Exit Support Package and Other Government Support for Winding Down

1. Why did the Government only decide to support one month of retrenchment benefit (RB)? Would the one month of support fulfil employers’ full obligations towards RB?

The payout is intended to help nightlife businesses who had not been allowed to operate, defray a portion of their retrenchment benefit to be paid to affected local employees during this challenging period. It is not intended to replace employers’ contractual obligations.

Employers are still expected to honour RB amounts which are provided for in the employment contract, memoranda of understanding or collective agreement (for unionised companies) which are contractual entitlements. If unable to do so due to the financial circumstances, employers should negotiate with the unions/employees on a mutually acceptable retrenchment benefit package.

If the RB is not contractually specified, employers should refer to the Ministry of Manpower (“MOM”)’s “Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment” and “Advisory on retrenchment benefit payable to retrenched employees as a result of business difficulties due to COVID-19” in deciding on the quantum of RB.

Employers are strongly encouraged to adhere to the advisories, including the provision of RB to help affected employees while they search for employment.

We strongly encourage employers receiving the exit package to provide retrenchment benefit beyond the limits of the financial support provided by the Government.

2. Why is the retrenchment benefit support applicable for local employees only? What about foreign employees that have been retrenched?

Employers are strongly encouraged to adhere to the advisories, including to provide retrenchment benefits to help all affected employees, both local and foreign.

In the event of a dispute, employees who wish to seek assistance can approach MOM for assistance. Employees with contractual claims (i.e. retrenchment benefit spelt out in the employment contract or collective agreement) for retrenchment benefit will be referred to the Tripartite Alliance for Dispute Management to file their claims. More details can be found here.

3. Can companies which are undergoing retrenchment but not intending to exit the industry still qualify for the retrenchment benefit support?

Only companies which are exiting the industry are eligible for the retrenchment benefit support. Companies which are currently participating in the pilot or suspending operations temporarily will not qualify.

4. Can a company which took up the exit grant still reopen when restrictions on nightlife establishments relax in the future?

The exit support package is intended for companies which are exiting from the industry. Companies which took up the exit support will not be allowed to participate in the pilot or reopen as a nightlife business for the next 12 months. Companies should consider the options and make their own business assessment before application.

5. Are there any other support schemes for retrenched workers by the Government?

Workers who have been involuntarily unemployed due to retrenchment or contract termination, or are currently experiencing salary reduction due to cost-cutting measures, may apply for the COVID-19 Support Grant by the Ministry of Social and Family Development (“MSF”) here. More details of the grant, including the eligibility criteria can be found on MSF’s website here.

Workers may also refer to Workforce Singapore (“WSG”)’s website here for resources on seeking alternative employment.

6. Can employers use the financial support payout for RB to fulfil other employment obligations e.g. outstanding salary?

No. Employers should continue to fulfil existing statutory/contractual obligations using their own finances. Failure to pay salary constitutes an offence under the Employment Act.

7. What other end-of-employment obligations should employers take note of?

Employers must give due notice or pay in lieu of notice and fulfil all other contractual obligations e.g. annual leave encashment, notice pay, before ending the employment relationship.

8. If there are disputes on RB payment paid out, what should employers/employees do?

Employers should provide retrenchment benefit depending on their financial position and adhere to the “Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment” and “Advisory on retrenchment benefit payable to retrenched employees as a result of business difficulties due to COVID-19”.

Employees who wish to seek assistance with their retrenchment can approach MOM. Employees with contractual claims (i.e. retrenchment benefit spelt out in the employment contract or collective agreement) for retrenchment benefit will be referred to the Tripartite Alliance for Dispute Management to file their claims.

9. What is deemed as a “cessation of business”?

The company’s licenses should be terminated, and the company’s name should be struck off from the register of the Accounting and Corporate Regulatory Authority (“ACRA”). The company should submit (i) proof of rescission of operating licenses and (ii) notices and filings indicating commencement of strike-off or wind-up process (e.g. strike off notice from ACRA) within 3 months of receiving the letter of offer. Please refer to the ACRA website here for details on closing a company in Singapore.

10. What are the types of costs that a company can claim under the ex-gratia support?

The company may use the ex-gratia payout of $30,000 to defray costs associated with the cessation of business, including but not limited to early lease terminations costs, reinstatement costs, and labour-related costs.