CMS Expert Guide to Dismissals

Global comparison

1. Dismissal of employees

The Employment Act (“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. the common law in Singapore.

1.1 Reasons for dismissal

An employee may give notice of termination without providing cause. An employer, on the other hand, is only permitted to give notice of termination for one of the reasons explicitly stated in the Labour Code, which are as follows:

  1. organisational reasons – the employer’s enterprise shuts down or relocates, or the employee is made redundant; or
  2. health reasons − the employee no longer has the capacity to carry out his present work in a satisfactory manner; this must be confirmed with a medical certificate issued by the occupational medical services provider or under a ruling of the competent administrative agency having duly reviewed the medical certificate; or
  3. an employee no longer meets the requirements outlined for the work they are carrying out; or
  4. there are reasons for immediate termination of the employment relationship − the employee has committed a gross breach of duty or has been lawfully sentenced to prison for a crime; or
  5. the employee has seriously, or less seriously but repeatedly, breached a statutory duty relating to their work performance; or
  6. the employee breaches their obligation to observe the prescribed regime of an insured person being temporarily unfit for work in the first 14 calendar days of temporary incapacity for work due to sickness in an especially gross manner.

There are two broad regimes for dismissal:

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

Where an employer wishes to terminate an employee’s contract without cause, he 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.

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 if they have worked for their employer for at least 6 months. There is no minimum service time period required for non-managers and non-executives filing dismissal claims. 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.

1.2 Form

Written form is necessary; must be delivered to the other party (both employer and employee may terminate the employment relationship by notice of termination). Under certain circumstances a fiction of delivery applies (e.g. if the employee refuses to accept the notice when it is delivered personally to them or when delivered by a postal worker). Under specific and strict conditions, it is also possible to deliver the termination documents electronically.

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.

1.3 Notice period

The statutory minimum notice period is set at two months, the period starting on the first day of the month after the month in which the notice of termination was delivered. 

It is possible to agree upon a probationary period of a maximum of three months (six months for managerial employees) with no statutory notice period. There is no notice period in cases of immediate termination of the employment relationship (i.e. in particular if an employee has committed a gross breach of duty or has been lawfully sentenced to prison for a crime).

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.

1.4 Involvement of works council

No involvement in termination process except in collective redundancies.

No involvement.

1.5 Involvement of a union

Employer must discuss in advance any notices of termination and any immediate termination of the employment relationship with the trade union. Trade union approval is only required where the employee is a trade union officer. Such approval can be substituted by a court decision if the approval was withheld and the employer cannot be justifiably required to continue employing the trade union officer.

No involvement.

1.6 Approval of state authorities necessary

Approval of the state authorities is not required. The Labour Office need only be notified of a collective redundancy or the dismissal of a disabled person or of an employee who is not a Czech citizen.

Not necessary.

1.7 Collective redundancies

Collective redundancies are defined as dismissals within a 30-day period of:

  1. more than ten employees in an establishment of 20 − 100 employees; or
  2. 10% or more of the employees in an establishment of 101 − 300 employees; or
  3. at least 30 employees in an establishment of 300 or more employees. The total number of employees also includes those employees whose employment relationship was terminated by agreement between the employee and the employer based on the same grounds for which other employees are being dismissed, if at least 5 employees were dismissed by notice of termination.

The employer must inform the works council and trade union (or directly affected employees if there is no works council or trade union) of its intentions at least 30 days prior to giving notice of termination, and must enter into negotiations to reach a compromise or reduce the number of affected employees, etc.

The employer must simultaneously inform the Labour Office in writing:

  1. that it has discussed the collective redundancies and its implications (i.e. the later results of these discussions) with the trade union, works council or affected employees; and
  2. of the actions it has taken in cooperation with the trade union / works council in relation to the collective redundancies; and
  3. of the number, characteristics, professional qualification, etc. of the employees to be made redundant.

Employers who employ at least ten (10) employees are required to notify the Ministry of Manpower if five (5) or more employees are retrenched within any 6-month period within five (5) working days after the affected employees are notified of their retrenchment.

1.8 Summary dismissals

Immediate termination (without notice period) of employment by the employer is possible only if the employee has breached a statutory duty in an especially gross manner or for a lawful conviction of the employee, following the employee intentionally committing a crime which leads to unconditional imprisonment for a duration longer than one year (or six months in the case of crimes committed in connection with exercising their job).

The employer may immediately (with effect upon delivery to the employee) terminate the employment within a period of two months of learning the reason for immediate termination, but not later than one year from the date of occurrence of the respective reason for termination.

An employer cannot dismiss with immediate effect any employee who is pregnant or during the employee's maternity or parental leave.

An immediate termination must be made in writing and be delivered to the employee in accordance with the Labour Code, with the reasons for immediate termination being specified in such a way that prevents confusion with any other reason(s) for termination.

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

1.9 Consequences if requirements are not met

Termination may be held invalid by the court and the employment relationship reinstated if the employee files a claim to the court no later than two months after the date of the purported termination of the employment relationship, and the court finds the termination to be invalid.

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. Employees have to 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 also include resignation of an employee if the employee can show, on the balance of probabilities, that he 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.

1.10 Severance pay

Minimum statutory severance pay depends on the reason for dismissal and  /  or the length of employment, and ranges from one average monthly salary for any dismissals for organisational reasons (including collective redundancies) of employees whose employment lasted less than one year, to 12 times the average monthly salary for dismissals for health reasons. The parties may negotiate a larger severance payment, or the payment of severance pay in the case of dismissal for other reasons.

Under the EA, employees who have served the company for at least two (2) years are eligible for retrenchment benefits. Those with less than two (2) 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 between 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.

1.11 Non-competition clauses

A post-contractual non-competition clause may be agreed upon between the employer and the employee and, if agreed, it must be in written form and must not last for more than one year. The agreement may be included in the employment agreement. Monetary compensation from the employer must, as a minimum, equal half the employee’s average monthly salary (i.e. of the wage / salary that the employee had prior to termination of the employment relationship) for each month during which the employee met the obligation not to compete stated in the clause. If the agreement sets out a financial penalty for breach of the clause by the employee, the employee’s obligation not to compete is discharged upon the payment of the penalty sum. The agreement is automatically terminated if the employer fails to pay the monetary compensation to the employee when it falls due. An employer may only withdraw from the non-competition clause during the term of employment. As far as case law is concerned, the withdrawal is only effective if it has been explicitly agreed upon, and such a provision is only enforceable if it contains reasons for the withdrawal, provided, in addition, such reasons are legitimate.

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, whilst the employee bears the burden of proof to show that the covenant is against the public’s interests.

1.12 Miscellaneous

The employer may not give notice of termination during a ‘protection period’ (i.e. where an employee is temporarily unfit for work, a night-shift employee is temporarily unfit to perform night work, an employee is conscripted or released from work to exercise a public office, or during pregnancy, maternity or parental leave), unless the termination is for organisational reasons due to the closure or relocation of the enterprise. There are several exceptions to this rule.

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, please contact CMS Holborn Asia’s employment law team.

2. Dismissal of managing directors

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 table below focuses on the removal of a managing director from his or 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.

2.1 Reasons for dismissal

In the Czech Republic managing directors are not considered employees, therefore labour law protection does not apply to them. The relationship between the managing director and the company is of a commercial nature, not an employment one. An appointment as managing director (as a statutory body or a member of a statutory body of an entity, i.e. not as an employee) may be revoked without stating any reason.

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.

2.2 Form

A valid shareholder resolution at a general meeting is required. There must be a simple majority of shareholders present, unless stated otherwise in the relevant company’s statutory documents. Apart from cases when entities have a sole shareholder, revocation of an appointment as managing director must be on the programme of the invitation to the general meeting. If not, the appointment may only be revoked, if all shareholders are present and agree to change the programme to include the revocation.

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 of 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 or 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 or 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 or 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.

2.3 Notice period

Not applicable.

No statutory minimum notice period for the removal of directors. Dependent on terms of resolution and can be immediate.

The termination of the director’s employment contract will be in accordance with what is stipulated in the director’s employment contract.

The EA provides that the length of notice in an employment contract should be the same for both the employer and the employee.

2.4 Involvement of works council

No involvement.

No involvement.

2.5 Involvement of a union

No involvement.

No involvement.

2.6 Approval of state authorities necessary

Not required.

However, revocation of a managing director from his/her office must be filed in the Commercial Register without undue delay. The appropriate court managing the Commercial Register may review the revocation in order to verify whether the revocation was done in accordance with applicable laws and the relevant entity’s statutory documents.

Not necessary.

2.7 Collective redundancies

Not applicable.

Not applicable.

2.8 Summary dismissals

Not applicable.

No special rules apply.

2.9 Consequences if requirements are not met

Invalidity of revocation.

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 or her contract of service (i. e. his or her employment agreement with the company) if the provisions for termination as set out in the same are not complied with.

2.10 Severance pay

No statutory severance pay.

Any severance pay will be made in accordance with what is provided for in the director’s employment contract. See section 1.10 “Severance pay” for more details.

2.11 Non-competition clauses

May be agreed in a performance agreement usually concluded with a member of a statutory body. The requirements set out in the Labour Code do not apply to managing directors unless explicitly agreed.

Restrictive covenants (including a non-competition clause) 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, whilst the employee bears the burden of proof to show that the covenant is against the public’s interests.

2.12 Miscellaneous

Managing directors shall not enter into employment contracts with companies, unless the type of work performed under the employment contract is materially different from the role of managing director. Instead, they should conclude an agreement on the performance of the office of the managing director. Such an agreement will not be governed by Czech Labour Code. 

Not applicable.