Singapore Severance & Retrenchment Benefit Estimator 2026 — MOM Tripartite Norm, IRAS Tax Exempt, CPF Exempt, EAP, Pro-Rated AWS and Full Low/Mid/High Package Comparison

RETRENCHMENT BENEFIT IN SINGAPORE IS NOT FIXED BY LAW. The Employment Act (Section 45) entitles employees with at least 2 years of service to retrenchment benefits, but the specific amount is to be agreed in the employment contract or negotiated. The MOM Tripartite Advisory (TAMEM) sets the prevailing norm at 2 weeks to 1 month of salary per year of service. Unionized companies typically pay 1 month per year under collective agreements. Employees under 2 years are not legally entitled, though MOM strongly encourages an ex-gratia payment. Verify at mom.gov.sg.

NO. RETRENCHMENT BENEFIT IS TAX EXEMPT IN SINGAPORE. IRAS treats retrenchment benefits as capital receipts (compensation for loss of office) rather than employment income. The full retrenchment benefit amount is NOT subject to income tax regardless of its size. This contrasts sharply with PILON, which IS fully taxable. Employers must report retrenchment benefit in Form IR8A under the non-taxable section and PILON under item d3. Always request written confirmation from HR showing the exact breakdown between tax-exempt retrenchment benefit and taxable PILON components.

NO. RETRENCHMENT BENEFIT IS CPF EXEMPT. Both the employee and employer are NOT required to make CPF contributions on retrenchment benefit payments (confirmed by CPF Board). The gross retrenchment benefit amount is paid in full cash with no CPF deduction and no income tax. A retrenched employee receiving S$30,000 in retrenchment benefit keeps the full S$30,000. However, other components such as PILON and Annual Wage Supplement (AWS) remain subject to CPF and income tax respectively.

RETRENCHMENT BENEFIT FORMULA: (Monthly Salary / 4.333) x Rate Weeks x Years of Service. Weekly salary = Monthly Salary / 4.333 (average weeks per month). Example: S$5,000/month, 6 years, market norm 3 weeks per year. Weekly salary = S$5,000 / 4.333 = S$1,154. Benefit per year = S$1,154 x 3 = S$3,462. Total = S$3,462 x 6 = S$20,769. At maximum 1 month per year: S$5,000 x 6 = S$30,000. At minimum 2 weeks per year: (S$5,000/4.333) x 2 x 6 = S$13,846. The gap between minimum and maximum on 6 years is S$16,154, making negotiation knowledge critical.

THE EMPLOYMENT ASSISTANCE PAYMENT (EAP) is for workers at or above the statutory retirement age (63 in Singapore) who are retrenched. Under the Tripartite Guidelines on Re-employment of Older Workers, if an employer cannot offer re-employment to an eligible employee aged 63 or above, an EAP should be provided. The EAP quantum follows the same norm as retrenchment benefits: 2 weeks to 1 month of salary per year of service. Like retrenchment benefits, EAP is tax exempt and CPF exempt. Workers aged 63 to 68 should verify in writing whether their package is an EAP or a retrenchment benefit.

A COMPLETE SINGAPORE RETRENCHMENT PACKAGE should include: (1) Retrenchment Benefit: 2 weeks to 1 month per year of service, TAX EXEMPT, CPF EXEMPT; (2) PILON: if not required to serve notice, calculated at salary/26 per day, TAXABLE, CPF APPLICABLE; (3) Annual Leave Encashment: all unused leave days at MOM daily leave rate, TAXABLE; (4) Pro-Rated Annual Wage Supplement (AWS/13th month): if contractually entitled, pro-rated by months worked, TAXABLE; (5) Pro-Rated Variable Bonus: if contractually provided, TAXABLE; (6) Outstanding Salary: all salary owed up to the last employment day. Verify which components are included before signing.

RETRENCHMENT BENEFIT is for employees with 2 or more years of service whose role has been made redundant. EX-GRATIA PAYMENT (goodwill) is a discretionary payment for employees with under 2 years of service who are not legally entitled to retrenchment benefits. While ex-gratia payments are not mandated, MOM strongly encourages them and most reputable Singapore employers make them. Both retrenchment benefits and genuine ex-gratia payments as compensation for loss of office are tax exempt under IRAS, provided they are clearly structured and documented correctly in the departure agreement and Form IR8A.

IF YOUR EMPLOYER OFFERS LESS THAN THE MOM NORM: (1) Review your employment contract. If it specifies a retrenchment benefit amount, your employer is legally bound to it. (2) Reference the Tripartite Advisory. The MOM TAMEM norm of 2 weeks to 1 month per year is the recognized standard and should anchor your negotiation. (3) Contact TADM at tadm.sg for free mediation of employment disputes. (4) If you are a union member, contact your union immediately as your collective agreement likely specifies 1 month per year. (5) Do NOT sign your departure agreement until all components are fully understood and agreed. Once signed, it is legally binding.

IT DEPENDS ON YOUR EMPLOYMENT CONTRACT. If your contract explicitly guarantees an AWS or 13th month bonus, you are entitled to a pro-rated portion for months worked in the current year. If retrenched in August after 8 months, you are entitled to 8/12 of your AWS amount. AWS is subject to CPF as additional wages and is taxable income under IRAS. If your contract frames the bonus as variable or performance-based rather than guaranteed, you may not be entitled to it upon retrenchment. Always check the exact contract language and list AWS pro-ration as an explicit item in your departure negotiation.

YES. Under the Employment Act, employers with 10 or more employees who retrench 5 or more employees within any 6-month period must notify MOM within 5 working days of informing the 5th affected employee. This mandatory notification enables MOM and tripartite partners (WSG, NTUC e2i) to proactively support retrenched workers with career matching, training subsidies, and job placement services. Failure to notify damages the employer relationship with MOM and may affect future work pass applications. Contact MOM at mom.gov.sg or 6438 5122 to check if notification has been filed.

RETRENCHMENT DURING MEDICAL LEAVE: An employer can retrench an employee on medical leave if the retrenchment is genuine redundancy. The employee retains full retrenchment benefit entitlement. Notice period cannot run concurrently with certified sick leave. RETRENCHMENT DURING MATERNITY LEAVE: Significantly more complex. Dismissing an employee on maternity leave without sufficient cause is unlawful. A genuine retrenchment during maternity leave requires proof of bona fide redundancy unrelated to pregnancy. The employee retains full Government-Paid Maternity Leave (GPML) benefits even if retrenched, paid by the government. Seek advice from TADM or a qualified employment lawyer in either situation.

RETRENCHMENT BENEFIT is for employees retrenched due to role redundancy. LONG SERVICE PAYMENT (LSP) under Section 45 of the Employment Act is for employees with 5 or more years of service dismissed without retrenchment (for example, when a position is abolished but the employer does not frame it as retrenchment). LSP is calculated at the same rate as retrenchment benefits (2 weeks to 1 month per year of service) but applies in different legal circumstances. Both are tax exempt and CPF exempt. The key distinction is the legal framing: retrenchment means the role is redundant; LSP applies to dismissal without cause that is not classified as retrenchment.

GOVERNMENT ASSISTANCE FOR RETRENCHED WORKERS IN SINGAPORE 2026: (1) Workforce Singapore (WSG) Career Support: career matching, job fairs, and career coaching at Careers Connect centres, register at mycareersfuture.gov.sg; (2) SkillsFuture: S$4,000 mid-career top-up (age 40+) for retraining courses; (3) NTUC e2i: training, upskilling, and job placement particularly for union members; (4) ComCare Financial Assistance: short-term living expenses support during the job search period for eligible residents; (5) MOM Retrenchment Notification: registered retrenched workers receive proactive outreach from partner agencies within days of notification.

PAYMENT TIMELINE: Under the Employment Act, all salary owed (outstanding salary, PILON, leave encashment) must be paid within 3 working days of the last employment day if the employer initiates termination. The retrenchment benefit should also be paid within this window if contractually specified. Some employers split payment: statutory components paid immediately, and retrenchment benefit paid within 14 to 30 days where board approval is required. Always ensure your departure agreement specifies exact payment dates for each component. Late payment should be escalated to the Employment Claims Tribunal (ECT) at mom.gov.sg/employment-practices/employment-claims-tribunals.

YES, ABSOLUTELY. The MOM norm of 2 weeks to 1 month per year is a GUIDELINE, not a ceiling. You can negotiate for more particularly when: your contract is silent on the amount; you have unique skills or institutional knowledge; you are a senior leader with a large bonus entitlement; you have potential legal claims (constructive dismissal) that provide leverage; or the company is profitable and restructuring rather than in financial distress. Successful negotiation tactics include referencing comparable market rates, offering structured knowledge transfer in exchange for enhanced benefits, negotiating extended health insurance coverage, and requesting outplacement services. Always negotiate before signing any departure agreement.

THIS IS THE ONLY SINGAPORE TOOL COMBINING ALL OF THE FOLLOWING IN ONE PLACE: (1) All 3 MOM rate tiers simultaneously (2 weeks, 3 weeks, 1 month per year) shown side by side; (2) Auto-detection of EAP eligibility for workers aged 63 and above; (3) Ex-gratia estimation for employees under 2 years of service; (4) Pro-rated AWS with custom amount input; (5) Pro-rated Variable Bonus; (6) PILON with CPF calculation at S$8,000 OW ceiling 2026; (7) Leave encashment at MOM formula; (8) CPF status per component (benefit = EXEMPT, PILON = YES); (9) IRAS taxability per component (benefit = TAX EXEMPT, PILON = TAXABLE); (10) Stacked bar chart comparing all 3 scenarios; (11) Branded PDF report. No other free Singapore calculator in 2026 provides all these features.