Tribunal rules Section 45 of Employment Act creates no statutory right to retrenchment benefits

An Employment Claims Tribunal has dismissed all three claims brought by a former HR Lead against his employer, holding in the process that Section 45 of the Employment Act 1968 does not create a statutory entitlement to retrenchment benefits — providing the first detailed judicial analysis of a provision that has sat unexamined on the books since 1968.

The judgment, JIF v JIG [2026] SGECT 3, was handed down on 1 July 2026 by Tribunal Magistrate Jared Kang Chern Wey. The employee had claimed that he was underpaid his retrenchment benefit, wrongfully dismissed on a retaliatory basis, and wrongly denied the vesting of his first tranche of employee share options. All three claims failed. The parties' identities were redacted from the published grounds.

The tribunal held that employees seeking retrenchment benefits must identify a contractual or collectively bargained entitlement; Section 45 itself does not create one.

Section 45 and the question of statutory entitlement

A central issue in the judgment concerned Section 45 of the Employment Act 1968 (EA), which Tribunal Magistrate Kang described as "a curious provision" that has remained in substantially the same form since the EA was first enacted.

Section 45 provides that no employee with less than two years of continuous service is entitled to any retrenchment benefit on dismissal on grounds of redundancy. Crucially, it says nothing about those who have served two years or more.

Tribunal Magistrate Kang noted that the provision "is framed entirely in the negative" and does not, "in any express terms, seem to confer any entitlement above that threshold." He considered whether the negative phrasing implied a corresponding positive entitlement for employees with two or more years of service — and rejected that reading.

Such an interpretation, he found, would be "a radical departure from the long-settled understanding that retrenchment benefits are not mandated by statute." It would also raise immediate practical difficulties, including how courts would quantify such a benefit without any statutory formula or mechanism.

"If Parliament really intended to generate such a right — be it in 1968 when it first enacted [Section 45], or over the years — one can reasonably expect that it would, at some point in the last five decades, have had something to say about its precise contents," he wrote. "That nothing of that sort has been appended to [Section 45] casts serious doubt that [it] could be read to carry such meaning."

He acknowledged that his interpretation left a residual puzzle. If Section 45 neither creates a statutory entitlement nor meaningfully constrains contractual arrangements, it may have no discernible legal effect — a result sitting uneasily with the presumption that Parliament does not legislate in vain. He observed, candidly, that "this may simply not always be possible" to resolve satisfactorily.

Non-contractual HR policies cannot be enforced

The employee argued that an internal "Redundancy Standard" document, along with past practice at the company, obliged the employer to pay one month's salary per completed year of service. He received two weeks per year and sought the shortfall.

Tribunal Magistrate Kang rejected this. The document stated on its first page that it was "non-contractual and may be subject to amendment or change from time to time." The employee accepted the text was present when taken to it at the hearing.

A document expressly stated to be non-contractual can become binding through clear incorporation into the employment contract or an unequivocal assurance that it governs the relationship as a matter of legal obligation. No such route was established here.

The appeal to past practice fared no better. "An employer's past generosity in another case may be evidence of how the employer chooses to apply its policies; it is not, without more, evidence that the employer undertook a legal obligation to all employees to pay on the same basis," Tribunal Magistrate Kang wrote. Usage, however consistent, "does not transubstantiate policy into contract."

He also noted that even if the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (TAMEMRR) were treated as creating legal entitlement — which it does not — the employee had already received two weeks' salary per year of service, within the advisory's stated norm of two weeks to one month per year.

Wrongful dismissal: burden of proof and the retaliation thesis

The employee alleged his retrenchment was retaliation for escalating proposed mid-year salary and share option adjustments to a group human resources governance team — characterising this as a protected "Speak Up" disclosure that had displeased senior management.

Tribunal Magistrate Kang identified a threshold issue: for with-notice dismissals on grounds of redundancy, as distinct from summary dismissal or dismissals on grounds of misconduct or poor performance, the burden rests on the employee to prove dismissal without just cause or excuse. Parliament did not provide for a burden-shift in redundancy cases.

On the facts, he found the August 2024 exchanges did not constitute a protected disclosure. The employee had acted as "the conduit expected of an HR lead within the prevailing governance framework," conveying management's proposals to the relevant governance team and relaying feedback in return. This was not whistle-blowing. The CEO and DCEO had been copied throughout the exchanges.

Timing also defeated the retaliation thesis. The Redundancy Business Case was dated 23 September 2024; the "at risk" letter was issued 9 October; the employee's formal Speak Up filing came on 10 October. By simple chronology, the filing could not have caused the decision to initiate redundancy. And the two months between the August exchanges and the October "at risk" step required inferring that management had spent that period plotting the employee's removal — a conclusion Tribunal Magistrate Kang found "hard to believe."

He accepted the employer's account that the HR Lead role was being reconstituted around change-management competencies, with operational work absorbed by others. The continuation of some HR tasks after the employee's departure did not, without more, establish a like-for-like backfill.

ESOP vesting: discretion not exercised irrationally or in bad faith

The employee's first ESOP tranche was scheduled to vest on 31 December 2024, the same date his employment ended. He argued he should have received the shares, or their cash equivalent, as a "good leaver."

The plan rules and employment contract conferred on the employer absolute discretion to determine whether an employee serving notice should nonetheless receive vesting. The employer exercised that discretion against the employee in the redundancy notice of 23 October 2024, which stated he was "not eligible for any variable compensation award for the performance year 2024."

A tribunal's review of such discretion is supervisory and confined to whether it was exercised irrationally or in bad faith. Finding neither, Tribunal Magistrate Kang dismissed the ESOP claim.

Criticisms of employer's conduct; no costs awarded

Although all claims failed, the employer did not obtain a costs order. Tribunal Magistrate Kang cited two principal reasons: the employer's admitted failure to comply with mandatory retrenchment-reporting timelines under Section 96A of the EA, and reservations about the handling of the redundancy process overall.

He noted the employee was never informed why no alternative role was available; that email access was curtailed during gardening leave before his employment had ended; and that a staff-wide announcement inaccurately described him as having "decided to leave to pursue other opportunities."

"These are criticisms of managerial practice, not findings of legal impropriety," Tribunal Magistrate Kang wrote. "They do not change any of my substantive conclusions set out above." Had the process been handled more carefully, he observed, it "might have reduced uncertainty for [the employee] and perhaps avoided this dispute altogether."