Can my company terminate my employment contract without paying any retrenchment benefit? Is it compulsory for employers to pay retrenchment benefit?

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Accepted Answer

If an employer terminates an employment contract with no plan to fill the vacancy soon, the employee is considered to have been retrenched.

The amount of retrenchment benefit depends on what is provided for in the employment contract, memoranda of understanding or collective agreement (for unionised companies). If there is no contractual provision, it is to be negotiated between employees (or their union) and the employers.

While retrenchment benefit is not mandated by law, MOM strongly encourages employers to adhere to the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (TAMEM), including to provide retrenchment benefit to help affected employees while they search for employment.

Can my company terminate my employment contract without paying any retrenchment benefit? Is it compulsory for employers to pay retrenchment benefit?

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