Meet Amelia. She is a Canadian citizen working at a MNC in Canada. The MNC requested that she relocate to Singapore to help in growing the Singapore business. Amelia takes up the offer to move to Singapore. The MNC convinces her to enter a new employment contract governed under Singapore law. The MNC offers her a higher salary and better perks to move to Singapore under the new employment contract. Amelia takes up the offer. After two (2) years in Singapore, the MNC suddenly then decides to shrink the Singapore office citing the need to cut overheads and tells Amelia that she is made redundant. Sounds too familiar, right?
What do expats need to do when they land in such a situation?
Navigating Termination in Singapore: Key Considerations for Expats
Getting axed can be a challenging experience, especially for expatriates in Singapore who may face unique circumstances due to their international employment status. Understanding their rights and entitlements is crucial in ensuring a smooth transition. This article outlines the essential points an expat should note when facing termination, including salary and benefits, severance agreements, tax planning, and more.
Salary and Benefits
Upon termination, expat employees may be granted severance/ex-gratia payments for loss of office, essentially a final compensation package which may include lump sum or benefits as a goodwill gesture from the employer. They are also entitled vacation pay as compensation for all accrued but unused vacation entitlement. Understanding the implications of final payments on their tax obligations are important. All payments and benefits under the employment agreement are subject to applicable tax and employment withholdings. Do read termination contracts carefully and reach out to qualified lawyers to assist you with negotiations and settlement terms.
Key Considerations for Severance Benefits
Confirm whether you qualify for Severance Benefits. Note that under Singapore law, employees are not automatically entitled to severance benefits although it is encouraged by the Ministry of Manpower in Singapore. Severance amounts may vary based on: Length of service, Employment grade or position, Terms of your contract. Confirm whether overseas service will be factored into the severance calculation, may depend on company terms and global policy.
Tax Planning
As an Expatriate, your termination benefits may be subject to tax from Singapore and your home country. Do seek advice from a qualified lawyer to ensure complete understanding of tax laws from your country as well as Singapore. If you are leaving Singapore, your employer will have to file an IR21 form with the inland Revenue Authority of Singapore (IRAS) for tax clearance before making the final payment. Do confirm whether your home country has any double taxation agreement with Singapore to avoid being taxed on the same income twice.
Employment Pass
When an Expatriate’s employment in Singapore ends, their Employment Pass (EP) is cancelled, and they are issued a 30-day Short Term Visit Pass (STVP). The Expatriate must find a new job and apply for a new EP within the 30-day period or will be forced to leave. This same rule will apply similarly to Dependant pass holders related to the Expatriate. They will also be asked to leave Singapore at the end of the 30-day period along with the Expatriate.
Repatriation Allowance and Airfare
Do check your employment contract if it includes expatriate benefits such as allowance or compensated airfare for your return. These benefits will normally be stated in the contract, do check with your company if these benefits stand after termination. Benefits typically stated in severance agreements include, shipping of personal belongings, flight tickets, and temporary accommodation. Apart from these benefits, do check if your company offers continued healthcare coverage when transitioning to a personal healthcare insurance plan.
How to ensure a smooth transition
Make sure to review all agreements thoroughly to understand your entitlements. Make sure to seek professional advice from qualified lawyers. Do reach out to us at Legal Expat if you require professional advice. We have a team of qualified lawyers that can assist you. Email us at: info@legalexpat.sg or drop us a WhatsApp at: +65 8093 4393 if you require assistance.