Two employment lawyers share how to avoid legal trouble when handling employee resignations
An employer in Singapore was recently barred from offering government-subsided traineeships and attachments after an employment dispute involving a former trainee went viral. ‘Michael’ had accepted a 12-month traineeship program with the employer under the SGUnited initiative, which was introduced to support companies’ manpower issues amidst the pandemic.
It was reported that two months into the program, Michael found a permanent position elsewhere and informed his employer that he’d have to quit his job. However, the company rejected the ‘resignation’ as they were concerned about filling the vacancy. There were plenty of back-and-forths, with Michael claiming that the employer used dirty tactics to keep him on the job.
Michael reported the case to the authorities and eventually posted his story on social media. The internet was soon debating about whether it’s legal for the employer to reject his resignation, especially since he was just a trainee. The Ministry of Manpower (MOM) said the Singapore Business Federation (SBF) had been assisting with mediating the issue since December and concluded that the employer’s actions were in “direct contradiction of the spirit of traineeship”. They clarified that even though trainees are not covered under the Employment Act, they have a right to leave a program as long as they provide sufficient notice as stated in the training agreement.
While Michael’s case shone a spotlight on trainees, we wanted to find out the legalities around employee resignations in Singapore, so we reached out to Dawn Tan, Director at Ashurst ADTLaw and Karen Mitra, Senior Associate at Ashurst to get some legal advice.
HRD: Are employers in Singapore legally allowed to reject resignations? What reasons can employers use to negotiate resignations?
Ashurst ADTLaw: Employers cannot reject the resignation of an employee. Employees are entitled to resign from their employment through the provision of written notice, in accordance with their employment contract.
Regardless of whether it is mentioned in the employee’s employment contract, employees covered by the Employment Act are also entitled to pay the employer in lieu of part or all of the notice period.
In the event that the employment contract does not provide for a notice period, Section 10(3) of the Employment Act (Cap. 91) provides for a minimum notice period depending on the number of years of service.
The employer and the employee can extend the employment beyond the end of the notice period, if that is what they agree. An employer might ask an employee to stay on for longer due to the company’s commitments, such as finishing a project the employee has been involved in, to provide cover for the leave of another employee or similar.
The reasons for the extension are ultimately matters for negotiation between the employer and the employee, but the end date can only be extended if the employee agrees. It is an offence for employers to disallow employees to leave their job without prior agreement and an employer should not use threats of punishment or the provision of a poor reference (especially if the employee has been a good performer) as a way to get the employee to stay with the company.
Alternatively, if the employer is keen to have the employee rescind their resignation and stay with the company, they should speak to the employee about the reasons for leaving and try and resolve any issues.
HRD: How can employers avoid legal trouble when handling employee resignations?
Ashurst ADTLaw: Firstly, employers should be aware of their employee’s right to resign, such as the applicable notice period, through written notice, payment in lieu of notice or the minimum notice period prescribed by the Employment Act.
Secondly, they should acknowledge the employee’s resignation – example by email or signing the resignation letter if the employee requests – and discuss with the employee the arrangements for their exit. This would include matters such as:
- The employee’s last day of work, including any agreement between the parties to lengthen or shorten the notice period.
- The employee’s leave arrangements, if any, during the notice period.
- Whether the employee will be placed on garden leave or if the employer has a contractual right to do so.
- Handover of duties and return of company property.
- Any other matter that needs to be finalised, such as reimbursements, tax clearance etc.
Once agreed, it is good practice to confirm these matters in writing to the employee. The employer should also ensure that it pays the employee his or her final salary on time. Under the Act, an employer in Singapore must pay an employee’s final salary subject to tax clearance for foreign employees:
- On the last day of employment, if the employee has resigned and serves out the notice period; or
- Within seven days of the last day of employment if the employee has resigned without notice and does not serve out the notice period.
Disclaimer: ADTLaw LLC and Ashurst LLP together form Ashurst ADTLaw in Singapore. Ashurst LLP is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary. The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying it to specific issues or transactions.