If an employee resigns with immediate effect and does not serve the notice period in their contract, they are liable to pay the company salary in lieu of notice for the period they did not serve. Under the Employment Act 1968, the employer may deduct that amount from the salary still due to the employee, but it must still account for everything else owed and pay the balance within 7 days of the last day. If the final pay is not enough to cover the notice pay, the company can try to recover the balance and, for employees covered by the Act, file a notice pay claim with TADM within 6 months.
This guide is for business owners, directors and HR managers who have just received a “last day is today” message, and need to decide what to pay, what to hold back and how to recover the shortfall without creating a salary claim against the company.
Is the employee allowed to leave without serving notice?
An employee can always end their employment. What they cannot do is end it early for free. The Ministry of Manpower (MOM) explains that either the employer or the employee may terminate the contract before the notice period ends, but the party who does so must pay the other salary in lieu of notice: the gross salary the employee would have earned for the part of the notice period not served. This reflects section 11(1) of the Employment Act, and MOM’s page on termination with notice sets out the practical rules.
So the practical question for the company is rarely “can we stop them leaving?” It is “how much notice pay is owed, and how do we collect it lawfully?” An employer should not try to force an employee to keep working, withhold their personal documents or refuse to release them as a way of applying pressure.
There is one important exception. MOM states that if the employer has not paid salary within 7 days of it falling due, the employee may leave without notice. If your company paid late in the months before the resignation, check this first, because the employee may owe you nothing.
How much notice should the employee have given?
Start with the employment contract. If it states a notice period, that period applies, and MOM’s guidance is that the notice period must be the same for the employer and the employee. If the contract says nothing, the Employment Act sets a minimum based on length of service:
| Length of service | Minimum notice if the contract is silent |
|---|---|
| Less than 26 weeks | 1 day |
| 26 weeks to less than 2 years | 1 week |
| 2 years to less than 5 years | 2 weeks |
| 5 years or more | 4 weeks |
MOM also states that the notice period includes the day notice is given, and counts public holidays, rest days and non-working days. Check probation terms too: many contracts provide a shorter notice period during probation.
Can the company deduct notice pay from the final salary?
Yes, within limits. Section 23(3) of the Employment Act allows the employer, subject to any contrary order of a court or the Commissioner for Labour, to deduct from the salary due to the employee the sum the employee is liable to pay in lieu of notice under section 11(1). Three points keep the deduction lawful:
- Deduct only what is genuinely owed. The amount is the gross salary for the unserved part of the notice period, calculated on the employee’s gross rate of pay. It is not a penalty, recruitment cost or estimate of lost business.
- The 50% cap does not stop a final-pay deduction. MOM’s guidance on salary deductions states that when the contract ends, the total authorised deduction may exceed 50% of the final salary payment.
- Do not add unrelated deductions. Other deductions, for example for damaged equipment or an outstanding staff loan, must each fit a category the Employment Act allows. Our guide to salary deductions in Singapore explains those rules.
What the company cannot do is keep the whole final pay simply because the employee left badly. Salary earned up to the last day, and pay for unused annual leave where the contract or law requires it, is still due. The notice-pay deduction is set off against those sums, and any balance in the employee’s favour must be paid.
When must the final salary be paid?
The timing depends on how the employment ended. Under section 23 of the Employment Act and MOM’s guidance on paying salary:
| How the employment ended | When final salary is due |
|---|---|
| Employee resigned and served full notice | On the last day of employment |
| Employee resigned without serving the required notice | Within 7 days of the last day of employment |
| Employer terminated the contract | On the last day, or within 3 working days if that is not possible |
Foreign employees are different. Where tax clearance is required, IRAS requires the employer to withhold all monies due to the employee, and MOM notes this can last up to 30 days after the employer notifies the Comptroller of Income Tax. See the section on foreign employees below.
Which situations change the answer?
| Situation | Effect on notice pay |
|---|---|
| Company agreed to release the employee early | Notice is waived. MOM recommends that a waiver be recorded in writing to prevent disputes. Do not later claim notice pay you agreed to forgo. |
| Employee asks to use annual leave to cover notice | Only with the employer’s agreement. MOM states that leave used to offset notice is not paid out, and pay runs only to the earlier last day. |
| Employee took sick leave during notice | MOM states sick leave counts as part of the notice period, and the employer cannot extend notice or claim short notice for those days. |
| Company was late paying salary | The employee may be entitled to leave without notice, so a notice pay claim is unlikely to succeed. |
| Employee simply stopped turning up | Treat it as absence first. See our guide on an employee absent without leave before deciding it is a resignation. |
| Employee is on a fixed-term contract | MOM states the employee can still resign by serving the contractual notice or paying salary in lieu. |
What should the employer do, step by step?
- Confirm the resignation in writing. Reply to the message or email, record the date it was received, the last day the employee states, and that they have not served the required notice. Ask them to confirm if anything is unclear.
- Decide whether to waive. If the company is content to let them go, say so in writing and close the matter. If not, state that notice pay is owed and will be set off against final pay.
- Prepare a written final-pay computation. List salary earned to the last day, unused leave pay (our guide to leave entitlements covers the rules), any allowances and claims due, the notice-pay deduction and the net amount.
- Pay any balance on time. If the employee is owed money after the set-off, pay it within 7 days of the last day. Record CPF on the wages actually paid; if you are unsure how a particular item is treated for CPF, check with your payroll provider or the CPF Board.
- Write for any shortfall. If notice pay exceeds the final pay, send a short letter setting out the computation and asking for the balance by a reasonable date. TADM expects employers to attempt recovery first.
- File a notice pay claim if unpaid. For employees covered by the Employment Act, an employer can file a claim for notice pay (see MOM’s overview of managing employment disputes at TADM) with the Tripartite Alliance for Dispute Management (TADM) within 6 months of the employee’s last day, using the company’s Corppass access. If mediation fails, the mediator can issue a claim referral certificate allowing the claim to proceed to the Employment Claims Tribunals (ECT).
- Handle passes, records and access. Cancel system access, recover company property, and complete the foreign employee steps below.
What if the employee is on a work pass?
A foreign employee who walks out still leaves the company with obligations.
- Tax clearance. IRAS normally expects Form IR21 to be filed at least one month before a non-citizen employee stops work. When an employee resigns with immediate effect, the employer should file as soon as possible and state the reason (immediate resignation or short notice) on the form. From the point of resignation, withhold all monies due until IRAS issues its clearance directive. Our guide to Form IR21 and tax clearance explains the process.
- Pass cancellation. MOM requires the employer to cancel an Employment Pass, S Pass or Work Permit within 1 week after employment ends. Do not delay cancellation as leverage for notice pay.
- Set-off still applies. Once tax clearance is given, the notice-pay deduction is applied in the same way, and any balance is released in line with the IRAS directive.
What about senior staff outside the TADM route?
The TADM notice pay claim is available only where the employee is covered by the Employment Act. The Act now covers most employees, including managers and executives, but excludes groups such as seafarers, domestic workers and civil servants. The ECT also has claim limits: claims generally must not exceed S$20,000, or S$30,000 where the dispute went through the Tripartite Mediation Framework or union-assisted mediation. Where the employee falls outside the Act, or the sum is larger, the claim is a contractual one in the civil courts, and the contract’s notice and payment in lieu clauses matter even more. In court, the Rules of Court 2021 expect parties to consider amicable resolution before starting proceedings, so a clear letter of demand remains the first step.
Example: a sales executive who leaves the same day
Example: This is a hypothetical scenario. A Singapore distribution company employs a local sales executive on a contract with one month’s notice after probation. On a Monday, after 18 months’ service, she emails that today is her last day. The company has always paid salary on time and did not agree to release her.
HR replies the same day, acknowledging the resignation and stating that one month’s salary in lieu of notice is owed. The payroll team computes salary for the days worked that month plus pay for unused annual leave, and finds the total is less than one month’s salary. The company deducts the full amount owed to her against the notice pay, pays nothing further, and sends her a written computation with a letter asking for the balance within 14 days. When she does not reply, the company files a notice pay claim with TADM well within 6 months of her last day, uploading the contract, the resignation email, recent salary records and the letter.
Had the company been two weeks late with her previous month’s salary, the analysis would be different: she could argue she was entitled to leave without notice, and the deduction itself could be challenged.
Documents to keep
- The signed employment contract or key employment terms, including the notice clause and probation terms
- The resignation message or email, with the date and time received
- The company’s written acknowledgement and any waiver or refusal of waiver
- Salary payment records for the last several months, showing payment dates
- The final-pay computation and proof of any payment
- Leave records
- Recovery letters and any reply
- For foreign employees: Form IR21 acknowledgement, IRAS directive and pass cancellation record
Frequently asked questions
Can we refuse to accept the resignation?
In practice, no. Resignation ends the contract once the notice period ends or notice pay is settled. The company’s remedy for short notice is salary in lieu, not keeping the employee at work.
Can we withhold the final pay until the employee returns the laptop?
No. Final pay must be paid within the statutory time. A deduction for lost or damaged property must meet the Employment Act’s separate conditions, and otherwise the company should recover the property or its value separately.
Do we have to pay CPF on salary in lieu of notice?
MOM states CPF contributions are not required for salary in lieu of notice. That point usually arises when an employer pays notice pay. Where the employee owes notice pay, base CPF on the wages the employee actually earned, and check with your payroll provider if the computation is unusual.
The employee offered to work two of the four weeks. Must we accept?
No. You can accept partial notice and claim notice pay for the balance, or agree in writing to waive the rest. Whichever you choose, record it, because a vague “okay” is often treated as a waiver later.
How is this different from dismissing an employee without notice?
When the employer ends the contract early, it is the employer that owes salary in lieu, and other rules apply. See our guide to termination of employment: procedure, notice and payment.
Need help with an employee who left without serving notice?
If your company, or you as a director or shareholder, is dealing with an employee who resigned without serving notice, contact the Raffles Corporate Services team at [email protected] or on WhatsApp at +65 8501 7133 or +65 9018 0072. We will help you understand the documents and deadlines. Where your matter needs a lawyer, we will refer you to a firm on our panel of Singapore law firms that regularly handles employment law. Raffles Corporate Services is a corporate services provider, not a law firm, and this article is general information, not legal advice.
The Raffles Corporate Services Editorial Team, Raffles Corporate Services