Singapore Employment Act - key changes in 2018

Singapore’s Parliament has introduced numerous key changes to the Employment Act on October 2, 2018. The country’s employee-centric workplace is leading the proposed changes, which all employers must adhere to in an attempt to avoid infringing on employment legislation.

Patrick Tay, MP, has been championing an expansion of the Act since 2011. He claims that changes and amendments proposed will provide greater worker protections in Singapore.

Others claim that the changes will help solve the problem of malpractice, which is common in small and medium enterprises.

What’s important to note is that the changes, that will take effect on 1st April 2019, while significant and will work to make Singapore’s workforce stronger, will not have a high cost for businesses. These changes are aimed at encouraging employers to have “better” employment practices.

The most significant changes that have been proposed are listed below:

Removal of S$4,500 Salary Cap for PMEs

Professionals, managers and executives, or PMEs, have had a salary cap of S$4,500 imposed against them. Under the Employment Act, any PME that exceeded these limitations did not benefit from the Act.

This means that these individuals may not be entitled to the following benefits:

  • Medical fee reimbursement
  • Hospitalization leaves
  • Wrongful dismissal compensation
  • Minimum annual leave
  • Paid sick time off

But under the proposed changes, all of the benefits above would extend to PMEs of all income ranges. The cap has been removed, and the change is expected to positively impact 430,000 PMEs in Singapore.

The change ensures that all PMEs are safeguarded under the Employment Act.

PMETs, which includes technicians, is also covered under the proposed amendments. This is a significant change because this group accounts for 56% of the local workforce and is expected to account for 65% of the workforce by 2030.

It's important to note that the salary cap removal does not extend to all workers and does not include:

  • Seafarers
  • Domestic workers
  • Public servants

These individuals are covered by other legislation that does not include the Employment Act.

All Employees to Benefit from Statutory Leave Entitlement

Statutory leave entitlements will also see a major change under the proposed amendments. The entitlements will now be extended to all employees, and this will be done through the removal of Part IV of the Act, under the general section.

What does this mean to employees and employers?

The removal of Part IV will eliminate the restrictive wording of the legislation that includes workers that earn up to the previous salary cap imposed on PMEs, or S$4,500. Non-workmen that earned up to S$2,500 in basic monthly salary were also included in the previous legislation.

Removal of this section will extend statutory leave to all employees.

In essence, this means that statutory entitlement will be 14 days maximum after years of service.

But one key benefit from this is that employees will not be forfeiting leave.

Leave, which may have been untaken during the calendar year, will not be lost. While the change may seem minimal, and it is, it will extend legislation to all employees regardless of their basic monthly income.

Non-Workmen Salary Caps Will Be Increased

Non-workmen have been negatively impacted from salary thresholds in Part IV benefits. The former legislation put a cap of S$2,500 on basic monthly salary, but this salary cap is now being increased to S$2,600.

Previous legislation excluded statutory protections for hours of work, conditions of services and rest days for any non-workmen earning in excess of S$2,500 monthly. Overtime pay is currently only offered to non-workmen that earn up to S$2,500 in monthly salary.

Workmen that earn above the cap may be taken advantage of, working long hours with no overtime pay. But under the new cap, many of these individuals will benefit from overtime pay protection.

Singapore has strict requirements on payment for overtime work. Employers that fail to meet these requirements will suffer severe consequences, and there are also Central Provident Fund implications that will be assessed.

Raising the cap will benefit an additional 100,000 workers, extending statutory protections to them.

Changes to Medical Leave

Medical leave changes are also being proposed, offering further protections for employees that may be suffering from medical conditions which result in the employee taking leave. The proposed amendments include:

  • Any medical practitioner can now certify paid sick leave for employees.
  • All hospitals and medical institutions are considered approved hospitals.
  • All hospitals and medical institutions will be accepted for paid hospitalization.

When the legislation mentions “all hospitals and medical institutions,” this will include community and public hospitals.

Under previous legislation, which is currently in effect, medical practitioners that were appointed by employers were the only ones that could certify paid sick leave for the individual. Hospitalization leave would only be qualified at national centers or if admitted into an acute hospital.

Employers that appoint medical practitioners could, in theory, influence the practitioner's certification, resulting in employees working when they’re truly sick.

The laws, as they stand today, would limit the ability for employees to seek out further diagnosis.

Community and public hospital admittance will allow for paid hospitalization for many employees that may have not previously been admitted into a national center or acute hospital. The ability to choose any hospital or medical institution allows for faster care and treatment of employees.

Direct admittance into a community hospital will now allow for entitlement of hospitalization leave.

Employees warded at community hospitals will have leave extended to them only if an acute hospital referred the individual.

The changes proposed will further protect employees that have worked for an employer for at least 3 months. Employers of employees that met the three month of employment will be liable to pay for medical examination fees through reimbursement.

Employment Court Tribunal to Offer Dispute Resolutions

Current iterations of the Employment Act are such that different disputes are head by different bodies. For example, if an employee feels as if they have been wrongfully dismissed, they will have their claim examined by the Ministry of Manpower.

These claims would occur when an employee claims that they were dismissed without cause or excuse.

But if a salary dispute occurs, the employee’s claim would then be adjudicated by the Tripartite Alliance for Dispute Management. Finally, if the dispute goes unresolved, the dispute will be heard by the Employment Court Tribunal.

Under the key changes proposed, the Employment Court Tribunal will be able to hear cases that include wrongful dismissal.

Salary-related disputes will still be referred to the Tribunal as in previous legislation. Employees and employers will benefit from the Tribunal being able to resolve employment disputes. There will no longer be two routes that the dispute will need to go through.

Changes will also include the expansion of the employee dismissal definition to also include involuntary resignation.

The current definition is such that dismissal is when an employer:

  • Terminates an employee’s contract
  • Termination is done with or without notice
  • Misconduct or other circumstances exist

When an employer suggests that the employee resigns from their position, the employee, if they follow the advice and resign, is not protected under the current definition of employee dismissal.

Now, if the employer suggests that the employee resigns, the employee may be able to claim wrongful dismissal. The employee will need to prove their side of the story, and it is required that the employee show that the resignation was not voluntary but as a result of the employer’s:

  • Conduct
  • Omission

Companies will need to change and adapt their current way of conduct as a result of these changes. Strategies of proposing employee termination will need to be thoroughly reviewed.

Salary disputes will also benefit from the proposed amendments. Employers will now need to have written consent from their employees if they want to make deductions from the employee’s salary.

The consent will be for certain services that may result in the employee’s salary being reduced.

Employees will also be able to withdraw their consent if the withdrawal request is made, in writing, before the deduction has been made. This allows employees to have further control and protections over any of their potential deductions from the employee’s salary.

Retrenchment of employees has also had some changes that have been covered briefly by others. The changes require employers to provide information on the retrenchment of an employee if the Commissioner of Labour requires it.

Current law is such that only employers that have 10+ employees notify the Ministry of Manpower when or if 5 or more of these employees have be retrenched in a six-month period.

Employers that are meaning to stay within the confines of the law will need to review their policies and contracts with employees. The goal is to have a full understanding of all changes, and to provide any much-needed policies changes to stay within the confines of the proposed amendments.

The Employment Act changes are a way to protect employees, shifting some of the power to the employees that help companies run and grow. The changes provide basic terms and working conditions that are meant to help all employees although some exemptions do exist.


Copyright 2018