In Singapore, being retrenched, fired or asked to resign can have different implications for your rights, financial entitlements and what you can do next. While these terms are sometimes used interchangeably in everyday conversation, they do not necessarily mean the same thing.
Understanding the difference is important, especially if you are deciding whether to accept a severance package, sign a resignation letter or challenge a dismissal.
Retrenchment: Your Role Has Become Redundant
Retrenchment happens when your employer no longer needs your role. The key distinction is that the reason for the termination is redundancy, rather than your misconduct or poor performance.
This can happen when a company restructures, downsizes, automates certain functions, moves operations elsewhere or adjusts to changing business conditions. In other words, it is the job that is being removed.
Under the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, employees who have served at least two years are eligible for retrenchment benefits.
The prevailing norm is two weeks to one month of salary for each year of service. However, the actual amount depends on what is stated in your employment contract or collective agreement, or what is negotiated with your employer. Retrenchment benefits are not generally mandated by law.
Read Also: How Is Severance Pay Calculated In Singapore
In practice, around nine in 10 eligible employees received retrenchment benefits between 2020 and 2025, according to MOM. Employees with fewer than two years of service may instead receive an ex-gratia payment out of goodwill.
Employers with at least 10 employees must notify MOM when they retrench any employee. This must be done within five working days after the affected employee is informed.
There is also a difference between a genuine retrenchment and a dismissal that is simply labelled as one. The Tripartite Guidelines on Wrongful Dismissal give the example of an employer claiming that a job was being removed through restructuring, only to hire someone else into the same position. If the reason given for a dismissal is proven to be false, the dismissal can be wrongful.
Being Fired For Misconduct Or Poor Performance
When we say someone has been “fired”, we typically mean that the employer terminated the employee because of something related to their conduct or performance.
Misconduct can include offences such as dishonesty, insubordination or a serious breach of company policy. In such cases, an employee can be dismissed without notice or payment in lieu of notice. However, the employer must first conduct a due inquiry. This generally means informing the employee of the alleged misconduct and giving them an opportunity to present their case.
Poor performance is treated differently. If an employer dismisses an employee for poor performance, the employer must be able to substantiate it. The employee should also be given the contractual notice period or salary in lieu of notice.
In practice, some employers may first put employees through a performance management process, such as a Performance Improvement Plan (PIP), before deciding whether to terminate their employment.
A dismissal can be wrongful for several reasons. For example, it could be motivated by discrimination, intended to deprive an employee of an employment benefit or used to punish someone for exercising an employment right. A dismissal can also be wrongful if an employer cites misconduct or poor performance but cannot substantiate it, or gives a reason for the dismissal that is subsequently proven to be false.
If you believe you have been wrongfully dismissed, you generally have one month from your last day of employment to seek mediation through the Tripartite Alliance for Dispute Management (TADM).
Read Also: Wrongful Dismissal In Singapore: Here Are The Rights You Have As An Employee Under The Law
Asked To Resign: Was It Really Voluntary?
Being asked to resign can be more complicated because the important question is whether you genuinely chose to leave. An employer may, for example, ask an employee to resign instead of going through a formal disciplinary or termination process. If the employee chooses to do so, it may be treated as a resignation, with the usual entitlements that come with resigning.
However, signing a resignation letter does not necessarily mean the resignation was voluntary. Singapore’s wrongful dismissal framework includes what is known as an “involuntary resignation”. In other words, if an employee was effectively forced to resign by their employer, the resignation can potentially be treated as a dismissal.
Whether a resignation was genuinely voluntary or amounted to an involuntary resignation depends on the circumstances surrounding the employee’s departure. This matters if your employer is pressuring you to resign. Before signing a resignation letter, it is worth understanding what you are agreeing to and whether you are genuinely choosing to leave.
If there is a significant dispute over your performance, conduct or the circumstances of your departure, you may also want to seek legal advice before signing anything.
If you believe you were forced to resign and therefore wrongfully dismissed, you generally need to start mediation at TADM within one month of your last day of employment.
Read Also: 5 Workplace Red Flags That Could Develop Into Employment Issues
How You Lose Your Job Determines What You Can Do Next
The simplest way to think about the difference is to look at why the employment relationship ended.
If you were retrenched, your role was made redundant because of the employer’s business needs rather than misconduct or poor performance. If you have served for at least two years, you are eligible for retrenchment benefits, with the prevailing norm being two weeks to one month of salary for each year of service. The actual amount will depend on your employment contract, collective agreement or what is negotiated with your employer.
If you were fired for misconduct or poor performance, a different set of rules applies. Misconduct can justify dismissal without notice, but the employer must first conduct a due inquiry. Poor performance should generally result in dismissal with notice or salary in lieu, and the employer must be able to substantiate the performance issue.
If you are asked to resign, the key question is whether you are genuinely choosing to leave. A voluntary resignation is different from an involuntary resignation where you were effectively forced out, which can fall within Singapore’s wrongful dismissal framework.
If you are unsure which situation applies to you, MOM and TADM are useful starting points. For a significant employment dispute, it may also be worth speaking to a qualified employment lawyer before signing anything that could affect your position.
Read Also: 8 Things You Should Do In The First 30 Days After Being Retrenched In Singapore
Know your employment rights.
