Changes to Singapore Employment Law 2014
The Employment, Parental Leave and Other Measures Act 2013 (the "Act") makes significant changes to the Singapore Employment Act ("EA"), extending protection for workers and improving employment standards, while recognizing that employers have practical business concerns and a need to remain competitive. The Act also introduces certain amendments to the Child Development Co-Savings Act ("CDCA"). These changes are the outcome of public consultation and evaluation by employers, unions, and the Singapore government.
Most of the changes, with the exception of Section 45 of the EA relating to retrenchment benefits, take effect on April 1, 2014.
Key Amendments to the EA:
- Extending EA protection to more workers.
- Improved employment standards and benefits for employees.
- Reducing rigidity and augmenting flexibility for employers.
- Enhancing enforcement and compliance with employment standards
Extending EA Protection to More Workers
Extend Part IV Protection of EA to More Non-Workmen. The salary threshold for employees other than workmen, such as clerical staff and frontline service staff, to be covered under the working hours and rest day-related provisions contained in Part IV of the EA will be raised from a basic monthly salary of $2,000 to $2,500, in line with recent increases in salary levels across Singapore. The Ministry of Manpower ("MOM") estimates this change will benefit approximately 150,000 workers.
Extend More Protection to Professionals, Managers, and Executives ("PMEs"). In addition to the salary protection currently accorded to them, PMEs earning a basic monthly salary of up to $4,500 will now be covered under the general provisions of the EA, including sick leave benefits and protection against unfair dismissal. MOM estimates this will benefit approximately 300,000 PMEs.
Improved Employment Standards and Benefits for Employees
A 25 percent sub-cap has been introduced for deductions to employees' salaries for accommodation, amenities, and services, to prevent excessive deductions from their salaries. This new sub-cap is within the existing 50 percent total cap of an employee's salary for authorized deductions.
With effect from April 1, 2015, the noneligibility period for retrenchment benefits for otherwise eligible workers will be reduced to two years from three years, in line with shorter employment tenures. Note, however, that no minimum statutory amount for benefits has been introduced, and the current practice of leaving these benefits to be agreed between employers, employees, and unions will continue. PMEs will continue to receive no statutory retrenchment benefits and will have to rely on contractual entitlements, if any.
Previously, in the event of a transfer of business, unions could represent employees transferred to another company only if the preexisting collective agreement with the original employer remained valid. To provide greater reassurance for affected employees, the validity of the collective agreement will now be extended for 18 months after the date of transfer, or until the expiry of the collective agreement, whichever is later.
Reducing Rigidity and Augmenting Flexibility for Employers
Previously, non-workmen earning up to $2,000 and workmen earning up to $4,500 could claim overtime pay. After the amendments, the salary threshold of non-workmen will be increased to $2,500. However, the overtime rate payable for non-workmen will be capped at the salary level of $2,250, to help employers manage costs.
PMEs earning up to $4,500 will need to have served with the same employer for at least 12 months to be eligible to seek redress against unfair dismissal, where notice is given. This will provide employers time to assess suitability of the PMEs for their jobs.
Employers will be allowed the additional option to grant time-off in lieu for PMEs who are required to work on public holidays, subject to mutual agreement. In the absence of mutual agreement, at least half a day off in lieu has to be granted.
Employers will not be obliged to grant paid sick leave and bear medical examination expenses of employees for cosmetic consultations and procedures. The assessment of whether a treatment is cosmetic or not would be based on the opinion of the medical practitioner performing the examination and providing the medical certificate.
Enhancing Enforcement of and Compliance with Employment Standards
The penalty for failure to pay salary in accordance with the EA will be raised. A minimum fine is introduced and the maximum fine increased. A first-time offense will be liable to a fine of between $3,000 and $15,000 and/or six months' jail. A subsequent offense will be liable to a fine of between $6,000 and $30,000 and/or 12 months' jail.
The maximum composition fine will be increased from $1,000 to $5,000.
Employment inspectors will be granted the power to arrest any person whom they reasonably believe is guilty of a failure to pay salary. They will also be allowed to enter any workplace to conduct checks.
Individuals such as directors or partners of companies will be made more accountable for EA offenses committed by the company. Such individuals who are primarily responsible for the offense and have failed to exercise reasonable supervision or oversight will be presumed to be negligent and be held liable. The individual will be able to rebut the presumption by proving that he or she had exercised reasonable supervision or oversight to avoid commission of the EA offense.
Marriage and Parenthood Related Amendments
The CDCA has been updated by the Act to accurately reflect the policy that parents' total child care and extended child care leave is based on their youngest qualifying Singapore Citizen ("SC") child under the CDCA. This is to avoid situations where parents who have both an older SC child and a younger noncitizen child double claim leave under both the EA and the CDCA.
A new formula has been introduced under both the EA and the CDCA to compute the minimum number of days of maternity, paternity, shared parental, or adoption leave an employee is entitled to take in circumstances where there is mutual agreement between employer and employee for leave to be taken flexibly by days instead of by block week. This will provide greater certainty for both employers and employees.
The above changes are a result of the first phase of an employment legislation review that commenced in the second quarter of 2012. The MOM has embarked on a second phase of employment legislation reviews to consider:
- Protection for workers under nontraditional work arrangements such as term contract workers, outsourced workers, and freelancers, while maintaining business flexibility.
- Additional protection for vulnerable low-wage workers.
- Circumstances under which foreign workers could be allowed to change employers.
Further amendments to the EA can be expected in due course.
For further information, please contact your principal Firm representative or one of the lawyers listed below. General email messages may be sent using our “Contact Us” form, which can be found at www.jonesday.com.
David P. Longstaff
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