Severance Pay in Singapore: A Comprehensive Guide to Your Entitlements

Introduction

Severance pay is a monetary compensation provided to employees who are involuntarily terminated from their employment. In Singapore, the Employment Act (EA) provides employees with minimum statutory entitlements to severance pay. This article will provide a comprehensive guide to severance pay in Singapore, covering eligibility, calculation, and payment.

Eligibility for Severance Pay

Under the EA, employees are eligible for severance pay if they meet the following criteria:

• They have been employed for at least 6 months continuously with the same employer.
• Their termination is not due to misconduct or poor performance.
• They are not covered by a collective agreement that provides for a higher amount of severance pay.

Calculation of Severance Pay

The amount of severance pay an employee is entitled to is based on their last drawn monthly salary and the length of their service. The statutory minimum formula for calculating severance pay is as follows:

Severance Pay = Last Drawn Monthly Salary × Number of Years of Service

For example, an employee who has worked for 5 years and earns a monthly salary of S$4,000 would be entitled to a severance pay of:

S$4,000 × 5 years = S$20,000

Payment of Severance Pay

Severance pay must be paid to the employee within 14 days of the termination of employment. It can be paid in a lump sum or in installments, as agreed between the employer and employee.

Additional Considerations

In addition to the statutory minimum entitlements, employers may provide additional severance pay to their employees, as per their company policies or contractual agreements. It is important to note that:

• Severance pay is taxable in Singapore.
• Employees may be required to repay a portion of their severance pay if they are re-employed within a certain period.
• Employees who are terminated due to redundancy or company restructuring may be eligible for enhanced severance pay under the Tripartite Guidelines on Redundancy.

Frequently Asked Questions

1. Am I eligible for severance pay if I was terminated for poor performance?

• No, employees who are terminated for misconduct or poor performance are not eligible for statutory severance pay.

2. Can I negotiate a higher severance pay with my employer?

• Yes, employees are free to negotiate a higher severance pay amount with their employers, even if it exceeds the statutory minimum.

3. What happens if my employer does not pay me my severance pay on time?

• Employees who are not paid their severance pay within 14 days of termination can file a complaint with the Ministry of Manpower (MOM).

Conclusion

Severance pay provides financial support to employees who have been involuntarily terminated from their employment. Understanding your eligibility and entitlements is crucial for ensuring that you receive the compensation you are due. While the statutory minimum severance pay provides a basic level of protection, employers are encouraged to consider offering additional severance pay as part of their employee benefits package.