While employers may wish for their employees to stay with them for a long time and to grow their business along with them, the reality is that employees come and go.
In the same way employers do not have to continue working with employees who fall short of their expectations, employees can leave when they find another position they value more.
In fact, the Ministry of Manpower (MOM) clearly states that “all employees, including those on fixed term contract, can resign at any time, as long as they serve the required notice”. In short, employers cannot reject an employee’s resignation.
This makes managing an employee’s notice period part and parcel of the responsibilities that business owners have to take on. Apart from navigating the exit of an employee, business owners also have to keep in mind their employment rights under Singapore’s Employment Act.
Having A Termination Letter (Either From Employee Or Employer)
MOM explicitly states that a termination letter, whether initiated by an employee or an employer, is a must. It goes on to state that any employee who hasn’t received a termination letter continues to be an employee of the company.
Termination letters should be signed/acknowledged by both parties, to prevent disputes. Employers also must give an employee a reason for their termination.
The termination letter should also include:
- Date of termination
- Last day of employment
- Duration of notice period
Minimum Notice Period That Employees Have (According To Singapore’s Employment Act)
Even before an employee joins, employers should have an employment contract that stipulates a notice period that suits their business. For example, a small digital market agency may only require the minimum notice period, while a nursery school may require a longer notice period to find a replacement.
In Singapore, the Employment Act dictates a minimum notice period. This is applicable even if no notice period is stated in the employment contract.
| Employment Term | Minimum Notice Period |
| Less than 26 weeks | 1-day’s notice |
| 26 weeks to less than 2 years | 1-week’s notice |
| More than 2 years, but less than 5 years | 2-weeks’ notice |
| More than 5 years | 4-weeks’ notice |
While employers can have longer notice periods, they cannot provide a shorter notice period than what is in the Employment Act. Furthermore, any notice period must be the same for both employees and employers.
This means if an employer requires their employees to provide 6-months’ notice before leaving, they must also give employees a 6-month notice period.
Read Also: Minimum Requirements For Key Employment Terms (KETs) On Employees Contracts
Pay Employees What They Are Entitled To
Employees should either serve the notice period as stated in their employment contract or the Employment Act OR compensation needs to be made by the party that served the termination if they do not wish for the notice period to be served.
Alternatively, notice periods can be waived by mutual consent between employers and employees. Again, this should be done in writing to prevent miscommunication.
Both employers and employees have to pay CPF on salaries during the notice period, as the employee is still considered part of the company. However, CPF contributions are not required for compensation in-lieu of notice.
Read Also: How To Calculate Leave Encashment Or Salary-In-Lieu Of Notice Period For Your Employees
Serving Their Notice Period
If an employee has remaining annual leaves, they can either choose to encash or clear their annual leaves. This should be calculated at the gross rate of pay for employees (without allowances or bonus payments). If employees are clearing annual leaves for the notice period, they are still contracted to their employers – this means they should not start employment with another company.
Annual leaves are forfeited for employees terminated for misconduct.
Employees can also choose to offset their annual leave in exchange for bringing forward their last day. Note that employees cannot use childcare leave for this purpose. This is different from clearing approved annual leaves (in the paragraph above). When this is done, annual leaves will not be paid for by the company. At the same time, this allows employees to take on a new job as sooner.
During the notice period, employees are also allowed to take sick leave. Employers have to continue to pay for medical entitlements and cannot extend their notice period.
Read Also: Medical Benefits That Businesses Have To Legally Provide For Their Employees In Singapore
However, reservist training is not part of a notice period, and employers can extend an employee’s notice period if they wish for the duration of the reservist.
When managing an employee’s notice period, there are also other options that businesses can use.
Read Also: How Much Can Employers Claim When Their NSmen Employees Go For In-Camp Training (ICT)
#1 Letting Employees Serve Out Their Notice Period
Letting employees serve out their notice period could be mutually beneficial. It allows your business sufficient time to find a replacement and have them trained by the employee who is leaving.
This can cause minimal disruption to your business.
At the same time, employees who are leaving can hand over their work gradually rather than be put in a stressful situation of having to hand over all their work to multiple other employees urgently. These employees may then have to handover this work again once a replacement is found.
Of course, the employee who is leaving needs to be on good terms with you in order for this to actually succeed.
#2 Extending Employee’s Notice Period (By Mutual Consent)
Again, if you and your employee are on good terms, asking them to extend their notice period at your company to aid a smoother transition can be beneficial. Of course, achieving this might be tricky if they have already found a new role.
This gives you more time to find someone to replace the employee. The last thing any business wants is to replace a capable employee in a rush with someone unsuitable for the job.
The working knowledge that your exiting employee hands over to the new employee will be quickly lost as that person is unlikely to absorb and put it into action. Nor can the person hand it down to the subsequent replacement.
#3 Putting Employees On Garden Leave
This is mainly for employees with longer notice periods.
For a lower-level employee, the main pain point is replacing the employee. However, for employees who are typically in the managerial level or c-suite (depending on the company size), having longer notice periods to have the option to put them on garden leave (and avoid giving your competitor an advantage to acquire their services immediately) can be beneficial.
Even for lower-level employees, this is akin to approving annual leave for their notice period – and disallowing a competitor to acquire their service in that space of time. If such an employee does not have sufficient annual leaves, and you feel they will disrupt your business operations and other employees while they are around, putting them on garden leave for the duration of their notice period is an option.
#4 Offer Salary In-Lieu Of Notice
By offering your employee a salary in-lieu of notice, you are effectively getting them out of your company as soon as possible. Remember, employees have the same right to pay employers a salary in-lieu of notice (if it is stated in the employment contract).
This way, employers can just move on immediately. While employees can take another job immediately.
Note that CPF is not payable on any amounts paid in-lieu of notice.
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