MOM outlines worker support and rules on wage priority in corporate closures

In a written parliamentary reply issued on 13 January 2026, the Ministry of Manpower (MOM) reaffirmed that employees’ salary claims are given priority during corporate insolvency proceedings, following questions raised by Workers' Party Member of Parliament Gerald Giam Yean Song.

Giam, representing Aljunied GRC, asked the Ministry whether it would consider exploring structural reforms, such as mandatory wage recovery insurance, holding directors personally liable for unpaid wages, and amending the Insolvency, Restructuring and Dissolution Act 2018 (IRDA) to prioritise employee wage claims over those of secured creditors by default.

In response, Minister for Manpower Tan See Leng stated that the Government fully recognises the importance of protecting employees’ wage entitlements in liquidation cases. He noted that under the IRDA, employee claims already rank above all unsecured debts, second only to administrative expenses necessary to conduct the winding-up process.

Tan emphasised that employers are expected to act responsibly and make wage payments as a priority, even when facing insolvency. MOM continues to investigate and take action against companies that breach employment laws during closures.

Addressing suggestions to revise the law further, Tan did not commit to amending the IRDA but reiterated that employees’ claims are already ranked above unsecured debts. No mention was made of pursuing personal liability for directors or instituting mandatory wage insurance at this stage.

The written response follows heightened public concern over abrupt company closures, most notably the sudden shutdown of cupcake chain Twelve Cupcakes in late October 2025. The company informed staff of its closure via WhatsApp just hours before terminating their employment. Many employees were left unpaid and without notice.

On 31 October 2025, about 15 former staff gathered outside the MOM Services Centre on Bendemeer Road seeking assistance. Several stated that their salaries and Central Provident Fund (CPF) contributions for October had not been paid. Foreign workers, including S Pass holders, faced urgent deadlines to find new employment or return to their home countries.

The Ministry held closed-door meetings with worker representatives, and investigations into the case were launched shortly thereafter. In a joint statement on 31 October, MOM and the CPF Board confirmed that CPF arrears for September and October would be claimed from the liquidator.

The Food, Drinks and Allied Workers Union (FDAWU) had also issued a strong rebuke of Twelve Cupcakes’ actions, labelling the sudden closure “unacceptable and unfair.” The union pledged to assist affected workers with salary claims, job placement, and referrals to support services.

Authorities have reiterated that while business closures may sometimes be unavoidable, employers must manage such situations responsibly. The Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment provides guidance on fair retrenchment practices.

Support for affected workers includes career guidance, job-matching services, and assistance from the Tripartite Alliance for Dispute Management (TADM) in recovering outstanding wages. The Taskforce for Responsible Retrenchment and Employment Facilitation, comprising MOM, Workforce Singapore, NTUC, and its Employment and Employability Institute, is handling the ongoing response.

In his written reply, Tan also disclosed that workers affected by similar abrupt closures in the past three years have received support through the Short-Term Relief Fund. However, no specific figures on the number of workers affected, quantum of unpaid wages, or total payouts disbursed were released in the written reply on 13 January.