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During
the downsizing of a business, you may wish to retrench some of your employees.
To avoid employment disputes or any unnecessary civil claims, it is important
to seek legal advice from lawyers in
Singapore like GJC law. This
article will address some of the implications the Employment Act has on employment contract issues such as
retrenchment and retirement.
Under
section 45 of the Employment Act, employees are required to serve a minimum
period of two years before they have any right to claim retrenchment payouts.
Employers are not legally obliged to pay compensation to retrenched employees.
Rules relating to unionized companies may vary, a contract
lawyer should be sought to review the terms in the collective
agreement. Although section 45 mentions a time period of two years, it is
silent on the amount. Generally, the majority of companies award two weeks’
salary for each year of service to the company.
Section
46 of the Employment Act deals with retirement. It states that employees who
have not worked for at least five years will not be entitled to any benefits of
retirement, other than the provisions under the CPF scheme. The amount an
employee can receive upon retirement can be provided in the employment
contract, but this is rare and a contract
lawyer may assist you in looking closely at the employment contract issues that may arise. Lawyers in Singapore should refer to the Retirement and
Re-employment Act when addressing the possibility of retirement payouts. When
an employee reaches 62 years of age, the employer should consult the employee
as to whether he or she would like to be re-employed, assuming his/her medical
fitness and performance. Assuming the employee wishes to continue, an
employment contract should be given to provide for employment until age 65.
Once the employee reaches the age of 65, there is no payout. However, if the
organization does not have a vacancy for him, then the employee should be
awarded with a payment as gratuity. Employment
lawyers in Singapore should be consulted for legal advice regarding the
quantification of this amount.
