Free Singapore retrenchment calculator. Estimate your expected retrenchment payment based on years of service using Tripartite Guidelines: 2 weeks pay per year for under 2 years, 1 month per year for 2 or more years.
Estimate your retrenchment payment under Tripartite Guidelines.
Expected retrenchment benefit
—
Rate applied
—
Equivalent months of pay
—
Taxable?
—
Your breakdown
Updates live as you type
Item
Amount
The Tripartite Guidelines and how the rates work
The Tripartite Guidelines on Retrenchment Benefits are jointly issued by the Ministry of Manpower, the National Trades Union Congress, and the Singapore National Employers Federation. They set two recommended rates. For employees with less than two completed years of service, the rate is 2 weeks of salary per year of service. For employees with two or more completed years, the rate rises to one month of salary per year. The guidelines are based on completed years only, so an employee who has worked for 2 years and 7 months is treated as 2 completed years under the basic formula, though some employers round up partially.
The rates apply to the last drawn monthly salary, which typically means the fixed base salary and any fixed allowances. Variable bonuses and one-off payments are not included in the base for calculating retrenchment benefit under the guidelines. If your employment contract specifies a higher rate or if there is a collective agreement in place, the contract or agreement amount applies instead.
What to negotiate beyond the basic retrenchment payment
The Tripartite Guidelines are a floor, not a ceiling. In practice, many larger employers and multinationals in Singapore pay significantly more. When negotiating your retrenchment package, consider asking for: salary in lieu of the full notice period if the employer is asking you to leave immediately; an ex-gratia payment on top of the retrenchment benefit if you are a long-serving employee; retention of medical benefits until you find new employment; a positive reference letter; and outplacement support such as career coaching. Some employers also offer a prorated bonus for the portion of the year worked before retrenchment.
Planning your finances after retrenchment
A retrenchment benefit is a one-time payment, not a recurring income stream. The standard financial planning advice is to hold at least 6 months of living expenses in liquid savings before a potential retrenchment. If your emergency fund was below that level, the retrenchment payment can partially rebuild it. Note that CPF contributions from your employer cease on the last day of employment, and your own employee CPF contributions also stop. You can make voluntary CPF contributions during a period of unemployment, but the employer share is lost. Prioritise maintaining Medisave adequacy to keep MediShield Life and any Integrated Shield Plan premiums funded while you search for new work.
Frequently asked questions
Is retrenchment benefit legally mandated in Singapore?
Retrenchment benefit is not legally mandated under Singapore employment law. Employers are not required by statute to pay it. However, the Tripartite Guidelines on Retrenchment Benefits issued by the Ministry of Manpower, NTUC, and Singapore National Employers Federation strongly recommend specific rates and the guidelines carry significant moral and reputational weight. Employers who do not follow the guidelines may face scrutiny and employees have avenues to seek recourse through the MOM Advisory Conciliation and Arbitration system.
What are the recommended retrenchment benefit rates?
The Tripartite Guidelines recommend retrenchment benefit of 2 weeks of salary per year of service for employees who have served less than 2 years, and 1 month of salary per year of service for employees with 2 or more years of service. These are the minimum recommended rates. Employers who have generous retrenchment benefit provisions in collective agreements with unions or in employment contracts may pay higher amounts. Some technology firms and multinational companies pay 2 to 3 months per year of service or more.
Is retrenchment benefit taxable in Singapore?
Retrenchment benefits are generally not taxable for employees who are laid off due to business restructuring, downsizing, or closures, provided the payment is made in good faith and is not excessive relative to the norms. IRAS considers retrenchment payments up to the amount recommended by the Tripartite Guidelines as non-taxable. Payments significantly above the guidelines may be viewed as disguised remuneration and could attract income tax. Ex-gratia payments made at the time of resignation, as opposed to retrenchment, are typically taxable.
Does retrenchment benefit include CPF contributions?
Retrenchment benefit is not considered ordinary wages under the CPF Act, so CPF contributions are not payable on retrenchment payments in most cases. This means the full amount is cash in hand for the retrenched employee. Salary in lieu of notice, however, is treated differently: because it is a payment in place of a contractual obligation to pay salary, it may be subject to CPF depending on the circumstances. If you receive both a retrenchment benefit and salary in lieu of notice, clarify the CPF treatment of each component with your employer or CPF Board.