What Can Companies do if they Can’t Pay their Employees During the COVID-19 Pandemic in Singapore?


The Singaporean government has recently announced the Job Support Scheme. Employers can get 75% wage financing for the first $4,600 salary of each employee during April and May. Furthermore, the financing is between 25% and 75% in July and October, depending on the sector where the business operates. This assistance has been expected to assist employers in retaining their employees.

The government has encouraged companies to pay baseline salaries to employees, even if they can’t work. A fair baseline wage can be negotiated between the two parties depending on the circumstances and the financial position of the company.

Still, what if Companies Can’t Pay the Wage?

If companies can’t pay the full salary, they can take actions such as baseline wage including unpaid leave, temporary layoffs, training employees for other skills, etc. If these are not practical, then retrenchment is the last option.

What is Retrenchment?

Retrenchment means discontinuing the services without a fault of the employee. It is taken as a last resort in cases where companies are unable to pay the worker.

In Singapore, employers must pay employees a retrenchment bonus. The amount depends on the negotiations between the two parties which may have been done before, or after the termination agreement.

Furthermore, companies should pay special focus to low wage workers. This can be in the form of paying more retrenchment bonus and referring them to e2i, Workforce Singapore (WSG) and joining the NTUC Job Security Council (JSC).

What is the Process of Retrenchment in Singapore?

Do remember, retrenchment is different from other types of contract termination which can be because of various reasons like an unsatisfactory probation period, breach of contract, misconduct, etc. Thus, it will be better for you to check a Guide to Terminating Staff in Singapore just to be sure about what you are doing.

In the case where you are looking for retrenchment, first, you should provide the employee with a termination notice and then discuss the retrenchment benefit in Singapore.

Remember, during this period, you still need to treat them with dignity and respect.

During the Coronavirus Pandemic, you will also need to report to the MOM if you had to terminate the contract of at least five employees during a six month period.