Should employers be required by law to provide retrenchment benefits?

Someone asked for my view whether retrenchment benefit should be made compulsory under law, as it the practiced in many other countries.

Here is my reply:

In some countries, employers contribute to a company pension fund. When the service of the employee is terminated, and the employee does not qualify for a pension or deferred pension, the employee loses the contribution for his period of service.

A retrenchment benefit would be fair to offset this loss to the employee.

In Singapore, the employer contribute to the Central Provident Fund, and the contribution vests immediately with the employee.

This is likely to be the reason why the government does not mandate the payment of retrenchment benefits.

The employment law however does provide for the retrenchment benefit to be negotiated individually or bargained collectively under the terms of employment. Most employers are not likely to provide retrenchment benefit as they consider that the cost of the employee is already quite high, considering the salary and the CPF contribution.

I know that many people are struggling due to the high cost of housing and the high cost of living in Singapore. This is a separate issue that I frequently write in the social media. I do not think that this problem can be solved by making retrenchment benefits mandatory under law.

Tan Kin Lian