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Termination and Resignation

Covers the rights and obligations of employers and employees during the termination or resignation process.

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Comprehensive Guide to Termination and Resignation in Singapore

Termination and resignation in Singapore are governed by the Employment Act (EA), which outlines the rights and obligations of both employers and employees. This guide provides a detailed overview of the legal framework, standard procedures, financial implications, and cultural considerations related to these processes.

1. Legal Framework

Employment Act (EA)

The Employment Act is Singapore's main labor law, covering most employees except:

  • Seafarers
  • Domestic workers
  • Statutory board employees or civil servants

Key provisions of the EA apply to all employees, while additional protections apply to workmen (manual laborers) and non-workmen earning up to SGD 4,500 per month.

2. Resignation

2.1. Employee's Right to Resign

Employees in Singapore have the right to resign from their job by serving the required notice period as stipulated in their employment contract. If no notice period is specified, the default notice period under the Employment Act applies (see Section 3.1 below).

Steps for Resignation:

  1. Review Employment Contract: Check the notice period and any specific resignation procedures.
  2. Submit Resignation Letter: Provide a formal resignation letter to the employer, stating the intended last working day.
  3. Serve Notice Period: Work through the notice period unless mutually agreed otherwise.
  4. Handover Duties: Complete any handover of responsibilities to ensure a smooth transition.

2.2. Notice Period for Resignation

The notice period is either:

  • Specified in the employment contract, or
  • Governed by the Employment Act if no contract terms exist:
    • Less than 26 weeks of service: 1 day
    • 26 weeks to 2 years of service: 1 week
    • 2 to 5 years of service: 2 weeks
    • More than 5 years of service: 4 weeks

2.3. Financial Implications for Resignation

  • Salary Payment: Employers must pay all outstanding salary and benefits by the last working day or within 7 days after the last day of employment.
  • Unconsumed Leave: Any unused annual leave must be compensated in cash.
  • Bonded Employment: If the employee is under a bond (e.g., for training sponsorship), they may need to repay the bond amount if they resign before the bond period ends.

3. Termination

3.1. Employer's Right to Terminate

Employers can terminate an employee's contract by:

  • Serving the required notice period, or
  • Providing payment in lieu of notice (compensation equivalent to the notice period).

Termination must comply with the Employment Act and cannot be done arbitrarily or unfairly. For example, termination due to discrimination or retaliation is prohibited.

Types of Termination:

  1. With Notice: Termination with the agreed notice period.
  2. Without Notice: Termination without notice is allowed only in cases of misconduct (e.g., theft, fraud, or violence). A proper inquiry must be conducted before dismissal.

3.2. Notice Period for Termination

The notice period is the same as for resignation (see Section 2.2).

3.3. Wrongful Dismissal

Under the Employment Act, wrongful dismissal occurs if an employee is terminated:

  • Without just cause or excuse (e.g., due to pregnancy, union membership, or filing a complaint against the employer).
  • Without following proper procedures.

Employees can file a claim with the Tripartite Alliance for Dispute Management (TADM) or the Employment Claims Tribunals (ECT) if they believe they were wrongfully dismissed.

4. Standard Procedures

4.1. For Resignation

  • Employee: Submit a resignation letter and serve the notice period.
  • Employer: Acknowledge the resignation and ensure all final payments are made.

4.2. For Termination

  • Employer: Provide written notice or payment in lieu of notice. If terminating for misconduct, conduct a proper inquiry.
  • Employee: Complete the notice period unless waived by the employer.

4.3. Exit Process

  • Final Salary Payment: Employers must pay all outstanding wages, including unused leave, by the last working day or within 7 days.
  • Return of Company Property: Employees must return all company property (e.g., laptops, access cards).
  • Clearance and Handover: Employees should complete clearance procedures and hand over responsibilities.

5. Financial Implications

5.1. For Employees

  • Unconsumed Leave: Employees are entitled to encashment for unused annual leave.
  • Bond Repayment: Employees under a bond may need to repay the bond amount if they resign prematurely.
  • CPF Contributions: Employers must make final CPF contributions for Singaporean and Permanent Resident employees.

5.2. For Employers

  • Payment in Lieu of Notice: If the employer terminates without notice, they must compensate the employee for the notice period.
  • Severance Pay: Not mandatory unless specified in the employment contract or collective agreement. However, retrenchment benefits are customary for employees with at least 2 years of service.

6. Country-Specific Considerations

6.1. Cultural Norms

  • Professionalism: Resignation and termination are generally handled professionally and respectfully. Employees are expected to provide proper notice and assist with handovers.
  • Exit Interviews: Many companies conduct exit interviews to gather feedback from departing employees.
  • Networking: Maintaining good relationships with former employers and colleagues is important in Singapore's small and interconnected job market.

6.2. Foreign Employees

  • Work Pass Cancellation: Employers must cancel the work pass (e.g., Employment Pass, S Pass) of foreign employees within 7 days of the last working day.
  • Repatriation: Employers are responsible for repatriating foreign employees to their home country unless the employee finds a new job in Singapore.
  • Job Search: Foreign employees on an Employment Pass or S Pass may apply for a Short-Term Visit Pass to stay in Singapore for up to 30 days after their work pass is cancelled.

7. Dispute Resolution

7.1. Tripartite Alliance for Dispute Management (TADM)

TADM provides mediation services for employment disputes, including wrongful dismissal and salary claims.

7.2. Employment Claims Tribunals (ECT)

The ECT handles unresolved disputes after TADM mediation. Claims are capped at SGD 20,000 (or SGD 30,000 for union members).

8. Key Takeaways

  • Resignation and termination in Singapore are governed by the Employment Act and employment contracts.
  • Notice periods must be served unless waived or compensated.
  • Employers must ensure timely payment of final salary and benefits.
  • Wrongful dismissal claims can be filed with TADM or ECT.
  • Foreign employees must ensure their work pass is cancelled and plan for repatriation or job search.

By understanding these processes and adhering to the legal and cultural norms, both employees and employers can ensure a smooth and professional transition during resignation or termination.