Retrenchment in Singapore

An employee who has been retrenched may face difficulties in deciding the appropriate steps to be taken after retrenchment. Through careful planning and use of appropriate methods, it is not difficult for a retrenched employee in Singapore to overcome this problem and return to employment. Thus, the time spent unemployed will be greatly reduced.

Before the methods of how one can overcome the issue of retrenchment in Singapore, retrenchment itself must be defined and its causes must be explained. Retrenchment is defined as a situation in which an employee suffers a loss of employment because the employee is no longer deemed necessary to the employer.

Retrenchment may be due to one or a combination of several factors impacting a company’s business operations.

Among the possible causes of retrenchment are the following:

An increase in the level of technology in use by the company which renders certain employees’ services unnecessary
A reduction in company revenue due to external economic and financial conditions
Obsolete management systems which negatively affect the company’s ability to retain employees
Bankruptcy of the company
Lockouts or strikes which often have the effect of reducing a company’s consumer base and thus reducing its overall profits

Retrenchment in Singapore and the Law

Retrenchments may occasionally be overturned in a court of law if it can be proven that the retrenchments were unjust. Such is the case when there is no justifiable cause for the retrenchments.

Another scenario in which retrenchments could be legally overturned occurs when the criteria used to select the employees who were retrenched are deemed to be unfair.

If the employers did not make any attempt to either reduce or avoid the retrenchments which were made, the retrenchments might also be considered unjust and thus reversed. It is the employer’s duty to prove to the court that retrenchment was the most suitable course of action to be taken at the time of its occurrence.

Union Reaction to Retrenchment 

In Singapore, the National Trades Union Congress (NTUC) keeps track of all mass retrenchments which occur. Representatives of the NTUC have stated it will challenge any Singapore company which retrenches its employees without justifiable cause. The NTUC may even lodge complaints with the Ministry of Finance during instances in which employees’ rights are flagrantly violated through unjust retrenchment. The NTUC views all companies of Singapore equally in this regard. As proof of this fact, small and large companies alike have in the past failed to live up to the NTUC’s expectations in this area and have thus suffered the consequences. 

It has sometimes been the case that some employees in Singapore who have believed that they have been unjustly retrenched have participated in strikes. Such strikes are usually coordinated by labor unions and are intended to convince company or other authorities to reverse decisions made regarding retrenchment. While such strikes sometimes have the desired effect, others end up becoming protracted and thus causing further problems for the companyother authorities involved, as well as the retrenched employees. 


Overcoming Retrenchment as an Employee in Singapore 

Employees in Singapore who have been retrenched must understand what they ought to do when they are faced with retrenchment. Of course, the first step to be taken after one has been retrenched is that of conducting a job search.  

It should be noted that it might be easier for an employee who has been retrenched to rejoin the workforce than it would be for others who are seeking a job. This is because prospective employers might take note of the fact that the retrenched employee is only out of a job due to market demands or other uncontrollable factors. Thus, such a person’s lack of a job does not reflect poorly on the person’s abilities as an employee.  

Retrenched employees should consider the skills and abilities they possess and leverage them into their next job. Singapore is a country full of job opportunities; thus, one who understands the market conditions in Singapore and how certain skills fit into this market will surely be employed again before too long. 

An employee in Singapore who has been retrenched should also have a suitable financial plan. The cost of living in Singapore is relatively high when compared to that of many other places around the world. It is important for those who have been retrenched to carefully consider their personal budgets. Some employees in Singapore receive a severance package when they are retrenched. This package makes it easier for them to manage their finances over the period of their unemployment. Nevertheless, these employees should also consider the duration for which their daily expenses will be covered through the money obtained from the severance package. 

Should you have any uncertainties regarding the financial plan which will best suit your current needs, we at Paul Hype Page & Co will be able to serve your needs. Regardless of your current employment status, we will take your present and likely future financial situations into account before deciding upon the most suitable financial plan for you. By working with our financial experts, you will better understand how we will put you in the most advantageous financial position possible while you are in Singapore. 

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Career Support Programme 

Retrenched employees who are citizens of Singapore might also benefit from the Career Support Programme. The Career Support Programme is an initiative which was created by Singapore’s Ministry of Manpower. It is a salary support program which is jointly administered by the Employment and Employability Institute as well as Workforce Singapore.  

It serves to encourage employers from companies which have been incorporated in Singapore to hire workers who are Singaporean citizens.  

This is because the program provides wage subsidies for any employer who chooses to hire a Singaporean citizen who is unemployed and has been actively seeking a job for six months or longer.  

Those who employ a Singaporean who is 40 years old or older are entitled to a larger proportion of benefits than those who employ a Singaporean who is below the age of 40.  

However, in order for the employer to benefit from the Career Support Programme, the person who is to be hired must earn at least S$3,600 per month if the company which is hiring is a small or medium-sized enterprise (SME) or at least S$4,000 per month if the company which is hiring is not an SME.  

Since the Career Support Programme rewards employers who hire Singaporean citizens, Singaporeans who have been retrenched will find themselves at an advantage when seeking re-employment. 


Mental Health when Retrenched 

When discussing how to overcome retrenchment, the emotional and mental elements involved must neither be ignored nor forgotten. Retrenchment can be a very traumatic and frightening experience for the person who is in the midst of it. Some people are emotionally unprepared for the impact of retrenchment. For those who are having trouble processing their emotions after retrenchment, it might be advisable for such people to attend counseling sessions.  

By attending counseling sessions, such people will better understand why they react the way they have to the disruption which retrenchment brings to their lives. A competent counselor will also help one who has been retrenched come to terms with the new reality and put such a person in a more positive frame of mind.  

It would also be of benefit to the mental state of a retrenched employee to have an adequate support system. The ability to be able to depend on family members, close friends, a spouse or other similar partner, or anyone else close to the retrenched employee will do much to enable the employee to endure the temporary hardships of retrenchment. 



Retrenchment poses many difficulties for everyone who is affected, whether directly or indirectly. However, as has been proven, there are methods by which the problems caused by retrenchment can be overcome. It is highly advisable for those who have been retrenched to be mindful of both their financial and mental condition.  

By keeping both stable, such a person will be better equipped to manage the challenging period of retrenchment and eventually return to work without facing any other major issues, whether financial or otherwise. 

There is one group of people which contains those who are never at risk of retrenchment in Singapore. This is because of their unique position. Namely, those who own a Singapore company.  

In this area, we at Paul Hype Page & Co have served many a satisfied client and will do the same for you. All you have to do is contact our incorporation experts and receive information and feedback from them. In this way, we will get you started on your journey towards owning and operating a Singapore company. Once you begin doing so, you can be assured that as a company owner, you will certainly not be retrenched.