Everything You Need to Know About Severance Pay in Singapore

Severance Pay in Singapore: An Essential Employer's Guide

Severance Pay in Singapore: An Essential Employer's Guide

September 30, 2022

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Key Takeaways

  1. Singapore does not operate under at-will employment
  2. Severance pay is not required but is common practice for most businesses
  3. Severance pay is not taxable
Summary

Employment guidelines are different in every country. Companies that want to expand overseas must consider local laws and business practices to establish themselves in a new market effectively. If you don’t pay close attention to labor law updates or bills passed, you could quickly find yourself having to offer high severance pay in Singapore or fees and fines for compliance errors.

Singapore does not have any legislation around mandatory severance pay. However, it is still standard practice to give employees compensation when dismissing them. Employers cannot dismiss employees at will, and it’s required that they provide a valid reason for ending a contract.

To help, we’ve put together this article that details the conditions for termination and standard severance pay in Singapore.

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Severance Pay in Singapore: An Essential Employer’s Guide

Termination in Singapore

There are three main ways an employment contract may be terminated in Singapore:

1. The Employer Wants to Terminate the Contract

This may be due to:

  • An employee’s misconduct (i.e. giving away trade secrets or confidential information) or breach of contract rules;
  • Because the company is downsizing or shutting down;
  • Because the employee’s position or type of employment has become redundant;
  • The employee is longer suitable for the task at hand.

2. The Employee Wants to Terminate the Contract

Reasons for this include:

  • The employer has breached their contract in