Is it compulsory to pay? If there’s a need to provide RB, can I impose a cap on the years of service or salary to compute the RB payment?
While retrenchment benefit is not mandated by law, MOM strongly encourages all unionised and non-unionised employers to adhere to the advisories, including to provide retrenchment benefit to help affected employees while they search for employment.
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.
There is a wide range of support measures provided by the Government, including training grants and financial support, to help employers manage their manpower cost. The Jobs Support Scheme (JSS) provides wage support to employers, helping them retain local employees during this period of economic uncertainty. As such, even employers in severe financial difficulties would have some funds to provide retrenchment benefit to the affected employees, though the quantum may vary from employer to employer depending on their financial position.