Behind every growing business in Singapore is a team of people. And where there are people, misalignments happen.
Few things weigh heavier on a manager than an employee who simply isn’t performing. You want your business to succeed, but you also care about doing right by your team. When work falls short, it is easy to react out of frustration—or to sweep the issue under the carpet until it becomes unbearable.
Many SME leaders fall into one of two dangerous traps:
- The Instant-Fire Trap: Assuming poor performance equals misconduct and firing someone on the spot.
- The “No-Reason” Myth: Believing that as long as you pay salary in lieu of notice, you can never face a wrongful dismissal claim.
At OTP Law, we believe legal issues are, at their heart, human issues. Before rushing into formal terminations, pause, take a breath, and evaluate your path using this visual decision tree.
Understanding Your Four Paths Forward
1. The Misconduct Track: Pause Before You Act
When an employee crosses a clear boundary—such as dishonesty, breach of trust, or gross insubordination—it is natural to want an immediate exit.
However, under Section 14 of the Singapore Employment Act, summary dismissal (terminating on the spot) requires a Due Inquiry. Firing someone without giving them a fair hearing or a chance to explain their side often turns a clear-cut case into a messy claim at TADM.
OTP’s Take: Process matters just as much as outcome. Taking a few days to conduct a proper internal inquiry protects your business and ensures everyone is treated fairly.
2. The PIP Track: Investing in Growth
Sometimes, poor performance is simply a symptom of unclear expectations, lack of training, or personal difficulties. If the employee has the right heart but lacks the right skills, a Performance Improvement Plan (PIP) is your best tool.
A PIP isn’t a weapon to push someone out; it is a genuine roadmap to help them succeed. Over 30 to 90 days, set clear, measurable milestones and check in weekly. If they improve, you keep a valuable team member. If they don’t, you have an objective, compassionate paper trail showing you gave them every opportunity to bridge the gap.
3. The Notice Track: Respecting the Contract
If coaching isn’t viable, or a PIP hasn’t worked, you may decide to end the employment relationship under the contract—either by giving notice or paying salary in lieu of notice under Sections 9 and 11 of the Employment Act.
A common misconception among business owners is that paying salary in lieu grants complete immunity from wrongful dismissal claims. Under the Tripartite Guidelines on Wrongful Dismissal, contractual notice cannot be used to mask discriminatory or retaliatory reasons.
Keep the process professional, clear, and grounded strictly in the terms you both agreed to when they joined.
4. The Negotiated Exit (MSA): Preserving Relationships
Not every exit needs to be a battle. When an employee simply isn’t the right fit for your culture, dragging out a 90-day PIP can be draining for both sides.
In these situations, we often guide clients toward a Mutual Separation Agreement (MSA). By holding an open, empathetic “without prejudice” conversation, you can agree on an amicable farewell—often paired with an ex-gratia payment in exchange for a mutual release of claims.
OTP’s Take: An amicable departure saves time, avoids the stress of tribunal disputes, and allows both parties to part ways with dignity.
A Quick Reference Guide for Managers
| Situation | Recommended Approach | What Principles Apply | Risk Level |
| Breach of trust or misconduct | Conduct a Due Inquiry before deciding | Section 14, Employment Act | High if due process is skipped |
| Gaps in skill or missed targets | Initiate a 30–90 day PIP with support | Tripartite Guidelines on Wrongful Dismissal | Medium if feedback is subjective |
| Unsuccessful PIP / General Exit | Issue contractual notice or salary in lieu | Sections 9 & 11, Employment Act | Medium if reason appears arbitrary |
| Misfit / Desired clean break | Negotiate a Mutual Separation Agreement | Contract Law & Amicable Settlement | Low when agreed mutually in writing |
Conflict Is Optional
Managing people is rarely simple, but disputes don’t have to be inevitable. By pairing clear legal boundaries with empathy and open communication, you can handle difficult transitions smoothly while protecting the business you’ve worked so hard to build.
If you are facing a delicate employment issue and want to explore your options before taking the next step, contact our team at OTP Law Corporation who are always here for a warm, practical conversation.
