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Termination

Notice

Are employers required to give notice of termination?

The Employment Act requires that a minimum mutual notice period be given by employers and employees depending on their length of service. The minimum notice period requirements under the act are as follows.

Length of service

Minimum notice period

Less than 26 weeks

One day

Between 26 weeks and two years

One week

Between two and five years

Two weeks

Five or more years

Four weeks

It is common for an employment contract to provide for longer notice periods. An employment contract cannot provide for a notice period which is shorter than the statutory minimum period and notice periods for employers and employees must be the same.

There are no statutory minimum notice periods for employees not covered under the Employment Act. This is determined by the individual employment contract. In the absence of notice periods being specified in an employment contract, the court will imply a notice period of reasonable duration.

Redundancies

What are the rules that govern redundancy procedures?

There is no statutory process for implementing individual redundancies or retrenchment. However, the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment states that the process should be fair and treat affected employees with respect and dignity. Though this is merely an advisory (as opposed to guidelines), it is nevertheless referred to in the Tripartite Guidelines on Fair Employment Practices. The advisory further recommends that employers examine alternatives to retrenchment, including:

  • shorter working weeks;
  • temporary layoffs;
  • flexible working arrangements; and
  • redeployment.

Employers should give a longer notice period than their contractual obligations to enable employees to adjust to their redundancy and look for other work. No specific timescale is recommended, as each redundancy is likely to be different. 

As regards statutory entitlement to retrenchment benefits, Part IV of the Employment Act provides that no employees are entitled to retrenchment benefits on dismissal on the ground of redundancy or by reason of a reorganisation of the employer’s profession, business, trade or work if they have carried out less than two years’ continuous service. Such employees may seek payment, but any amount will be subject to negotiation. Employees not covered under Part IV of the Employment Act are not entitled to any statutory retrenchment benefits, except as provided for by their individual employment contract.

However, based on the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, the prevailing norm is to pay a retrenchment benefit varying between two weeks’ and one month’s salary per year of service, depending on the company’s financial position and considering the industry norm. In unionised companies, the norm is one month’s salary for each year of service.

Are there particular rules for collective redundancies/mass layoffs?

Employers with at least 10 employees must notify the Ministry of Manpower if five or more employees are to be retrenched within a six-month period. The notification must be submitted within five working days after an employee is notified of their retrenchment. For the first four employees to be made redundant, notification must be submitted within five working days from when the fifth employee has been notified. Thereafter, notification must be submitted within five working days after each employee has been notified.

There are no additional statutory requirements on employers to consult or negotiate with trade unions (whether recognised or not) in respect of retrenchment proposals. Although recognised trade unions have the right to serve notice on an employer to engage in collective bargaining under Section 17 of the Industrial Relations Act, terminations on the grounds of redundancy are expressly excluded. However, the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment recommends consultation with recognised trade unions over proposed redundancies, which is also commonly provided for in collective bargaining agreements.

Protections

What protections do employees have on dismissal?

If an employee covered by the Employment Act considers that they have been dismissed without just cause or excuse by their employer, the employee can complain to the Ministry of Manpower within one month of the dismissal even if notice has been given by the employer (ie, unfair dismissal compared with wrongful dismissal). An employee in a managerial or executive position would have to serve at least 12 months in any position with the employer before this remedy is available to them if they are dismissed with notice or provided with payment in lieu of notice.

If the Ministry of Manpower decides that the dismissal is without just cause or reason, it can order the employer to:

  • reinstate the employee and pay a sum equivalent to their lost wages from the date of dismissal until reinstatement; or
  • pay compensation as determined by the Ministry of Manpower. There is no cap on the amount of compensation awardable and it is expressly stated that the ministry need not have regard to any principles of law when determining compensation.

If the Ministry of Manpower makes such an order, the employee cannot bring claims against the employer through the court system.  

Alternatively, and as is also the case for employees who are not covered under the Employment Act, civil claims can be brought against employers. However, in respect of dismissal, the law recognises only wrongful and not unfair dismissal. The potential damages would be limited to contractual entitlements, which would usually be their notice entitlement and any other rights that they may have in their individual employment contracts.

Subsequent to the amendments to the Employment Act taking effect in April 2019, the Employment Claims Tribunal will handle all claims of unfair dismissal against companies, with some minor changes to existing conditions and framework.

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