What Happens at the Termination of Employment in Singapore?

Both you and your employer have the right to end your employment relationship by terminating your employment contract. This process, however, entails certain legal obligations and implications on both parties that must be abided by in accordance with the relevant employment-related legislation, as well as any of the terms and conditions that are set out in the employment contract.

If you are negatively affected by the termination of your employment, there may be possible avenues of legal action that you may undertake, as set out below.

In this article, we will cover what is termination of employment and the various ways in which an employment relationship can be terminated:

• Termination with notice
• Termination without notice
• Termination due to the employee’s misconduct
• Wrongful dismissal

What is Termination of Employment?

Termination of employment refers to the end of an individual’s employment with a particular business or company, which may be voluntary or involuntary. According to the Ministry of Manpower (MOM), when either you or the employer wants to end the employment relationship, you may do so by terminating the contract of service.

The Employment Act (EA) covers any person who has entered into a contract of service and also governs the termination of employment. Specific examples include:

• Duration of contract: Section 9 of the EA lays out that a contract for a specified piece of work or period of time will be terminated when such work is completed, or the period of time for which the contract was made has expired.
• Duration and manner of notice of termination: Section 10 of the EA lays out the requirement for the notice of termination to be the same for both employer and employee. The notice must be done in writing and can be given at any time. An employer’s notice period would vary depending on the terms of their contract or the employee’s period of employment. The day on which the notice is given should also be included in the period of notice.
• Terminating your employment without waiting for the notice to expire: Section 11 of the EA lays out such an exception, provided that payment is made to the other party in accordance with the terms of their contract. Alternatively, either party may terminate the contract without notice if there is any wilful breach by the other party of a condition of the contract.
• Terminating your employment as a minor: Section 12 of the EA states that no contract of service as an employee is enforceable against a person below 18 years of age, and no damages or indemnity are recoverable from that person in respect of the contract of service unless it is for his or her benefit.

For further information, please refer to our other article on the Employment Act and its scope.

What are the Various Ways in which an Employment Relationship Can be Terminated?

Termination with notice

Termination with notice happens when:

• You resign; or 
• Your employer wishes to terminate your employment. 

In either of these situations, you must serve notice or pay compensation in lieu of notice. However, notice can be waived by mutual written consent between you and your employer.     

A written termination letter is mandatory for you to be considered as having formally left the company, and you must ask your employer to give you a signed letter if you did not receive it. Do note that a reason from either party for termination is not required if notice has been given to the other party.

Your notice period is largely dependent on the terms specified in your employment contract. If it is unspecified, the notice period will depend on your length of service. The notice period includes the day on which the notice is given, public holidays, rest days, and non-working days.

You can refer to this table provided by the MOM which stipulates the notice period required according to the length of service, along with other essential calculations. 

Termination without notice 

Termination without notice happens when:

• You wish to resign; or 
• Your employer wishes to terminate your employment without giving notice. 

Either party will have to pay salary in lieu of notice. This means paying the other party an amount equivalent to the salary that would have been earned during the required notice period, instead of giving advance notice of your termination. The party that has breached the terms of the employment must pay salary in lieu of notice. Examples of situations where such termination may occur include:

• Breaking the terms of the contract. Examples include your employer failing to pay your salary within 7 days of it being due. In this case, the onus for compensation lies with the employer.
• Employee being continuously absent from work for more than 2 working days, either without approval and a good excuse or without informing and attempting to inform your employer of the reason. In this case, the onus of compensation lies on you as the employee.
• Changes to the terms and conditions of work where there is no agreement or consent such as a change in the required notice period. In this case, the onus of compensation lies on the employer.

Do note that in addition to salary in lieu of notice, either party may be required to pay compensation for terminating the contract before a specified period. Such terms are, however, not covered by the EA and are based on the contract of service. As such, any disputes have to be settled by the civil court.

Termination due to employee misconduct

Misconduct, according to the MOM, is the failure to fulfil the conditions of employment in the contract of service. Examples include dishonesty and insubordination. For instance, an employee could have either provided untruthful or false information in their job application, or refused to comply with the directions issued in the workplace without valid reasons.

Cases of employee misconduct will result in either a formal inquiry or internal investigations, depending on the severity of the case before any disciplinary action is taken.

While there is no fixed procedure for such inquiry, you may refer to this MOM page for an overview of the inquiry process.

Upon conducting the inquiry, if there is:

• Misconduct, the employer can instantly downgrade the employee, suspend the employee from work without pay for a maximum of 1 week, or terminate employment without notice, and no salary in lieu of notice will be paid.
• No misconduct, the employer must restore the full amount of any salary that was withheld during the suspension period.

You may also refer to this article on handling cases of employee misconduct in Singapore for a more detailed discussion.

Wrongful dismissal

Wrongful dismissal occurs when an employee is dismissed without just or sufficient cause. Examples of wrongful dismissal include:

• Dismissal based on discriminatory grounds such as:
  • Age; 
  • Race;
  • Religion;
  • Disability;
  • Marital status;
• Depriving an employee of their benefits or entitlements (whether provided under statute or by the employer) that they would have otherwise earned or received in the ordinary course of their employment (e.g., maternity benefits, or retirement benefits);
• Punishing an employee for exercising their employment rights (e.g., filing a mediation request for unpaid salaries or being unwilling to work beyond contractual hours). 

On the other hand, a valid dismissal is based on reasons such as poor performance according to the required standards of the employer, redundancy, or employee misconduct.

Both employers and employees should refer to the Tripartite Guidelines on Wrongful Dismissal for more information on what would amount to wrongful dismissal.

If you believe that you have been wrongfully dismissed, here are some steps that you can consider taking:

1. Try to speak with your employer or the HR department in your company to resolve the matter amicably first.
2. If the matter cannot be internally resolved, you can proceed with a claim in court or with a mediation claim with the Tripartite Alliance for Dispute Management (TADM) for both statutory and contractual salary-related claims, and wrongful dismissal claims which have a high rate of success. Note that if you believe you have been wrongfully dismissed specifically due to your age or have been denied re-employment, you should submit an appeal to the MOM on those grounds here instead of submitting it to the TADM.
3. If the claims cannot be resolved at the TADM, you can file for an appeal and have your case referred to the Employment Claims Tribunals (ECT). If the ECT judges find that your dismissal is wrongful, your employer will be ordered to either reinstate you to your former job and pay you for any income loss due to the wrongful dismissal or pay you a sum of money as compensation.

You should file any statutory and contractual salary-related claims within 6 months from the last day of work if you are no longer employed, or within 1 year after the arising of the dispute if you are still employed.

On the other hand, wrongful dismissal claims at the TADM should be filed within 1 month from the last day of your employment, or within 2 months from the date of confinement for pregnant employees. Note that if you are a manager or executive, you can only file a wrongful dismissal claim if you have worked for at least 6 months at the job at which you were dismissed. Filing for a claim at the TADM will allow you to claim up to $20,000 or up to $30,000 if you go through the Tripartite Mediation Framework assisted by unions recognised under the Industrial Relations Act.

—

To recap, termination of the employment relationship can happen in four different ways depending on the situation. A good rule of thumb to follow across these various scenarios would be to seek resolution of the matter amicably where possible. Depending on the nature of the termination, various avenues for legal recourse may also be available.

It is recommended that you consult an employment lawyer in Singapore for legal advice or assistance if you have had your employment terminated to determine your rights and potential remedies, if any.