment benefits

You should also prioritise important things that you have to pay off, including your housing loans and insurance premiums. However, if you have a tight cashflow and you're struggling to repay them, here's what you can do.

For the former, you can approach HDB for help, and they will often help to work out several repayment schemes. While banks may not be that lenient, you can try talking to your bank, and they might help with some form of debt restructuring.

As for the latter, you can approach your insurance company to discuss if you can differ your insurance premiums through a premium holiday. 

Some life insurance plans also come with retrenchment benefits, which will typically provide a fixed payout during your unemployment period. Aside from that, you can also consider making a partial withdrawal. This allows you to withdraw some of the accumulated cash value of your policy without needing to surrender your policy. Though note that this is irreversible.  

That's why it's worth emphasising that you should have at least six months of emergency funds as a buffer, which also includes your mortgage and insurance premiums. 

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Under this complimentary 1-year plan by Etiqa Insurance, eligible Singtel postpaid mobile customers can get up to six months of their Singtel mobile and fixed broadband bills waived off (up to S$600) should they suffer from job retrenchment or accidental death. 

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Read more:
Balance Transfer: How Does it Work and Should You Get One?
What You Should Do if You Can’t Pay Off Your Credit Card Bill?
4 Ways You Are Accumulating Debt Without Knowing It
How a Debt Consolidation Plan Can Improve Your Credit Score Over Time
Will a Debt Consolidation Loan Affect My Credit Score?

Keep moving forward

When you get retrenched, your first instinct might be to hop onto any job offer you get. This might encompass low-paying jobs or opportunities that you aren’t even that interested in.

Bottom line is, don’t let panic fuel your job hunt. Don’t settle for anything less out of fear of remaining unemployed. Keep your head high, and know your self-worth and what you can offer as an employee to prospective employers.

💡 Pro-tip: Allow yourself a several-day grace period to think through any potential job offer before deciding to reject or accept it.


Read these next:
What Happens If: You Lose Your Job in Singapore and Have No Savings
Money Confessions: I Was Retrenched at 26 Years Old and I Have No Savings
6 Crucial Things to Do During Job Loss & Near-Unemployment
11 Things You Shouldn’t Do Before or During a Recession
How to Prepare for a Recession as a Working Adult in Singapo

Although she struggles *slightly* in resisting good deals and sales, Emma is on a lifelong journey to understand what financial independence as a Z-llennial means. That said, her inner child is still very much alive… with animals and gaming being her weaknesses.


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