Singapore Startup’s Guide on Retrenching Responsibly

Singapore Startup’s Guide on Retrenching Responsibly

This article was first published by Coach2Nurture.

During this period, Singapore start-ups may face certain challenges in managing resources including headcounts. While you are contemplating retrenchment, we would like to share some TAFEP guidelines on alternatives

Alternatives to Retrenchment

  1. Send employees for training to upgrade their skills and employability
  2. Redeploy employees to alternative areas of work within the company
  3. Implement flexible work schedule, flexible work arrangements, shorter work-week, or temporary layoff
  4. Adjust wages in line with tripartite norms e.g. monthly variable component of up 10%, freeze increment and annual wage supplement
  5. Implement no-pay leave (as a last resort)

 If retrenchment is inevitable, guidelines on how to manage it responsibly. 

How to Retrench Responsibly

  1. Fair and Objective Criteria of Selection in relation to the business downturn and organization re-structuring and job roles are no longer required
  2. Communicate to Employees by communicating the rationale and explain how the exercise would be carried out and be sensitive to the emotions of employees
  3. Provide Retrenchment Notice Period to affected Employees. Start-ups are encouraged to provide notices above the MOM Employment Act termination notice period.
  4. Provide Retrenchment Benefit in line with the advisories.
  • Employees with 2 years’ service or more are eligible for retrenchment benefit.
  • Those with less than 2 years’ service could be granted an ex-gratia payment.
  • The prevailing norm is to pay a retrenchment benefit varying between 2 weeks to one- month salary per year of service, depending on the financial position of the company and the industry norm.
  1. Facilitate Employment Options through helping affected employees look for alternative jobs in associate companies, in other companies or through outplacement assistance programmes. Start-ups could also provide supporting documentation such as referral letters, service records and past training certificates to facilitate the job search of affected employees
  2. File Manpower Retrenchment Notice (MRN) to MOM, If you have decided and will be going through a retrenchment exercise, you are strongly encouraged to submit a notice of retrenchment
  • It is mandatory for Employers with at least 10 employees who have retrenched 5 or more employees within any 6-month period to notify MOM of the retrenchment exercise.
  • Employers must notify MOM of retrenchments within 5 working days after they notify their employees.

Long Term Effects of Retrenching Responsibly

  1. Employee will appreciate
    1. Employee will always remember how it was managed
  2. Employer Reputation and Branding
    1. To upkeep the morale of existing staff
    2. To attract Talents when the business recovers
  3. Not run into compliance issues with MOM & TAFEP

For specific guidelines as well as advisory support. please visit

or contact Karen Lur, Founder at 9842 4939 or email:

About Coach2Nurture

Coach2Nurture offers a range of HR advisory, consulting and coaching services with the necessary tools and expertise to help you grow your business. If you are at a start-up phase, we will support you in the initial set-up to build your HR capabilities. If you are at a growth stage, we will support you to develop your talents through coaching and mentoring. If your business is at a transition stage, we will extend organisation right-sizing, career transition coaching and support to help your business or your Employees for the next phase.

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