Some 2,680 non-resident employees on average were retrenched in Singapore annually between 2021 and 2023, according to the country’s Ministry of Manpower.

The data, presented in response to a parliamentary question by MP See Jinli Jean, highlights the industries most affected: electronics manufacturing, information & communications, and wholesale trade.

While retrenchment benefits are not legally mandated, around 90% of eligible employees (those with at least two years of service) received some form of compensation. Those with shorter tenures, however, do not qualify.

Responsible retrenchment: Principles and expectations

Singapore’s approach to retrenchment is guided by the Tripartite Advisory for Managing Excess Manpower and Responsible Retrenchment (TAMEM), which sets out expectations for fair treatment and objective selection processes.

According to MoM, retrenchment should be the final course of action, undertaken responsibly and with sensitivity. The Tripartite Alliance for Fair and Progressive Employment Practices, or TAFEP, monitors compliance and engages employers who fail to follow these guidelines.

TAFEP maintains that if job cuts become unavoidable, businesses must conduct them with empathy and dignity. “Employers should take reference from the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (TAMEM) issued by the tripartite partners when implementing retrenchment exercise,” the organisation states.

Although not a statutory requirement, MoM encourages both unionised and non-unionised employers to provide retrenchment benefits to support affected employees. The specific amount is typically determined by employment contracts, memoranda of understanding, or collective agreements in unionised firms. Where no formal agreement exists, terms must be negotiated between employers and employees (or their unions).

Impact of retrenchment on migrant employees

Singapore’s economy is deeply reliant on migrant labour, with foreign workers making up about 40% of the country’s 3.4 million-strong labour force. As of June 2024, the total foreign workforce stood at 1,545,200.

The Tripartite advisory applies to all retrenchments, including those affecting migrant employees. Employers are urged to consider long-term workforce needs before making cuts and to follow the National Wages Council Guidelines and TAMEM. The selection process should be objective, based on an employee’s ability to contribute to the company’s future.

TAFEP acknowledges that while employers can legally terminate employment by providing notice or paying in lieu of notice, such actions may still be deemed retrenchment if the employer has no intention of refilling the role. In such cases, businesses must be prepared to justify their decisions if disputes arise.

During retrenchments, TAFEP stresses the importance of transparency and timely communication with employees and of treating them with “utmost respect and compassion during these difficult times”.

The reality of migrant labour in Singapore

Singapore has long been built on the contributions of foreign workers, yet they often find themselves at the sharp end of workforce adjustments.

Work Permit holders – who make up the bulk of low-wage migrant labour – typically earn between S$450 and $800 a month, though official salary data remains scarce.

The Employment of Foreign Manpower Act, or EFMA, governs their rights and wellbeing and ensures employers meet their contractual obligations.

Having a written employment contract that clearly defines terms and conditions is thus strongly advised.

Balancing business needs and workforce fairness

Singapore’s labour policies reflect a balancing act between economic pragmatism and fair employment practices.

While retrenchments are sometimes unavoidable, the emphasis on responsible employment practices serves as a guardrail against indiscriminate job cuts.

Businesses are under pressure to respond quickly to economic shifts, but adhering to these principles is not just a legal or ethical consideration but also a reflection of corporate responsibility and long-term workforce sustainability.