Dismissals and Termination of Employment in Singapore

The Employment Act 1968 (“EA”) is Singapore’s main labour law. The EA confers certain statutory protection(s) to local and foreign employees working under a contract of service in Singapore. Employees who are not covered under the EA are: (1) seafarers; (2) domestic workers; and (3) statutory board employees or civil servants in Singapore.

When dismissing an employee in Singapore, an employer needs to be mindful of:

1. the terms of the employment agreement;
2. the statutory protections conferred by the EA; and
3. common law in Singapore.

There are two broad regimes for dismissal:

1. termination without cause; and
2. summary dismissal for reason(s) attributable to the employee.

An employer wishes to terminate an employee’s contract without cause, may do so by giving notice or by paying the employee his base salary in lieu of the notice period.

An employer can also, after due inquiry, summarily dismiss an employee for cause (e.g. as a result of employee misconduct) with immediate effect, i.e. without the stipulated notice period (referred to as “dismissal”). This results in immediate termination of the employment agreement. What amounts to misconduct is largely a question of fact, and generally the relevance and effect of the misconduct is judged with reference to its effect on the employer-employee relationship. The total accrued salary and any other sum due and payable to an employee who is dismissed must be paid either on the day of the dismissal or, if that is not possible, within three days, not including Sunday (or any such rest day as determined by the employer) or public holidays.

In addition to civil legal action, an employee who claims that he or she has been unfairly dismissed may file a wrongful dismissal claim (“dismissal claim”) with the Tripartite Alliance for Dispute Management ("TADM") within one month of his or her last day of employment. For managers and executives, a dismissal claim can only be made with the TADM if they have worked for their employer for at least six months. There is no minimum service time period required for non-managers and non-executives filing dismissal claims with the TADM. Dismissal claims will be referred to mediation at the TADM before adjudication by the Employment Claims Tribunal.

If a female employee has worked for an employer for at least three continuous months, the employee has statutory maternity protection against retrenchment and dismissal without sufficient cause.

Employers are not statutorily required to provide reasons for dismissal, in particular for dismissals with notice. If, however, the employer is terminating an employee for poor performance and dismisses the employee without notice, the failure to give reasons would amount to wrongful dismissal.

For contractual termination (i.e. termination without cause), notice of termination has to be given in writing. There is no special formality required for summary dismissal of an employee, although if summary dismissal is for misconduct, the grounds for dismissal should be proved and an inquiry conducted by the employer to allow the employee to present his/her case before the employer decides on dismissal.

The EA provides for a statutory minimum period of notice of between one day and four weeks, depending on the employee's length of service.

The EA provides that the length of notice in an employment contract should be the same for both the employer and the employee. Both the employer and employee also have the option to elect for salary in lieu of notice, in which case the terminating party must pay the other party the amount the employee would have earned during the required notice period or balance thereof.   

No involvement.

A trade union must first be recognised by the employer before the union can represent its members in collective bargaining. Once recognised, the trade union becomes a negotiating body for the employees it represents and collectively negotiates with the employer on employment terms and benefits.

Typically, the trade union and the employer will enter into a Collective Agreement that sets out the employees’ terms and conditions of employment. Such agreements must be filed with the Industrial Arbitration Court for certification. 

Employees who believe they have been dismissed unfairly may make a representation through their trade union to be reinstated in their former employment within one month of the dismissal.

Certain executives are typically excluded from representation by unions. This includes, for instance: (a) executives in a senior management position; (b) executives who have decision-making powers on any industrial matter (including employment, termination, promotion or reward of other employees); and (c) executives who have access to confidential information relating to the budget and finances of the employer. That said, rank-and-file trade unions may seek recognition from employers to collectively represent executive employees.

Rank-and-file unions that have been recognised to collectively represent rank-and-file employees may represent its executive members as individuals, and not as a class, for certain categories of purposes, including: (a) retrenchment benefits; (b) dismissal; (c) breach of individual contract; (d) 

Not necessary.

Under the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, redundancies are expected to be a measure of last resort, and employers are first expected to consider and explore other feasible options like putting in place adjustments to work arrangements without wage cuts, adjustments to work arrangements with wage cuts, direct adjustment to wages, or no-pay leave. If an employer decides to proceed with retrenchment, it must ensure objectivity in the selection of employees. 

Employers who employ at least ten employees are required to notify the Ministry of Manpower of any retrenchment within five working days after the affected employees are notified of their retrenchment.

Under the EA, employees who have served the company for at least two years are eligible for, though not statutorily entitled to retrenchment benefits. Those with less than two years’ service could be granted an ex-gratia payment out of goodwill.

The EA does not dictate the nature or amount of severance pay and leaves it to the mutual agreement of the employee and the employer. In the absence of a contractual agreement, the prevailing norm is to pay between two weeks' to one month's salary per year of service, depending on the company’s financial position and industry.

Allowed. See section 1.1. "Reasons for dismissal" for further elaboration.

An employee may lodge a dismissal claim seeking to be reinstated to his previous position and for any loss of income due to the wrongful dismissal, and/or for compensation. 

In the case of the TADM claim, employees must engage in mandatory mediation with their employers at the TADM followed by adjudication at the Employment Claims Tribunal if a mediated resolution cannot be reached. 

The EA defines the term 'dismiss' to include resignation of an employee if the employee can show, on the balance of probabilities, the individual did not resign voluntarily, but was forced to do so because of any conduct or omission on the part of the employer. Employers should be mindful that such employees can also lodge a dismissal claim.

In cases of redundancies / retrenchments, see section 1.7 above. 

In all other situations, there are no specific legislation or guidelines and parties may decide on severance pay by mutual agreement. 

In all cases, outstanding salary and payment in lieu of unused leave (unless excluded under the Employment Contract) must be paid.

Restrictive covenants (including non-competition clauses) are not valid and will be void unless:

1. they are deemed by the Singapore Courts to be reasonable between the parties and in the interests of the public;
2. they seek to protect legitimate proprietary interests; and
3. are not more extensive than is reasonably necessary to protect such interests.

The burden of proof is on the employer to show that the covenant is reasonable between the parties, while the employee bears the burden of proof to show that the covenant is against the public’s interests. While the analysis of whether a particular restrictive covenant is enforceable is highly fact-specific, typically, where the scope of the restriction is wider (in terms of scope, geographical area, and duration), the more likely the restrictive covenant will be found to be unenforceable.

The Tripartite Guidelines on Wrongful Dismissal were published on 1 April 2019 to illustrate what is considered wrongful dismissal. Employers are reminded to be mindful of the examples in these guidelines as these are matters that TADM mediators and Employment Claims Tribunal adjudicators are likely to take into account when mediating and/or adjudicating wrongful dismissal claims.

For the latest updates and developments on wrongful dismissal claims, contact CMS Holborn Asia’s employment law team.

There is no distinction between the duties and liabilities of a “director” and a “managing director” save as otherwise provided for in the constitution of the company.

The section below focuses on the removal of a managing director from his/her office as director. This is separate and different from the termination of a director’s contract of employment and/or other related employment issues, which are covered in section 1 “Dismissal of employees” as that relates to the director’s role as an employee of the company.

It is not a strict legal requirement for reasons to be provided when a director is being removed. This will ultimately be subject to the constitution of the company in question.

Public Company

• A public company may, by ordinary resolution (i.e. a vote by a simple majority at a general meeting), remove a director before the expiration of his period of office, notwithstanding anything in its constitution or in any agreement between the public company and the director.
• However, if the director was appointed to represent the interests of any particular class of shareholders or debenture holders, the resolution to remove him will be ineffective until a replacement director is appointed.
• Special notice must be given for a resolution to remove a director or to appoint a replacement director at the meeting at which the incumbent director is removed. The company is required to send a copy of the notice to the director concerned and at the meeting, the director is entitled to be heard. The director is also entitled to make written representations (of a reasonable length) and to request that a copy of those representations be sent to every member of the company. The company is entitled to apply to the Singapore Court for the director to be denied the right to send out representations or to have his/her representations read at the meeting.
• Public listed companies in Singapore are subject to additional obligations under the law, including the obligation to make an immediate announcement to the Singapore Exchange (“SGX”) upon the cessation of the director’s services.

Private Company

• A director must be removed in accordance with the company’s constitution. Where the constitution is silent on the removal of a director, it may be amended in accordance with the required procedure on the removal of directors. Subject to any provision to the contrary in the constitution, a private company may remove a director by ordinary resolution before the expiration of his/her term, notwithstanding anything in any agreement between the company and the director.
• However, if the company also wishes to remove the director as an employee of the company, this must be in accordance with the termination provisions of his/her employment contract with the company.
• The removal of a director will be deemed invalid unless at least one director who is ordinarily resident in Singapore (who may be the sole director) remains on the board.
• The Accounting and Corporate Regulatory Authority of Singapore (ACRA) should be notified that a director has ceased to hold office within 14 days of said action having taken place.

No statutory minimum notice period exists for the removal of directors. Removal is dependent on the terms of the resolution and can be immediate. Generally speaking, termination of the director’s employment contract will be in accordance with what is stipulated in the contract and in compliance with the EA, as applicable (please see section 1.3 above for further details on notice periods).   

Under the Industrial Relations Act and Tripartite Guidelines on Extending the Scope of Union Representation for Executives, union representation of executives is safeguarded. No involvement in relation to removal from position as director. Please see section 1.4 above for dismissal of a director in his capacity as an employee.

No involvement in relation to removal from a position as director. Please see section 1.5 above for the dismissal of a director in his capacity as an employee.

Not necessary.

Not applicable.

No special rules apply.

The removal of the director is invalid and/or ineffective.

In the case of public companies, non-compliance with the announcement obligations referred to above could result in a reprimand and/or sanctions from SGX.

Even if the requirements above are met, a director may sue for damages and compensation for breach of his/her contract of service (i. e. his/her employment agreement with the company) if the provisions for termination as set out in the employment contract are not complied with.

Any severance pay will be made in accordance with what is provided for in the director’s employment contract and/or the employer’s company policies, if applicable. See section 1.10 “Severance pay” for more details.

Typically, restrictive covenants placed on directors are assessed by the same rules/requirements as set out in section 1.11.

Not applicable.