Singapore is considering stronger measures against employers that refuse to provide retrenchment benefits despite having the financial capacity to pay, as the government reviews protections for workers affected by layoffs.
Acting Manpower Minister Jasmin Lau outlined the proposal in Parliament on 6 October 2026. One option under consideration is administrative action against employers that refuse to pay benefits in serious cases, despite having the means to do so and receiving repeated engagements and warnings.
The proposal forms part of Singapore’s ongoing Employment Act review, which is examining whether stronger obligations on employers are needed. The measures remain under consideration and have not yet been introduced as new requirements.
Most Employers Provided Retrenchment Benefits
According to the Ministry of Manpower (MOM), data from Mandatory Retrenchment Notifications in 2025 showed that 88% of employers that carried out retrenchments provided benefits to affected employees.
The remaining 12% did not provide retrenchment benefits. About one in five of these employers cited financial difficulties, while others pointed to the absence of a legal obligation or alternative forms of support, such as extended payroll arrangements or employment assistance payments.
The government is considering how to improve compliance while recognising that some employers face genuine financial constraints.
Retrenchments Rise to 4,620 in the Second Quarter
Singapore recorded 4,620 retrenchments in the second quarter of 2026, up from 3,830 in the first quarter, according to MOM’s second-quarter labour market report.
The increase was concentrated in outward-oriented industries, including manufacturing, information and communications, and financial services. Business reorganisation and restructuring accounted for around three-quarters of retrenchments.
Workers were also taking longer to return to employment. The proportion of retrenched resident workers who found new employment within six months fell from 60.7% in the first quarter to 54.9% in the second quarter.
Government Says AI’s Role Remains Unclear
Questions were also raised about whether artificial intelligence (AI) was contributing to the increase in retrenchments.
Lau said the impact of AI adoption remained difficult to separate from wider business transformation and restructuring. MOM’s surveys indicated that only a small minority of firms adopting AI had reduced headcount, while more firms were creating new roles or redesigning existing jobs.
The government said it would continue improving its surveys and labour-market monitoring to better understand AI’s effects on employment.
Tackling Disguised Retrenchments
MOM is also working with tripartite partners to provide clearer guidance on what constitutes retrenchment and the obligations that follow.
The ministry may investigate complaints involving potentially disguised retrenchments, including cases where a company experiences a rise in contractual terminations. The aim is to prevent employers from misclassifying job losses and under-reporting retrenchments.
What HR Teams Should Watch
For HR leaders and employers in Singapore, the developments highlight several areas to monitor:
- Retrenchment benefits: Review existing policies and employment arrangements against current guidance and any future changes.
- Financial planning: Factor appropriate employee support into restructuring plans.
- Accurate classification: Ensure genuine redundancies are identified and reported correctly rather than treated as ordinary contractual terminations.
- Workforce transformation: Document the rationale for restructuring and assess how technology-related changes affect roles and employees.
The government has not yet confirmed the final measures arising from the Employment Act review. Employers should monitor official MOM updates before treating the proposal as a new legal obligation.
