You employer is absolutely correct. They have to file an IR-21 (Tax Clearance) with IRAS one (1) month before your final day of work. From the moment that notice is given, by law, the employer has to hold all salaries due from the date of the notification of termination/release until tax clearance has been settled. This could be shitty as if you or the employer gives you 5 weeks notice, a week before payday, the employer has to hold the current paycheck as well as the final paycheque until tax clearance is done.
Having said that, if the employer files the IR-21 online it takes less than 10 days for the employer to get tax clearance. You will also be informed by IRAS at the same time except you letter will state that the employer will be paying your tax bill and withholding that amount from any/all salaries due you. If you go to another employer here in Singapore, at the end of the tax years IRAS will recompute your taxes and bill you for any balance of taxes due.
For the blow by blow details..............
https://www.iras.gov.sg/IRASHome/Busine ... tep-Guide/